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Author: RBMunkin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 124931  
Subject: Re: house construction tax law Date: 4/15/2008 9:35 AM
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"You're almost right. The "almost" part is that someone in construction might have to treat undeveloped land as inventory and not capital gains property.

I believe that Peter, and I know that I, was reacting to the position being taken by the construction guys in your original post when referring to a fraudulent return. Sorry for the confusion."

Ok, thanks.
So if it's treated as inventory, I'm right that it would be expensed as COGS when it sells. So including it on Sch C in the year it sells, whether as an expense or as COGS would amount to the same profit and thus the same tax, right?

And if they treat the land as capital gains, that is fraud. Just to make double sure I know what you are saying.

I thought the IRS definition of fraud was intentional attempt to cheat. I guess intention is hard to prove though. They think they are doing it properly. But I guess a judge would have to decide if he believes them if they got audited and hauled into court.

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