Just to confuse things a bit more: I once came across a developer who would build a "model home" in a new area and use it to meet clients as well as a model. He would then custom build the rest of the development, but would treat the model as a business asset. (Part advertisement, part office and show floor.) The model home would then go off on 4797. I never handled that transaction myself, but ran across it in a later year.
I'm sure that the "banker" is using a logic chain for the tax treatment that would hold up in any barbershop in the land!