House flipper - Partnership

[JML222]

The client is in a 25% / 75% partnership with a co-worker and they bought their first house to flip in 2022.

House sold in 2023. I understand IRS rules regarding house flipping (cap costs increase basis, non cap expenses taken in year incurred, etc),  but I just found out the LLC they formed wasn't valid until 2023. Is there a way to file the 2022 loss on a Sch C? If so, how do you show the distribution of loss?

Thanks!

[Just-Lisa-Now- · Accepted solution]

If the house hasnt been sold yet, the house and all the improvements sit as inventory until it is sold.  So you may not be looking at much, if any loss for the year of purchase.

Who's name/TaxID number is on the property if there is no partnership yet?

[JML222]

House was sold in Jan of this year

Loans for the home and purchase are under my clients name. 

Why couldn't they file a 1065 with the appropriate division of expenses?

[qbteachmt]

What sort of expenses are there, for an entity that is flipping one project? Nearly everything will be an investment in that project and not expense.

And you can't file a partnership return when there is no partnership.