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This came up in the seminar I attended also. The gut reaction was that there were very few cases where it would make sense. We're talking about a maximum benefit of a 2% decrease in tax that is at least 5 years away. You'd have to have almist no current tax liability on the election for it to be worthwhile. So if there was (almost) no tax to pay by making the election, what harm is there in making it?

To the original poster - I'd be concerned about step transaction issues if you developed the property fairly quickly. The longer the time before the start of development, the less risk I see. If you started developing the property in 2001, I think you could easily have a problem. If the development didn't start for several more years, I see much less of a risk.

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