ILLMAS Posted October 4, 2016 Report Share Posted October 4, 2016 Crosia knitting buddies decided to buy a property, fix it, then sell it, everything was done in 5 months (bought, rehabbed, sold). There was no deprecation taken nor deducted, I entered the information of Form 4797, and the gain is appearing on part II (Ordinary Gains and Losses) and flowing into the 1040 ln 14, it's been awhile since I had a case like this but I don't remember if it also has to flow to Sch D? Thanks MAS Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted October 4, 2016 Report Share Posted October 4, 2016 It IS Ordinary Gain. Short term and they are not in the business of rehabbing and selling properties. Short term. Does not belong on Sched D. 1 Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted October 4, 2016 Author Report Share Posted October 4, 2016 These whipper snappers buy investment properties for themselves (Rental units), just this time they bought it as a group, but they are in the real estate investment business. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted October 4, 2016 Report Share Posted October 4, 2016 Well, I went directly with your title where you called it investment property so I deleted my earlier answer. Quote Link to comment Share on other sites More sharing options...
OldJack Posted October 4, 2016 Report Share Posted October 4, 2016 It is "investment property" not property subject to deprecation as it is not USED in a business operation. Therefore it is not form 4797 rather form Sch-D. There is no reason a person or business in the real estate business cannot have an "investment property" resulting in capital gain or loss. (ie; stocks, bonds, land, buildings, etc.) 4 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted October 4, 2016 Report Share Posted October 4, 2016 Is it inventory of the partnership that was created to be in the business of buying and selling property? 1 Quote Link to comment Share on other sites More sharing options...
OldJack Posted October 5, 2016 Report Share Posted October 5, 2016 42 minutes ago, Lion EA said: Is it inventory of the partnership that was created to be in the business of buying and selling property? Explain taxes to the client, ask the client if it is investment property or inventory, (its not a tax preparer decision) the client will say investment as it probably must be sold before they can have money to do another. It is possible for joint ownership in real estate without it being treated as a partnership. The property is not being used in a business (not in condition for use and depr) so It is most likely not the intent of the parties to inventory the property. As this property is not in use it is code sec. 1221 property, capital asset (Sch-D), and not business 1231, 1245, or 1250 (form 4797). 4 Quote Link to comment Share on other sites More sharing options...
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