I got a new client today and since I do not agree with the approach from his previous preparer, I wanted to review my thinking first to get things right. My brain is still fried after all those extensions.

Client buys neglected properties mostly with private loans, fix them himself (has a contractor license) and put them on month-to-month lease while listed for sale. Some of these properties are later acquired in an installment sale but some kept on lease sometimes for years.

For 2022 he had a total of 5 properties: 3 on lease and 2 were sold.

For 2023 he had a total of 9 properties: 4 on lease and 3 were sold. The other 2 were just not leased yet.

Everything will go to schedule C, SE Tax on rental income & gain on sale, properties & improvements to inventory until sold. Correct?

Is he allowed to claim depreciation expenses on the leased properties?

Because of the installment sales how should I treat the inventory at the end of the year?

Please give me your opinions and thank you.

And Free IRonMaN now! ...… oh never mind 👍