Either way, if you flip houses that is ordinary income. 

The only thing that changes is that, if you chose to file as a C-Corp for some reason, the profits that flow to the members of the LLC would be taxed as qualified dividends as opposed to ordinary income on the personal 1040's.

For example, if I were to remove a window and put in a new patio door and it cost me $450 I could have it be a expense even though it would be clearly a capital expenditure.

Over Improving would be fixing/renovating a property to a point were you will not recoup that capital investment because the neighborhood comparables will not support a value that high.An extreme example would be installing a $100,000 in ground swimming pool and patio in a home in a neighborhood where the homes typically seller for $85,000.

HML outside of a retirement account results in ordinary income.

The K1 has all of the profit listed on line 1 as ordinary business income and does not seem to reflect long term cap gain tax benefits. 

Found that the cement on a side patio sloped significantly towards the house which caused some leaking that we didn't see and a hazard in winter with freezing over.

As mentioned, the HOA official documents can be obtained free by the home owner/Realtor via the HOA's web site and hard copies cost no more than $25 and the home owner has already compensated the property manager to complete these ordinary tasks with their HOA dues.Then there is the Transfer Fee on home refinancing.

She knows we still have plans to improve the landscaping, tear down a dilapidated garage, pour a new driveway, carport and patio; she is willing wait for the finished product and is super excited to be settled into her new home.

Someone who finds loopholes to avoid/defer ordinary income tax.