<keefnj[at]aol.com> wrote in message
news:1f59284c-42ae-4dd8-81a4-57612ea505fe[at]e39g2000hsf.googlegroups.com...
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Unlike the other response (so far), I do have a problem with that. You're
changing your accounting procedures and might be required to file a form
3115. You need to treat the activity consistently. Either these 3 units
are capital assets or they are inventory. How did you report them in 2006?
If the 3 units were not in inventory on 12/31/2006, then you are changing
your method if you inventory the remaining unit.

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<keefnj[at]aol.com> wrote
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Sounds good so far.





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I believe it'd be looked at as a basis reduction.





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Paul A. Thomas, CPA
Athens, Georgia

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

An LLC was formed in 2006 to acquire a 3 unit residential property,
renovate it totally and sell the 3 units.

Some questions:

In 2006 all costs were "capitalized". In 2007 more renovations
occurred and 2 of the 3 units were sold 12/2007 at a loss. I plan to
treat this as a trade or business. I will deduct all costs as "COGS"
and inventory the 3rd unit at 12/31/07. Sound ok?

Besides the mortgage that was paid in full there was a private loan
that was satisfied at less than amount borrowed in 2008 at the last
closing. Would this be a reduction of the property basis or separately
stated income (eg debt forgiven).

Thank you in advance.

Kevin

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >