subdivision

[Bart Libsock]

Well it's getting exciting, or scary now, just got done drilling two new wells for two lots that did not have wells, and unloaded big big road building equipment yesterday to build new road into our 4 lot subdivision. Hopefully a lot sells right away to pay off most of the bank borrowed money. Is there any way to not write the IRS a huge check from the sale of these lots. My CPA likes to sometimes play it too safe. Maybe there are legal loopholes that one can exploit,without ending up in the pokey.

[Dave Foster]

@Bart Libsock, the well's deeper and the water sweeter as a developer but there is a cost associated as @Jay Hinrichs alluded to.  On these two at least you're tagged as a dealer.  You've turned a shovel and started improvements.  Those are inventory. You're going to pay ordinary income plus.  

Jay's right though. As you move forward there are some ways to mitigate that through structure and limiting improvements on raw land to entitlements only.  Then with the help of good tax guidance and some good entity structure you can move that land through 1031s and defer some tax.

I'm with Jay  - I'd rather have to write a check for tax on gain than cash a check because of losses.