The net taxable income arising from the cancellation of NYC BTQ Lease(i.e. Store#604)= Income arising from the Cancellation of the lease – the net tax value of store’s old fixed assets + the net tax value of the NYC BTQ old TI allowance- depreciation (including bonus depreciation, which is 50% of the acquisition cost ) of the new store’s fixed asset.
The amount received by St. John Knits for the cancellation of NYC BTQ lease is treated as a capital gain, which may offset any capital losses, if any. If a capital loss is not available, the capital gain is taxed at the regular tax rate of 35%. See IRC §§1241 and 1231.
The net tax value of NYC BTQ fixed assets is $994,237.
NYC BTQ (i.e. Store 604) TI allowance balance is zero for book and tax
The amount received by St. John Knits for the cancellation of NYC BTQ lease is treated as a capital gain, which may offset any capital losses, if any. If a capital loss is not available, the capital gain is taxed at the regular tax rate of 35%. See IRC §§1241 and 1231.
The net tax value of NYC BTQ fixed assets is $994,237.
NYC BTQ (i.e. Store 604) TI allowance balance is zero for book and tax