EBITDA = Revenue - Expenses + Back Out specific Expenses (Income Taxes, Interest, Dep, Amort)Say for example you have hold a property that generates $1000 a month revenue after vacancy and has the following monthly expense profile:- PM $100- Property Tax $100- Insurance $50- Repair and Capex Deferred Expense: $150- Principal on Mortgage $50- Interest on Mortgage $200- Depreciation $200Total $850EBITDA = $1000 - 850 + (200 + 200) = $550 (we don't add back property tax as it is a different class of tax that is simply an operating expense.  

Flipping is not investing and the tax you pay with the profits are NOT capital gains if you went into the flip with the intent to flip.The profits from your flip will be subject to Self Employment tax as well as regular income tax.You do not negate your taxable profits from the flip by paying down a mortgage (equity paydown is never a deductible expense).If your original intent with the flip was to make it another rental, then you may have some argument for capital gains, but you'll have to have a lot of contemporaneous documentation to indicate your original intent and why you ended up flipping instead of holding.

James - I hadn't thought of that idea - but I wonder, if I put the property into an entity, I think that would trigger the tax as well.

As I wrote on my blog today about preparing for the Obama Coronation in January, the truly wealthy pay only as much tax as they choose to pay.

I would advise to carefully consider energy costs, zoning for legal TAT, increasing GET tax as well as high cost of on island management. 

The concern we have is that if it is considered a gift, then will the IRS tax as a gift?

It sounds like they are trying to get as much info from me so they can to tax as much as they can.

I have the optIon of opting out of FICA tax. As

Are there any BP members here who have a strategy of simply flipping apartment buildings to build wealth, and just pay the tax as a cost of business?

The uncle's portion will not drive any tax as your father gets a stepped-up basis.