I do not know what you did to your taxes before. It sounds like you filed a schedule C to capture the expenses related to the property, but this was not an income producing property.
while you may have intended it to be, If by the time you disposed of it, if you did not produce income, then any losses you may have taken from your personal returns may have to be recaptured by the IRS.
My recommendation is to do amended returns.
If you end up with a net profit from the sell of realestate under the process you are doing, you may be exposed to Self Employment tax, on the net profits of 15.3%. You do not it seems qualify for a realestate professional.
This is not an inventory item. If you were a home buidler, you would have inventory.
If you were a realestate professional you would have inventory.
You should correct this. You may get by with it, but on an audit the IRS would catch this.
If you never reduced personal income by the schedule C losses in prior years, you may be able to get by with it. BUT if you reduced personal income and paid less tax because of the Schedule C losses, in pior years, you will need to amend.