"Harlan Lunsford" <hlunsford[at]bellsouth.net> wrote:
- quote -

Oh Harlan, I've seen a LOT of dumb questions. Most of them
involve asking questions where answers were literally right
next to the question and involved moving ones eyes.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Joe wrote:

- quote -

You raise an interesting question. (Remember, the only
"dumb" question is the unasked question.)

While ultimately the costs flow into the cost of goods sold
section (page 2), you'll find that many such costs have to
at first be capitalized and added to the basis of the
property. Where you can identify actual subcontractor
costs with a particular house, it's easy. Just make sure
subs break down the mutli building costs on their invoices
so you can allocate to each property. (The subs DO give you
a bill, don't they? (BIG grin; cause I know they don't.)

You'll really have some fun some day when a client , like
mine, buys 22 acres, incurs a bunch of different costs,
including building part of the highway (called a decell lane
(deaccelleration), and the 22 acres are ultimately sold for
both commercial and single family housing. Guess I'll put
this LLC off till about April 2nd.

ChEAr$,
Harlan Lunsford, EA n LA
Sun 13 Mar 2005

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"Joe" <alexjjr[at]yahoo.com> wrote:

- quote -

If you are a tax professional and are asking these
questions, I strongly suggest you not do the return.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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"Joe" <alexjjr[at]yahoo.com> wrote:

- quote -

1. Probably in Schedule A (cost of sales) line 2 or line 5.

2. You need to be clear whether the cash infusions are (a)
contributions of capital (recorded on line 23 of Schedule L)
which do not require repayment or (b) loans from shareholder
(recorded on line 19), which should have promissory notes
available. If the stated interest rate on the note is less
than the AFR for the note term, you 'll need to calculate
imputed interest and, if over $600, issue a 1099-INT to the
shareholder.

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

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"Joe" <alexjjr[at]yahoo.com> wrote

- quote -

I would think to the basis of the house(s) in question.

How do you treat the constructions costs?

- quote -

In general, yes.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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The client has a real estate S-corp, uses independent
contracts to build houses. On the 1120S where would I report
expenses incurred and paid to Subcontracts? Also, when cash
contributions are made to increase a shareholder-owner
basis, a promissory note is necessary to show loan
repayments schedule. However if one was not established at
the time of incorporation, what can be done? Any
suggestions?

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