Client build a spec house, not really in the business. This was his first and probably his last. He's paid mortgage interest on the land and house. It has not been deducted anywhere, can I add it to his cost? What about the property taxes on this house? Add to cost, also?
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Spec House
In my opinion he is in the business of building homes for sale. Even if it is just one. All costs go on the Schedule C.I would put a favorite quote in here, but it would get me banned from the board. -
And don't forget "Revenue Ruling 66-247
'The costs incurred in the construction of a house for speculative sale are capitalized regardless of the taxpayer's overall method of accounting. Such costs shall be applied against the amount realized upon the sale of the house for purposes of determining gain or loss in computing taxable income."
So you ask can you add to the costs Yes, you can. And since this is capitalization I don't believe you need to make a carrying election. But maybe someone else has a suggestion about this. But I think you just add to the basis.JGComment
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