Property built for sale

[anu31402]

A new client just walked in to prepare his 2006 returns. He owns a "Disregarded" LLC registered in 2006. In 2006 he built (...from scratch) and sold a house under the LLC. I know he would require a Sch C but do I need to use Sch E for this property or any other form?

Please, any reference to IRS publication (s) will be appreciated. He hasn't built any other house since then.

Your advice is well taken.

kay, EA

[DaveO]

Is he a home builder?

Does he plan to do this again? If not I'd say it's a capital gain and report it on "D".

[anu31402]

Does he plan to do this again? If not I'd say it's a capital gain and report it on "D".

Yes. He said he registered the LLC solely to develop and sell houses.

[Matt Sova]

Dave O

Your answer is incorrect. It does not matter if he plans on building another house and for sale or not. This IS a business activity and NOT a capital gain activity. It is reported on Schedule C and the only other Schedule you will need is SE if there is net income.

Matt

[anu31402]

Your answer is incorrect. It does not matter if he plans on building another house and for sale or not. This IS a business activity and NOT a capital gain activity. It is reported on Schedule C and the only other Schedule you will need is SE if there is net income.

Matt

Thanks. All I appreciate your advice.