client purchased in original house in early 2020. did some imrpovements in 2021. sold at end of 2021. do I separate sales price between short term and long term
I would simply add the 2021 improvements to the basis of the house.
and not show part as ST and rest as LT?
I would say it depends on whether or not Flips is a business (ordinary income) or investment (capital gain)
If the person is regularly involved in flipping houses then it is a business. But if they just boght their first house because they think they could make money on it by fixig it up I would say that is an investment.
Regardless, any improvements are added to basis of the home and treated as a single unit for CG purposes
thanks for the input and we are treating as a single unit for cap gain purposes. client does it as investment.
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