Discussion:R.E Professional and property sale

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Discussion Forum Index --> Tax Questions --> R.E Professional and property sale


Schreier25 (talk|edits) said:

11 February 2007
An individual is changing careers to a "Real Estate Professional." She has taken thousands of dollars worth of classes, conferences, etc. She is not a broker or agent. She intends to "flip" houses as well as buy houses going into foreclosure, rent, etc. At the end of 2005 she bought her first house - I erroneously put it on Sch C as an asset and depreciated it - it was minor - only one month. I realized after the fact that it should have been classified as inventory. The house sold at a huge loss in 2006. I want to take the entire loss in 2006 on Sch C. Not sure the best approach: do I amend 2005 and reclass it into inventory; do I do an accounting change request; or do I simply adjust the basis for the one month's depreciation? Any advise would be greatly appreciated - there are big numbers involved here and I want to handle the transaction properly.

Thanks. MJ

Kevinh5 (talk|edits) said:

11 February 2007
sounds like a true professional. Buy high, sell low. If you want to do it correctly, amend her prior year return. She got a tax benefit she shouldn't have that year. If you don't care about getting it correct.....

Kevinh5 (talk|edits) said:

11 February 2007
Also, please fill out your profile by clicking on this link, hitting the Edit tab, and saving your profile. Thanks

Schreier25 (talk|edits) said:

11 February 2007
Just filled out the profile - thanks for the quick response and suggestion- will be doing an amended return now!

Stupidemployeeowner (talk|edits) said:

12 February 2007
Does she own any other property? This might be viewed as an attempt to skirt the loss rules on personal residences. If she lived in it while "working" on it, she probably cannot deduct the loss. Lots of people are in this situation due to the market conditions the last year, and I think the IRS is going to have fun with a lot of them.

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