Cost basis on subdividing

[Pearce G.]

I have a commercial zone property under contract that includes a building that I intend to hold for rental income and some additional vacant land that I intend to subdivide from the building and then flip.

For tax purposes, how is the cost basis allocated?  Is it split evenly between all the subdivided parcels?  Or is one of them deemed to be the original parcel with full cost basis and the other parcel(s) have zero cost basis?  If so, can I decide which parcel retains the cost basis?  Or is cost basis allocated by rule or appraisal or some other formula out of my control?

If the cost basis on the vacant land is zero, then I probably need to plan for a 1031 exchange when I sell it.  On the other hand, if I can assign the entire cost basis to the vacant land, then I will have little or no profit on the sale, and a 1031 is not necessary.