One time house flip

[ILLMAS]

A fellow tax preparer friend called me with a question that caught me off guard, he has TP that bought a house in 2014 to flip, house was sold in 2015, his question was if he should capitalized the property in 2014 and what ever improvements they made in that year?

I was a bite confused and suggested it can be reported it on Sch C as inventory or even on Sch E but no depreciation allowed, now I am second guessing myself.  Can anyone help me on this one.

Thanks

 

MAS

[Possi]

I wouldn't put it on a C, he is not employed by flipping this house.

I wouldn't use an E, it is not rental property.

The Sch D is the only place I would have put it. It is clearly investment property.

I don't usually chime in, so wait for another opinion.

[Lynn EA USTCP in Louisiana]

A one-time only house 'flip' - in this situation I'd also utilize Schedule D.

 

[ILLMAS]

Thanks, you are absolutely correct, I am sure glad I asked.

[Abby Normal]

The costs are capitalized, just not on the 2014 tax return.