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Level 1
March 5, 2024
Question

I am trying to enter sale of business property (house), that was held for 2 years. The sale shows as a ordinary income instead of capital gain.

  • March 5, 2024
  • 3 replies
  • 16 views
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3 replies

dkh
Level 15
March 5, 2024

Where are you entering this information? Schedule D ? Is it a rental property, if yes, sell it through the Asset Entry Worksheet in Schedule E.

Need details to understand how to help

Level 2
March 5, 2024

This is a house was rehabbed and sold after 2 years of ownership.  It wasn't rental.

BobKamman
Level 15
March 5, 2024

So maybe it belongs on Schedule C.  None of the expenses were deducted there in the last two years?  

qbteachmt
Level 15
March 5, 2024

"shows as a ordinary income instead of capital gain"

There's a difference in an Inventory Asset, used to generate a sale, and "business property" as an Asset used in the operation of the business.

A Capital gain, even if you are calling this an investment property, and a Flip, in the IRS terminology, are differentiated by the business purpose.

So, either this activity (the flip) was the business, and this was inventory held over a year end or two while being improved. Or, it is an unusual situation, maybe they bought it to fix and occupy or fix and rent (fixed asset) and then got an offer or otherwise circumstances changed, and they ended up selling it.

Because sales of inventory assets are Ordinary Income.

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Level 2
March 5, 2024

Thank You so much for an explanation. 

dkh
Level 15
March 5, 2024

curious...... is  @techbiz1662  that started this post the same as @techbiz1861 that ended it ?

 

qbteachmt
Level 15
March 6, 2024

"is  @techbiz1662  that started this post the same as @techbiz1861"

Hey, a war is a war is a war, I suppose...

Don't yell at us; we're volunteers