Capital Gains, etc...

[Tami R.]

I have two questions...

I read somewhere that you pay taxes when you do a flip but not Capital Gains tax if your intention was to flip... can someone explain?  
Here's somethings we are looking at.... we have held a house for 1+ years and have slowly remodeled it - never thought we were going to rent always have been intention to flip... so when we flip (we do have a corporation 99% of our business has been rentals) what do we look at for taxes etc...

Here's an example of what we are looking at:

Purchased house for $10k

Put $40k into house

Sell house for $90k with a realtor of 6% commission

We are in south/central Iowa.

Another thing... we have another example:
1.  We have a house that has been rented for 5 years.
Bought for $30k put $10k into it and want to sell for $60k realtor 6% commission.
Is the tax different from selling a rental compared to selling a house that was going to be a flip.

I am looking at doing more flips but I am trying to figure out how I would get paid, capital gains, etc... 

[Wayne Brooks]

@Daria B. Sorry, but you could not be more wrong.  Flipping is taxed as ordinary income, with self employment taxes, not short term cap gains.  And intent is More relevant than length of time held, in determining cap gains verses ordinary income, particularly in flipping and developing verses long term investments.