Speculative building

[Fastyz450]

I am a licensed residential builder in AZ. I paid sales tax on all the materials to build a house. When I sell it will I be required to pay federal and state income tax as well as capital gains tax? Seems like like when it's all done someone else gets about 50% of the dollars generated from the project!

[Mike9241]

not so fast. if your business is building houses, the iRS views this as a business activity (not an investor activity) and the sale of inventory which produces ordinary income. discuss your activity with a tax advisor.  Depending on the tax structure of the entity doing the building you could also be liable for self-employment tax