inventory

[butch48]

I purchased some property this year, first time. let's just say i purchase 10 lots at $75,000 dollars. I had expenses cleaning up this property and have sold say 4 properties and am just under my investment in getting my money back but actually reporting a loss. Is the balance of the property considered inventory and can i enter this after I have entered deductions? Also how would i value the other 6 lots?

Thank You

[ColeenD3]

When you say lots, I assume you mean land. Land is not inventory and this is not a business. This is investment property.

If each of the properties was $7,500 each, then that is the remaining basis of each. If each lot was purchased for a different price, then the cost of each property is the basis.

If you improved the property, you can add that amount to the basis. While the following paragraph refers to depreciation, it gives you an idea about how to treat land.

To enter the sale:

1. Click on “Wages & Income
2. Scroll down the screen until to come to the section “Investment Income”
3. Choose  Other as this is not the sale of stock and select “start"
4. The first screen will ask if you sold any investments during the current tax year (This includes any sale of real property held as an investment property so answer “yes” to this question)
5. Since you did not receive a 1099-B, answer “no” to the 1099-B question
6. Choose type of investment you sold - select Land

[butch48]

Yes, the lots are land. I did receive a 1099-S for property sold that i have already entered with expenses that i have incurred.  Would this be a factor?

[JulieS]

No, receiving a 1099-S is a normal part of selling real estate and doesn't change anything in ColeenD3's answer. 

As an investor, you report the costs associated with the property at the time you sell it, usually as an increase in basis. 

The lots you still have are not inventory and you can't deduct your expenses until you sell them.