I can't show income, but my credit is in the 650s.

This provides me some legal protection as well as tax benefits.It depends on the person, most small time investors should just put in their personal name as long as they qualify for conventional financing. 

With you, and not leading with taxes!

Hundreds of websites allow people to create fake paystubs, tax returns, W-2, bank account statements, and more.

I have also sent personal hand written letters to people who are listed on the tax records of properties that are vacant.

In the other two, it's new to seller but they are open to the idea.As far as the sellers, one is an experienced investor who wants out but isn't ready for capital gain tax.

Will the profit be counted as self- employment income or long-term investment income?

Right now, I'm mostly a stay at home dad, but my dream is to start looking into that more seriously once my young kids are all school age in about 3 years, something that I can do to earn my family some additional income while maintaining flexibility to take care of the kids outside of school.

With the 40,000 profit is there anything I can do to defer my tax?

I've never had a tax sale turn out to be void, but it is my biggest fear with Alabama tax sale investing.