Taxes Multi Member LLC - Capital gain or ordinary income

[Drew Halvin]

Yippy made some money in my first year flipping...now time to figure out my taxes. I'll preface by saying I'm a CPA but don't let that fool you as I was just a former auditor with probably no more expertise in taxation than the average Joe. I am using Business Turbo tax (which sucks by the way for this line of business) and my dilemma is whether to classify the flip gains as ST Capital gains or Ordinary income (flipped two properties this year)? To my knowledge both options will flow through (k-1's) to the owners of the LLC as ordinary income anyways (I know not a good argument to the IRS and I'm sure there are nuisance differences). It would seem weird to classify my property sales as revenue and expenses as COGS to make it fit in ordinary income. Also please don't reply consult a tax expert CPA as I'm clearing not looking to do this.

Cheers,

DH

[Basit Siddiqi]

@Drew Halvin

The following is a brief overview of purchasing a flip property and selling in a different tax year.

2017 - Purchase House
2017 - Repairs to House

2017 return - report cost to purchase house and repairs as inventory.
This is not deductible in 2017.

In the year that you sell the property - you report sale price less inventory.