Question re. Business Income Statements

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Posted by IB (NJ) on August 11, 2008 at 15:29:32:

Hi Folks:
I'm putting together some pro-forma financial statements for a business plan on a new venture. When I sell a house, would the expenses that typically show up on the HUD-1 statement like attorney fees, transfer realty fees, property taxes, etc, be considered 'Cost of Goods Sold' (COGS) and used to calculate my gross profits?

COGS is defined as "the cost of the raw material and direct labor required to produce the product or service that generated the revenue".[Rogers - The Entrepreneur's Guide to Finance and Business]

So I would think that virtually any specific expense related to the purchase and sale of the real estate would fall under this category. Expenses such as what I listed above along with property insurance, inspection fees, realtor commissions, etc. Even a mortgage and its closing costs. Your thoughts?

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