A friend and I bought a property in 2014 under an LLC and have been reporting it and the improvements we've made to it as inventory on our returns. We haven't taken depreciation. The property sold in 2017 for a profit. Can we report the sale of this "inventory" so it can be treated as a long term capital gain? If we follow the dispose of asset process, when we enter the asset it throws the balance sheet out of whack because the $ associated with the asset is then counted under inventory and real property.
