How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15606
Experience:  15years with H & R Block. Divisional leader, Instructor
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

I am trying to determine if a corporation is in the business

Customer Question

I am trying to determine if a corporation is in the business of buying and selling fee simple interest, oil & gas leases and ORRI, are those sales not just the sale of inventory. I realize if the property has been producing and they corporation was taking a depletion allowance it is probably the sale of a capital asset because the property had moved from inventory to capital asset status. Much like a company with inventory for sale converting an inventory to rental.
Submitted: 2 years ago.
Category: Tax
Expert:  Robin D. replied 2 years ago.
Hello and thanks for trusting me to help you today. I am a tax adviser with over 20 years of experience.
The gain generally is capital gain (taxed at preferential tax rates),
except for recapture of prior depletion or depreciation deductions
(taxed at ordinary income rates).
These are assets of the corporation and not inventory.