I have this patnership tax return that i am working on that has just two partners that build homes to sale. They started their partnership in 06 in which they built one house and sold it. At the end of the year they had three other houses that were under construction. My question is do they have to include the homes that are under construction as inventory or do they deduct the materials in 2006? IF they deduct the cost of material s in 06 then they will have a huge loss. But if they include the houses in inventory then they have a huge profit from the one sale. It will all equal out in the long run. Please Help!! Thanks Alot!!!
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