"John Molinda" <johnmolinda[at]yahoo.com> wrote:

- quote -

With the usual caveats - They sound like investments to me.

FYI - it matters NOT what the net proceeds are, your gain is
your sale price minus costs to sell and basis. Having net
proceeds is not indicative of what you gain may or may not
be.

Gene E. Utterback, EA

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John Molinda <johnmolinda[at]yahoo.com> wrote:

- quote -

My opinions are offered for what they're worth (nothing).

- quote -

Investment.

- quote -

Personal.

- quote -

Personal.

The difference between personal and investment is that if
you'd had losses on the personal properties, they wouldn't
be deductible (not even against each other). Profits are
treated the same.

Seth

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I'd like some opinions on whether these property sales will
be considered "dealer" or "investor" sales. All the research
I can do basically says there is no exact was of determining
the status. Even the IRS tax court throws its hands up.
Several CPAs and my own CPA I spoke to said they are going
to treat these as "investor" and thus short & long term cap
gains tax and if the IRS sends a love letter saying
otherwise, then we worry from that point on. I want them as
"investor" because I can wash my cap losses with them.

Here is each property and its situation. All were sold in FY2004.

Oh, key point, I have in no previous year sold any real
property and will not sell more (don't own any except
primary residence) in the foreseeable future. I'd like to
hear from the experts if these would be considered "dealer"
or "investor".

PROPERTY #1
INITIAL REASON PURCHASED: long term investment/rental
TIME HELD: 4 years
CIRCUMSTANCES OF SALE: got tenant in 1 week after I
purchased it. Same tenant for 4 years. I moved across
country and could no longer take care of the property so
tenant bought it.
NET PROCEEDS: $35,000

PROPERTY #2
INITIAL REASON PURCHASED: as primary residence
TIME HELD: 5 months
CIRCUMSTANCES OF SALE: moved in as my primary residence
after I moved cross country. Put utilities in my name and
furnished the place. Turned out neighborhood was 99%
elderly and condo was too small for me. Elderly complained
about my loud music. Moved out and rented to a tenant.
Tenant lasted 3 months. Was tenant from hell. Lied on
application, selling drugs, rent check bounced, destroyed
carpet. Tenant was so bad, the home owners association
passed new rule banning any rentals! Since I moved and
could not rent to anyone else, I sold it.
NET PROCEEDS: $32,000

PROPERTY #3
INITIAL REASON PURCHASED: as primary residence after moving
out of Property #2 above
TIME HELD: 3 months
CIRCUMSTANCES OF SALE: got the place real cheap. Put
utilities in my name and furnished the place. Was totally
trashed inside. I spent $8000 fixing it up (new paint, new
carpets, new windows). Place looked gorgeous. After a few
weeks noticed neighborhood was real bad. Lots of riff raff.
Mexican gangs hanging out on corner by house, drive by
shootings, then a brick threw my living room window. No
wonder I got it so cheap. Couldn't take the crime anymore,
moved out into what is now my new primary where I like it.
NET PROCEEDS: $40,000

CPAs said that the IRS would treat these as "investments"
and a red flag would be if I bought and sold a lot of
houses in 1 year or bought and sold houses for several
years in a row.

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