True or false: Real property held for resale to others by contractors and brokers is classified by the IRS as a 'business property'.

Real property held for resale by contractors and brokers does not fall under the classification of 'business property' as defined by the IRS. Instead, such properties are typically classified as inventory. This distinction is important because 'business property' usually refers to properties held for productive use in a trade or business, such as office buildings, warehouses, or rental properties. In contrast, properties held for resale represent an inventory that is actively intended for sale in the ordinary course of business, rather than utilized for ongoing business operations. Understanding this classification helps clarify how real estate entities and transactions are treated for tax purposes, especially concerning capitalization, depreciation, and income recognition.