Short term/long term


R

Rich Carreiro

What sort of property does that rule apply to?

It clearly doesn't apply to stock.
Don't be so sure.

If you're a professional trader or a market maker, your
gains and losses are ordinary income and loss, not capital
gains and capital losses.
 
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S

Seth Breidbart

It applies to any property purchased or created for the
purpose of selling, rather than holding for investment or
personal use.
What is the difference between "purpose of selling" and
"[purpose of] holding for investment"? Either way, I buy
something intending to sell it later at a higher price than
I paid.
Why do you say that? What does "stock" mean?
Shares in a corporation.
If you are a developer and buid 100 condominiums,
then I didn't buy them, I own them in the course of a
business.

Seth
 
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S

Seth Breidbart

Drew Edmundson said:
As an aside, and not in any way disagreeing with your
overall comments, real estate cannot be "inventory." See
Rev. Rul. 69-536. It is "property held for resale." A
semantic thing for these purposes. However for other
purposes it is a real and important difference, e.g. not
being "inventory" prohibits the use of FIFO, LIFO, etc.
Given that each item of real estate is unique, I don't see
how LIFO vs. FIFO could apply (even if it could).

Seth
 
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D

Drew Edmundson

(e-mail address removed) (Seth Breidbart)
wrote:
Given that each item of real estate is unique, I don't see
how LIFO vs. FIFO could apply (even if it could).
Other taxpayers have disagreed with you. The courts however
agree with you and the reason they use is that real estate
is not inventory.

LIFO doesn't require that the same item continue to be held
in inventory. For example some car dealers using LIFO may
still have 1986 Impalas on the books. For some reason to me
they don't seem comparable to the 2006 Impala. The items
just need to be similar and many tract homes meet that
requirement.
 
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V

Victor Roberts

What is a "spec home"?
OR ... a house built on speculation - one where there is not
a purchase contract in existence before construction is
begun. (That's the common usage of the term in our area.)
I agree your definition is more common. I stand corrected.
 
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S

Seth Breidbart

Drew Edmundson said:
LIFO doesn't require that the same item continue to be held
in inventory. For example some car dealers using LIFO may
still have 1986 Impalas on the books. For some reason to me
they don't seem comparable to the 2006 Impala. The items
just need to be similar and many tract homes meet that
requirement.
I would have thought the requirement is that the items have
to be fungible, not just similar.

Seth
 
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D

Drew Edmundson

I would have thought the requirement is that the items have
to be fungible, not just similar.
LIFO isn't as simple as I appeared to make it. As the topic
is quite exhaustive I would suggest those interested read
Section 472 and the Regulations there under. My point is
that real estate cannot be inventory but can be the similar
"property held for resale." While similar they aren't the
same.
 
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