 amount you can exclude. You can exclude the construction allowance to the extent it does not exceed the amount you spent for construction or improvements. Short term lease. A short term lease is a lease or other agreement for occupancy or use of retail space for 15 years or less. So when we talk about lease agreements, most of us are familiar with them from an individual standpoint where we lease for like a year is a common type of lease for like an apartment or something like that. But when you're talking about building space for businesses, oftentimes the leases are going to be quite longer and more in depth kind of leases because clearly the business is going to want to lock down a particular space for a longer period of time. So once again, a short term lease is a lease or other agreement for occupancy or use of retail space for 15 years or less. The following rules apply to determine whether the lease is for 15 years or less. So take into account options to renew when figuring whether the lease is for 15 years or less. When you come up with these kind of rules about a lease being a lease that qualifies a short term or long term or whether it be a lease or a purchase and these kind of things, you can structure these types of agreements to try to maneuver around the definitions by trying to structure it a little bit differently. These are substance over form kind of questions that come into play. So you've got to take into consideration if you're able to extend the lease quite easily and it's quite likely that you're going to extend the lease, then maybe it shouldn't be a short term lease in actuality because although it's structured as a short term lease, it's pretty clear that it's going to be longer than 15 years the way it's been designed. So but do not take into account any option to renew at fair market value, determine at the time of renewal. So meaning if at time of renewal, they're allowing you to renew them to the lease at fair market value, then that would be you would think more of an arms length transaction. But if they're saying that they're going to renew the lease at something that's far less than fair market value, you would think they're trying to do something funny formatting it as a short term lease in form. But in actuality, it's a long term lease. So two or more successive leases that are part of the same transaction or a series of retail transactions for the same or substantially similar retail space are treated as one lease retail space retail space is real property least occupied or otherwise used for you as a tenant in your business of selling tangible personal property or services to the general public qualified long term real property qualified long term real property is non residential real property that is part of or otherwise present at your real retail space and that reverts to the landlord when the lease ends exchange of like kind property. So here we've got that like kind exchange situation. Generally, if you exchange real property used for business, so we're talking real estate here generally here real property used for business or held as an investment solely for other business or investment real property of like kind no gain or losses recognized. So we're talking real property not typically your home right in that case. So if you're thinking about the like kind type of exchanges, then you want to think about under what circumstances is it could I could I structure something as a like kind exchange. There's a lot of material on that so you could dive into that in more detail if you want you could do a whole we could do a whole course in and of itself on basically like kind exchanges. So this means that the gain is not taxable and the loss is not deductible. So for more information you can see form 8824 leasehold improvements. If a tenant erects buildings or makes improvements to your property, the increase in the value of the property due to the improvements is not income to you. So so the increase in the value of the property that they worked on is not income. So however, if the facts indicate that the improvements are a payment for rent to you, then the increased value would be income. So they did something to the property right they increased the value of the property because they worked on something that's not necessarily income because you don't have to report the increase in the value of the property is increased until you realize it generally. However, if they did something that increases the value of the property and you and you forgo their rent for doing that, then they basically paid you rent by doing that work right so in that case you would think that there would be an income situation. Loans money borrowed through a bona fide loan is not income. So clearly if you need to capital if you need to capital money to grow your business the capital either comes from you equity or from the business itself meaning the income in the business you're putting that back in the business or it comes from outside sources such as loans. So loans are an inflow of cash at some point but they're not going to be income because there's something that you're going to be paying back they're going to be similar to basically renting a building or something like that because you're renting the purchasing power of something to purchase something most likely equipment if it's a business loan so that you can then use that equipment to generate revenue in the future and you're going to have to give the money back plus the rent on the money called interest therefore it's not income when you got the money. So sales tax state and local sales tax imposed on the buyer which you were required to collect and pay over to state or local governments are not income. So sales tax obviously is like a usage tax so you are the tax collector then of that you're required to be the tax collector of in the United States the state or local area the state and local sales tax because there's not generally a federal sales tax it's the state and local thing which means that the tax in general or in theory is not on you as the business owner the tax is supposed to be on the person buying the goods and services you're just the tax collector so you have to mark up the income with the sales tax and when you receive the increased price meaning if you were to charge $10 and you had to charge $12 you had to charge $2 of sales tax let's say that means that the the $2 isn't revenue to you the $10 that you charged was revenue the $2 from a bookkeeping standpoint should go into a payable account sales tax payable and then and then you pay it to the government notice that you could the sales tax is a little confusing a lot of times because you could think of it as why don't I include the whole $12 as income and then when I pay the two dollars out for sales tax I call that an expense so that would bring me back to the $10 12 minus the two gives me $10 that's the same thing as just not recording either the expense or the income of the two dollars the reason we don't do that in theory is because the again the concept is it's not income or an expense to you you're just a tax collector it's a non-income statement item you should put it on the books as a as a liability not as income and then when you pay the sales tax it's not going to be an expense and again as a as a bookkeeper or someone doing taxes you might get questions of people saying hey look I pay sales tax I have to write the check of sales tax to so I should have an expense of sales tax and you've got to then think well we'll know because if you properly didn't include the sales tax on the income statement then you're not going to have an expense of sales tax now if they did include income related to the sales tax they recorded the transaction at $12 instead of $10 they included the sales tax then you should reduce the income line generally to what it was not included in the sales tax so that actually gets a little bit messy tax software is helpful I mean accounting software is helpful to properly calculate and track sales tax but sometimes people don't use accounting software so they so they have to come up with a system that works maybe without accounting software when they have to deal with sales tax and so you want to make sure that you have an understanding of what's going on with it if you're dealing with sales tax