Qualified installment sales

[CPAPJL]

Client this year sold 5 residential properties on installment basis, all purchased and sold in 2005 and is planning to do more of this - he never consulted me, but now that I see it, I wonder if he has become a "dealer" and possibly is not allowed to use installment sale method at all. The properties are not part of a subdivision, just random properties that he found he can buy cheap and sell high with small downpayment. He has another successsful retail business and his sister helps him keep up with the installment contracts and some rental properties he owns. At what point would he become a dealer? Any thoughts?

[Bees Knees]

I would tell the client one more sale, and you no longer qualify for the installment method. 5 seems to be a good limit to set.

It is a judgment call. Facts and circumstances....In this short of a period of time, my judgment says 5 is the limit.