Ark. Code R. 26-51-424 - 2(a)(1) (1997) - Transfer of Property to Related Person

Losses due to the voluntary removal or demolition of old buildings and the scrapping of old machinery or equipment incidental to renewal or replacement are deductible from gross income. When a taxpayer buys real estate upon which is located a building which he proceeds to raze with the intent of erecting thereon another building, the taxpayer has incurred no deductible loss or expense on account of the demolition of the old building. The basis in the real estate will be increased by the cost of the demolition.