Construction-new homes

[Ken]

I have a customer who is self employed Sch C who builds new homes and sells them. I am trying to decide if the costs of the material and contract labor for sub contractors goes on the front of the schedule C in Sec II or on the back in Sec III lines 37 and 38. Also he built 2 homes in 2006 but only sold one and from what I am reading--I only report the income and expenses for the home that was sold and all expenses for the one he still has do not get reported until he sells that home. Is this correct?

Thanks
Bonnie

Bonnie I believe the sub contractors are responsible for getting their own materials when they do a job for a general contractor, so I would just subtracct what I paid the sub contractor as (other) expense on back of schedule C.
If you are using the cash method of accounting ( which I always do for schedule C's), you would only report that income and expenses that you had in the year the income was recieved.

[Gretel]

Yes, houses are inventory and all expenses but admin should be part of COGS.

[Bonnie]

I have a customer who is self employed Sch C who builds new homes and sells them. I am trying to decide if the costs of the material and contract labor for sub contractors goes on the front of the schedule C in Sec II or on the back in Sec III lines 37 and 38. Also he built 2 homes in 2006 but only sold one and from what I am reading--I only report the income and expenses for the home that was sold and all expenses for the one he still has do not get reported until he sells that home. Is this correct?

Thanks
Bonnie