McKinney Tax Planning

Planning in a City That Is Still Growing

McKinney's growth creates planning decisions that come up once in a lifetime: selling a family farm, building a business near the new airport or deciding what to do with a home that has doubled in value. BOMCAS does tax planning for McKinney clients remotely.

Statewide ideas are collected on the Texas tax planning page; this one deals with McKinney land, aircraft and family wealth.

Selling Land to Developers

Families selling land have several choices. A sale for cash produces capital gain in one year. An installment sale spreads the gain over the years payments are received. A like-kind exchange under section 1031 lets the seller defer the gain by buying other real estate, such as farmland further out or rental property, within strict deadlines: 45 days to identify replacement property and 180 days to close. Developers may want to buy in phases, which can suit an installment plan. The rollback tax on agricultural land should be built into the price.

Keeping Land in the Family

Land passed at death takes a new basis, so heirs can sell with little gain. For families with large estates, gifting interests in a family land company over time, combined with the $15 million federal exemption for 2026 and the $19,000 annual exclusion, can move value out of the estate. Texas has no estate or inheritance tax.

Aircraft and Equipment

Businesses buying aircraft or equipment can use 100 percent bonus depreciation for property acquired after January 19, 2025. Aircraft used partly for personal flights have deduction limits, and entertainment flights are restricted. Planning the purchase, the ownership company and the record-keeping before buying avoids problems.

Builders

Builders can choose accounting methods for home construction, and smaller builders may qualify for simpler methods. The timing of closings around year-end affects taxable income.

Homeowners

Home values in McKinney have risen sharply. Married couples can exclude up to $500,000 of gain on a main home they have owned and lived in for two of the last five years, and gain above that is taxed. Retirees moving to a smaller home should check the gain before selling.

Retirement

Business owners can use 401(k), SEP or cash balance plans. Retirees can convert IRAs to Roth in low-income years, using lower brackets before Social Security and required distributions start.

New Buildings Near the Airport

Companies building hangars, offices or warehouses near McKinney National can use a cost segregation study to separate parts of the building, such as electrical systems serving equipment, paving and land improvements, into shorter lives eligible for bonus depreciation. The study is most valuable when done as the building is placed in service.

Selling a Practice or Business

Professional practices and local businesses are often sold to larger groups. How the price is divided among equipment, goodwill, a non-compete and consulting changes the tax: goodwill usually produces capital gain, while non-compete and consulting payments are ordinary income. Negotiating the allocation before signing matters.

Charitable Giving

Gifts of appreciated land or stock to charity avoid capital gains tax. Conservation easements can provide deductions when land is protected, but they are closely examined by the IRS and must follow the rules strictly.

The Steps

Review returns and assets.
Model sale or purchase options.
Compare tax results.
Coordinate with your attorney and adviser.
Follow up as plans change.