sethb[at]panix.com (Seth Breidbart) wrote:
- quote -

LIFO isn't as simple as I appeared to make it. As the topic
is quite exhaustive I would suggest those interested read
Section 472 and the Regulations there under. My point is
that real estate cannot be inventory but can be the similar
"property held for resale." While similar they aren't the
same.

---
Drew Edmundson, CPA
Cary, NC

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Drew Edmundson <drewsbeagles[at]hotmail.com> wrote:

- quote -

I would have thought the requirement is that the items have
to be fungible, not just similar.

Seth

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- quote -

I agree your definition is more common. I stand corrected.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

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ethb[at]panix.com (Seth Breidbart)
wrote:

- quote -

Other taxpayers have disagreed with you. The courts however
agree with you and the reason they use is that real estate
is not inventory.

LIFO doesn't require that the same item continue to be held
in inventory. For example some car dealers using LIFO may
still have 1986 Impalas on the books. For some reason to me
they don't seem comparable to the 2006 Impala. The items
just need to be similar and many tract homes meet that
requirement.

---
Drew Edmundson, CPA
Cary, NC

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Drew Edmundson <drewsbeagles[at]hotmail.com> wrote:

- quote -

Given that each item of real estate is unique, I don't see
how LIFO vs. FIFO could apply (even if it could).

Seth

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Stuart A. Bronstein <spamtrap[at]lexregia.com> wrote:
- quote -

What is the difference between "purpose of selling" and
"[purpose of] holding for investment"? Either way, I buy
something intending to sell it later at a higher price than
I paid.

- quote -

Shares in a corporation.

- quote -

then I didn't buy them, I own them in the course of a
business.

Seth

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sethb[at]panix.com (Seth Breidbart) writes:

- quote -

Don't be so sure.

If you're a professional trader or a market maker, your
gains and losses are ordinary income and loss, not capital
gains and capital losses.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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Drew Edmundson <drewsbeagles[at]hotmail.com> wrote:

- quote -

Real Estate is held in a control account similar to securites
being held for the short-term unless it is being rented in
which case it belongs in an account with income producing
assets.

Although you may refer to it internally as inventory, it is
not inventory for either accounting or tax purposes.

Dick

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Drew Edmundson <drewsbeagles[at]hotmail.com> wrote:

- quote -

Thanks for the clarification. I wasn't aware of that nuance.

Stu

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sethb[at]panix.com (Seth Breidbart) wrote:
- quote -

It applies to any property purchased or created for the
purpose of selling, rather than holding for investment or
personal use.

- quote -

Why do you say that? What does "stock" mean? If you are
a developer and buid 100 condominiums, all the income from
sales will be ordinary income, even if some of them are
sold more than a year later.

Stu

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"Stuart A. Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

As an aside, and not in any way disagreeing with your
overall comments, real estate cannot be "inventory." See
Rev. Rul. 69-536. It is "property held for resale." A
semantic thing for these purposes. However for other
purposes it is a real and important difference, e.g. not
being "inventory" prohibits the use of FIFO, LIFO, etc.

---
Drew Edmundson, CPA
Cary, NC

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Stuart A. Bronstein <spamtrap[at]lexregia.com> wrote:
- quote -

What sort of property does that rule apply to?

It clearly doesn't apply to stock.

Seth

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sethb[at]panix.com (Seth Breidbart) wrote:

- quote -

Actually, even buying a house with the purpose of turning
around and selling it makes the house inventory rather than
an investment. For example, you are able to buy a house in
a foreclosure sale and think you can make some money from
it. So you clean it up, paint it and sell it.

Even if it takes longer than a year to sell, if the purpose
of the purchase was to turn around and sell it, it's
inventory.

Stu

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Stuart A. Bronstein wrote:
- quote -

http://dictionary.reference.com/sear...pec+house&r=66 and
http://www.yourwebassistant.net/glos...htm#spec_house give
conflicting definitions. The second one matches Stuart precisely.

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Victor Roberts <xxx[at]lighting-research.com> wrote:
- quote -

Where I come from "spec" stands for speculation. That is,
he builds it with the intent and hope of selling it for more
than what he put into it. Some people make money doing
that, some actually lose money.

Stu

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- quote -

No, _buying_ a house to sell is an investment. Building a
house to sell is a _business_.

- quote -

He didn't "acquire" the house, he built it.

Seth

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Dick Adams <rdadams[at]smart.net> wrote:
- quote -

I don't see where the OP even suggested this.

- quote -

A friend my mine built a house not far from here and he
acted as his own general contractor, and he still lives in
the house after at least 5 years. I think the issue of the
"intention" can best be inferred from whether or not he ever
lived in it, whether it was his primary residence and for
how long, and why he moved. I assume this is not black and
white.

- quote -

Agreed.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

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- quote -

OR ... a house built on speculation - one where there is not
a purchase contract in existence before construction is
begun. (That's the common usage of the term in our area.)

--
Don EA in Upstate NY

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Wayne Rivers wrote:

- quote -

Then it is not a "spec home", rather a "spec"ulative house.
(A house is not a home, but that's another story.)

anyway, it's a short term event, based on completion of the
house, and not the longer term ownership of the underlying
land.

ChEAr$,
Harlan Lunsford, EA n LA

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Dick Adams <rdadams[at]smart.net> wrote:
- quote -

I've always understood the term to apply to a house built on
"speculation." That is, a house built without intending to
live in it but to sell it upon completion. All with the
speculation that the final sale will result in a profit.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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