Residential golf community and resort developments have traditionally faced many tax issues including:
- When to recognize income from lot sales,
- Capitalization of carrying and other indirect costs during construction,
- Inclusion of future costs in lot costs, including implications of extending the statute of limitations for assessment of tax,
- Allocations of lot development costs to specific lots sold,
- The accounting for "excess costs", if any, of golf course and related amenities not transferred to membership entities that were incurred to enhance the salability and value of the lots,
- Depreciation of golf course land improvements retained, and
- The accounting for golf course costs anticipated to be transferred to membership entities,
- Entity selection,
- General tax planning for owners.
All of these issues, some individually but clearly collectively, can have a very significant effect on a development's cash flow requirements and after-tax rate of return to the owners/investors.