Generally, you would report in the Schedule C if your income was related to activity that is generating ordinary income (such as Flips).Unless your income (AGI) is greater than 150k, you should have been able to deduct the Losses from your rental activity.

(rehab of 138 units that flooded in Spring, TX) Every ounce of profit we had was dumped into our property.

This would be flip, with an ARV of 225k ...... estimated rehab 50k, missing out on +50k profit ..... so its a good winner, want to fight this out.Any advice, stories of this happening?    

That could wipe out any profits.

No doubt, this property will generate great return. 18%ROI - We bought it for 32k+17k Reno; all in for $49k... in a very desirable neighborhood.

Just because it sold for 35 means nothing.  35k + 25k rehab + 10k profit to TK company = 70k

Great 4 bedroom 2 bath family home that we sold for a great profit.

After expenses, which included a special HOA assessment and a month's rent to my agent, 24 payments of $1595 ($38k) left ~$12k in rental profit.

Currently own one duplex which we lived in for a while, but are now renting both units with a nice monthly profit. 

The profits would then get re-invested into the next home and continue the trend until I am able to able to build the next home with the profits that were made from previous sales.