Capital gain on a flip to sell

[Alexander Chavez]

Hello Everyone!

I am trying to break down different scenarios for a future flip in Chicago and was hoping I can get some feedback from people. I do plan to do this under my own name and not in the name of an LLC(for this deal). I will be putting in most of the money for the purchase and rehab but will also have a partner for any of the remaining rehab amount. I have an understanding of how the federal taxes would work (at least somewhat), I would add the profit from the flip to my current income and then pay the taxes according to the tax bracket I am in(if sold under 1 year-which is the plan).

To make things easier to explain, lets use this example:

Purchase price (includes all purchasing expenses) = $150,000

Rehab, holding, closing, etc costs = $50,000

Total expenses = $200,000

Lets say it sells at $250,000 so profit = $50,000

I put in $170,000 my partner $30,000

We agree to split the profit %in for %out.... so in this case 85/15

What I am trying to determine is how does uncle sam account for all the expenses in order to subtract it from the final sales price to get your total profit on which they will charge you capital gains? (what documents/receipts,etc do I need to provide them with)

What about the state of Illinois, what are there capital gain rates?

How do they account for the money your partner contributes(in this case some of the rehab costs)?  Do my partner and I have to set-up any specific documents in order to provide them with the proof of this, or just receipts?

I might not be asking the right questions so feel free to help fill in any of the blanks, ask questions, heck even criticize (if it will help me learn and understand how this works).