Passive Investor - How to report on tax return?

[Mike Steffen]

One of my friend has business of flipping houses. He offered me to invest in his business on profit sharing. I will be just an investor and will get my money back with profit once he sells property after fixing it. 

How do I report my income on my tax return? 

Does he need to issue 1099? Do I have to pay social security tax/Medicare tax on this extra income? 

If he sells property after a year - can I report this as long term gain? 

I would appreciate if someone can help us.

Thanks.