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Level 2
posted Mar 21, 2021 12:05:00 PM

New Real estate Flipper with Schedule C - Am I at a benefit to using LOWER OF COST OR MARKET METHOD (LCM) or COST

PLEASE - ONLY CPA's OR ACTUAL TAX EXPERTS. 

 

New to real estate flipping , I flipped a home in 2020. 

I have the option of choosing LCM or cost method on 2020 return. Must use it thereafter on all returns.

 

WHICH is best for real estate flippers? and why?

 

 

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1 Replies
Level 12
Mar 21, 2021 12:45:33 PM

If you are good at this or expect to be, you do not want to use LCM. That's for businesses that have old, stale, obsolete inventory......tons of writedowns. Use cost.