Be mindful of short-term capital gains tax, as profits from flips held for less than a year are taxed as ordinary income, and frequent flipping may result in self-employment taxes.While profits from flips do not qualify for 1031 exchanges (since flips are considered inventory, not investment properties), you can minimize your tax burden by deducting allowable expenses like renovation costs, loan interest, and holding expenses.If you're considering diversifying into rentals, explore opportunities to benefit from long-term tax advantages such as depreciation and lower long-term capital gains rates.

How would this be accounted for for general accounting and taxes?  

I assume they collect a proration every month for property tax?

Did you have taxable income that could’ve been reduced utilizing tax strategies?

How much money, after expenses and taxes would he property make yearly?

I recommend that you look at Notice of Defaults, Vacants, Tax Liens or Probate. 

My duplex - built 1989, 2,060 sf, 2 bed/bath, 1 year old roof, value if I subdivide (county already approved) and sell each separately $150k each ($300k total)Investor duplex - built 1995, 2,300 sf, 2 bed/bath, 5 year old roof, value around $310kThe investors initial request was for an equal trade and they would pay realtor fees, which I replied wouldn't be equal due to buying/selling costs (recording fees, title insurance, closing fee, survey, inspections, loan fees, 1031 fees, accountant fees, repairs), taxes would increase due to new sale price, I'd trade a 3.75% mortgage for a higher one, and I'm on the 10th year of a 30 year loan so resetting that to a new loan would restart amortization and pay more towards interest.

Would the federal tax liability be $140k at year 5 for the sale, with long term capital gains (ignoring any Net Investment Income Tax)?

Great hosts will be good neighbors, will contribute to local tourism and will pay their taxes and permit fees* A major area to improve on the proposal is the 1 hour time-limit for resolving complaints.

You did purchase the property in one tax year and are selling it in another tax year which satisfies one of the court rulings.