donated real estate

@9130 3525 3968 4316 

The lots are fixed assets regardless of whether they were donated or purchased and they should be recorded as income when received unless you're a not-for-profit and they were donated with restrictions.  Title insurance is not an expense, it is part of the basis of the fixed asset value.  

Hello,

you have given very helpful suggestion.

Just to clarify this is a not for profit, so you are saying the lots should not be recorded as income on the p&l if their are restrictions, but if there are no restrictions then the lots should be recorded as income, correct? 

If the next group of donated lots to the non profit organization are restricted, than what should the lots be categorized as? 

Why is title insurance considered part of the basis of the fixed asset value? 

How would title insurance add to the value of the lots?

@9130 3525 3968 4316 

Unrestricted in-kind donations are revenue when received.  Restricted in-kind donations are recorded as Net Assets With Donor Restrictions.  When the restrictions are removed, the donations are removed from Net Assets With Donor Restrictions and moved to Contribution Revenue.  With all due respect, if your not-for-profit doesn't know this, I would strongly suggest contacting a CPA with NFP experience or getting a board member with experience.  Just my $.02.

@9130 3525 3968 4316 

Why is title insurance considered part of the basis of the fixed asset value?

Because the IRS requires it (See IRS Publication 551 - Basis Of Assets):

Your basis includes the settlement fees and closing costs for buying property. You can't include in your basis the fees and costs for getting a loan on property. A fee for buying property is a cost that must be paid even if you bought the property for cash.

The following items are some of the settlement fees or closing costs you can include in the basis of your property.

...Owner's title insurance