Bill Blade has owned severalplots of land in Bell County, Texas. He purchased the land at various times during the last 30 years. About every fourth year, Bill subdivides into lots one of the properties he owns. He then develops the property and has water, sewer, natural gas, and electricity hookups put in each lot and paves new streets. Bill has always treated his sales of such lots as sales of capital assets. His previous tax returns were prepared by an accountant whose practice you recently purchased.
Bill comes to you to and asks that you determine if proper tax treatment was used on the prior tax returns?