Can plan assets be used to pay real estate taxes?

[John A]

Can plan assets be used to pay real estate taxes (as an investment expense of the plan) if the plan holds real estate?

[Guest]

Absolutely, who else is "legally" responsible for the tax but the property owner

[AndyH]

I had a plan with such an "investment" audited by the IRS. The agent insisted that the taxes, if paid by the sponsor, be treated as a contribution. Looking back at it, I'm not sure that treatment was required, but we went along with it at the time, since the auditor only insisted on this treatment prospectively.