Whether or not the LLC is in the business of making loans depends on the facts and circumstances of your specific situation. 

Speak to your tax or legal advisor about your specific circumstances. 

Even if it takes ten years to complete the flip, the acquisition date is always in the same year as the sale.Consult a licensed tax professional for specific guidance as it may relate to your unique circumstances.  

A much shorter holding period has been accepted, where a change in circumstances indicates that the taxpayer had intended to hold the property for a longer period.

Yes, you'd be taking way less than you would/should under regular circumstances but it could payoff dividends in the future.

Universal practice OR depends on circumstances?

Even if there was a way to rent out an 'illegal' apartment, I absolutely under no circumstance would with the strong pro-tenant laws Massachusetts has. 

Lender won't want to hear excuses about weather or other circumstances,,,,, so ensure you take into account everything that could effect your performance.

I'm really considering fianancing at least 65% LTV , so that I will in fact have cash readily available invade of any unforeseen issues.

Maybe I am overreacting to the dear that the house-flipping shows make it look too easy, and assuming everything on that site will come with unforeseen liens, an eviction, and a major renovation.