Sale of Storage Shed

[zeros]

Client sold a storage shed which he had owned for over 5 years. This was for his personal use. He made a profit of about $8,000. Not sure what form this would be reported on? Would this be subject to capital gains treatment or ordinary income?

[appelman]

Schedule D

See:

http://www.irs.gov/taxtopics/tc409.html

[erchess]

Unusual case?

I would guess that it is very unusual for a personal use storage shed to be sold at a gain. Please, anyone who thinks I am wrong jump in and say so.

Can OP explain what is unusual here that led to the shed becoming more valuable over time? (Was it for example very well built so that "obviously" it appreciated the way houses do and mobile homes do not?)

[appelman]

Self built?

After all, sweat equity doesn't count.

[erchess]

Granted that

there is no allowance for the value of the owner's time building it but the total costs of materials and maybe even tools purchased or rented do get included in basis. And I know the Cohan Rule has shrunk considerably since it was originally formulated but I would be caught making what I thought were reasonable estimates if records proved unavailable. I don't believe that there is an ironclad rule that you must have written records to substantiate basis in a personal use asset the way there is for most expenses related to a business.

[appelman]

Materials tend to be cheap.

If he built it himself and did a really nice job, I could easily seeing him sell it at a profit.

[FEDUKE404]

Must have been one fine shed!

If he built it himself and did a really nice job, I could easily seeing him sell it at a profit.

Agreed, if the guy did most of the work himself. But I'm also trying to imagine a "storage shed" that would be valuable. May be a matter of terminology, aka it's a "workshop" perhaps?

But if the guy merely "owned" (implying a purchase) the shed, I cannot see such a gain under normal circumstances.

[DonPriebe]

Maybe selling the shed also included moving it to its new location up the mountain two counties over.

Normal answer - Schedule D.

[Gary2]

Or maybe "Sale of Storage Shed" means selling a parcel of land on which the only structure is the shed. If the shed isn't portable, it may not occur to the author to mention the land.

[zeros]

Winters in Arizona

I would guess that it is very unusual for a personal use storage shed to be sold at a gain. Please, anyone who thinks I am wrong jump in and say so.

Can OP explain what is unusual here that led to the shed becoming more valuable over time? (Was it for example very well built so that "obviously" it appreciated the way houses do and mobile homes do not?)

Client winters in Arizona and storage sheds in Arizona are available to purchase. They stand separate from where he lives and a number of them are "connected together." He decided to sell his because he purchased a permanent home there and has storage on his property.