Thursday, August 8, 2019 from 11:00 AM to 12:00 PM AKDT
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Hallie Bissett 
Alaska Native Village Corporation Association 

July Fishnet (in August) 

Grants are Taxable!

The 2017 tax reform act took away the option to treat grants as non-taxable “contributions to capital” under IRC Section 118. Under pre tax reform grants could be treated as contributions of capital instead of taxable income. Under tax reform the term “contributions of capital” does not include (1) any contribution in aid of construction or any other contribution as a customer or potential customer, and (2) any contribution by any governmental entity or civic group. This is effective for “contributions” made after December 22, 2017, by a governmental entity pursuant to a master development plan that has been approved prior to such date by a governmental entity.
Since these grants will be taxable income there will be tax basis and once the projects are completed and placed into service they will be eligible for depreciation for tax purposes.
Our partner BDO will be on the line as a subject matter expert, to explain the changes but more importantly to take your questions regarding specific instances and projects you may be working on as well as possible solutions.