tax ramifications of making a profit

[worldjohn]

If you buy and sell a piece of land and make, lets say $20,000. If you've been bidding for a few years and running a small business making losses could you say to the tax man that that 20k is a business profit?  I would have five years of office expenses I could put against that to reduce the tax burden a bit. Is the tax rate doing it this way better than having it be a capitol gain? Can I even choose?
thanks ahead of time!

[Pfm1011]

I'm presuming you didn't incorporate..  You cannot write off five years of unrelated expenses against the land profit. Related expenses you can justify are deductible.  Simple way of thinking, If you are audited , can you justify the expense. If it is true expense, deduct it,.  If you have been bidding for two years, look at those expenses.

Trip to Florida to "look at land" , New car to "look at land", 40 ft Searay to "look at land from the lake side" ,  massage by stripper  to get out cramp caused by "looking at land"   .. I suspect all may be  frowned upon and might not be a good idea to claim.

[Frank]

Trip to Florida to "look at land" , New car to "look at land", 40 ft Searay to "look at land from the lake side" ,  massage by stripper  to get out cramp caused by "looking at land"   .. I suspect all may be  frowned upon and might not be a good idea to claim.

The massage could possibly be deductible as a medical expense provided you have a scrip from you doc.  Haha.   

[Frank]

If you buy and sell a piece of land and make, lets say $20,000. If you've been bidding for a few years and running a small business making losses could you say to the tax man that that 20k is a business profit?  I would have five years of office expenses I could put against that to reduce the tax burden a bit. Is the tax rate doing it this way better than having it be a capitol gain? Can I even choose?
thanks ahead of time!

You should be in a better tax position if you try to characterize it as a capital gain - it really depends on how much money you have spent in your quest, and you should be keeping track.  If Rev Can comes back at you and says 'no, that is a business income', then you could counter with the myriad of expenses you have incurred to reduce the net impact.   The most certain way to recapture those costs against any profits is to incorporate - but you will definitely have to claim the profit as a business income if the sole purpose of your company is to acquire these lands and flip it.   

You need to talk to a good accountant, and divulge all of your particulars in order to get a reliable opinion.