Does anyone know if there is a different tax treatment from flipping land as a dealer versus buying land, splitting it formally in the same year?
@robc I don’t think splitting the lot has any real impact on the situation. It has more to do with what your plans were when you bought it. If you were trying to turn it over and sell it, either as one lot or two within the same year, then you’re probably a dealer.
@robc the issue is when you sell relative to when you bought. listen to Anderson advisors on youtube, he goes through scenarios where you buy in one entity, do absolutely nothing for more than 1 year, sell it at higher price to your other entity to realize 20% capital gain and then your other entity does whatever and then taxed with the regular tax… even if you do not sell within the year but started the subdivision process it might be considered a dealer activity especially if your other activities within the same entity were short term as well.
@nataliac Thanks. Since I posted this I have learned that the split is not an improvement. Neither is a soil suitability study. You actually have to move the dirt and make some change to be considered and improvement.