Capital gains if you're still in the negative?

[Matt Streeter]

In January my wife and I purchased 130 acres of land, for 480,000$. we are going to sell two 10 acre building lots,  probably for somewhere between 100-150,000 each. we will keep the other 110 acres.  2 acres we will subdivide out for ourselves to build a house on,  and the rest will be rolled into a Christmas tree business. on the acreage that we sell,  will we be hit with capital gains since we're still going to be approximately 200,000 in the negative? 

[Bill B.]

You are not $200k negative unless you give those buyers all the land. You paid $480k for 130 acres or less than $4k per acre. Unless you can prove to the irs that the acres you sold were better than average. Your cost basis per sale will be 10 x $3,690/acre cost or $37k. That sounds like capital gains tax on $63k-$113k depending on sales price and closing costs. 

Imagine these were condos. And you sold off 65 condos for $425k. Do you think you could tell the IRS you lost $5k on the deal, even though you have 65 condos left?