@Dan Oxman Yes the investment must be derived from capital gains as @Tony Kim mentioned.

Since most flipping transactions have a quick turnaround, the idea is that any profit is derived from the ordinary course of business.

They will have one or two people that can bump your purchasing power significantly with the use of rental income derived from the property you are purchasing. 

It depends on if IRS considers you an investor or trader. they look at different factors, I pulled court cases where they looked at these:(1) the taxpayer's investment intent; (2) the nature of the income to be derived from the activity; and (3) the frequency, extent, and regularity of the taxpayer's securities transactions (Kay; Mayer; and Moller)  A taxpayer is a securities trader only when both of the following are true: (1) the taxpayer's trading activity is substantial; and (2) the taxpayer seeks to profit from short-term swings in the daily market movement, rather than to profit from the long-term holding of investments. 

Everything else is derived or subtracted from that number. 

For example: Derivative lawsuits are often decided in the jurisdiction where the LLC was formed.

haven't  ever heard of an appraisal with only photos …...what is derivation of the  work orders ?  

He lays out a system for managing the finances of your business that many find helpful.I have not read the book myself but have implemented a derivative of his system for my rentals.  

My properties are owned by a US corporation which is owned by my Canadian corporation, so I do not derive income directly from the US but only through profits that are repatriated to Canada which are then paid out to me by my Canadian company, not my US company. 

For example if the building were to cost $750K do we rent per square foot or some other derivative?