It is important to note that, under Sec. 1221(a)(1), property is not a capital asset if it is “stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer . . . or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business.”It is key you be able to demonstrate both intent at the time of the transfer, and in activities after, especially if you churn.

Yes, of course, this is true - it was an easy example with easy numbers to demonstrate the scenario.

I've never seen that term used in cases where loans between related parties were under dispute.I would be more interested in demonstrating the interest was reasonable based market research, there is evidence of repayment, evidence of any collateral, consistent treatment as a loan on both tax forms, inclusion of interest income for him and interest deductions for you, there were provisions for enforcement of collection on nonpayment, amortization schedule, etc.Remember, it is canon that substance takes precedence to form.

We felt due to the relocation and it previously being under contract, the seller would be more inclined to negotiate.We also demonstrated financial strength by being pre-approved (not just pre-qualified), having a higher down payment for earnest money, and a quicker due diligence deadline.

Notable sales this year demonstrate a stratification in pricing achieved.

Pictures of the property as it was when they left are critical for you to have to demonstrate what the physical damage to to property was, and why you had to pay what you paid for restoring it. 

The numbers below are made up numbers for me to demonstrate my case for you:First, ask your realtor to ask the owner, why $275,000?

The most profitable aspect lies in appreciation.I have created the following example to demonstrate the benefits of cash flow and appreciation over a five-year period.

It is your intent to hold that property (and ability to demonstrate that intent)  that determines the eligibility. 

You also need to demonstrate that you will be hiring US citizens eventually and contributing to the economy.