how are construction costs counted towards year end taxes?

[Wade Stahle]

Example: A flipper has made $100k in profit in the calendar year 2016. In December 2016 he buys another flip and renovates using all of his $100k profits. The house doesn't sell till January 2017. Since he has $100k worth of expenses in 2016 does that mean the IRS sees his total 2016 profit as $0 or $100k???