The plan must be reasonable. There must be some projections of cash flow and future cost. Just saying we plan to spend X with no details will not fly. The plan can be changed if economic conditions change.
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How detailed must the plan be to improve land in an OZ at the time of purchase?
What is required in the plan and am I allowed to change it after the purchase?
Answers
Just self-certify, and yes, you can change it.
No need for a business plan until the first testing period, which is generally at least six months out.
There is little guidance on what goes in the plan at this point. I believe the IRS essentially is looking for real developments and if something gets built, you should be fine. The plan should include a schedule of work to be performed and estimates of cost at various milestones. A normal construction plan prepared by a builder or architect can form the basis of the written plan. It can be amended after creation as any plan should be able to be.
I am not sure based upon your question. The bottom line is you have to significantly upgrade the real estate.
You're only allowed to change the plan based on circumstances outside your control. The plan needs to contain projected uses of funds and a schedule with as much precision as possible, preferably anticipated months of deployment, but I have seen plans broken down by quarter-annual intervals instead, which ought to work fine.
There is no requirement in the regulations to improve land. There is, though, anti-abuse rules that will not allow the acquisition of land for investment or hedging purposes. The land must be used in an active trade or business.
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