You have to pay taxes on ALL that profit, it doesn't matter what you intend to do with it later.What you're thinking of is something that only C-Corp or S-Corp companies can do, and involves dividing the company's profits up into salary, distributions, and retained earnings, which are taxed differently.Regarding investing in stocks and then pulling your money out of those to buy real estate, the tax man has already thought of that too.

I get that you can designate a salary and take distribution at a lower % bracket, but that's about all that's clear. 

We made assumptions about cost to stabilize the property and just assumed that us coming up with a reasonable capex escrow plus putting the positive cash flow back into improvements (vs. taking distributions) for as long as necessary would be good enough. 

Is the difference sufficient enough deriving from the Maximum allowable offer for the end buyer?

And, not for nothing, but I have the business basically structured as a pass-through entity so the point/goal is really to drain it through distributions, etc. annually.  

Following are the similarities and differences between the solo 401k and the self-directed IRA.The Self-Directed IRA and Solo 401k SimilaritiesBoth were created by congress for individuals to save for retirement;Both may be invested in alternative investments such as real estate, precious metals tax liens, promissory notes, private company shares, and stocks and mutual funds, to name a few;Both allow for Roth contributions;Both are subject to prohibited transaction rules;Both are subject to federal taxes at time of distribution;Both allow for checkbook control for placing alternative investments;Both may be invested in annuities;Both are protected from creditors;Both allow for nondeductible contributions; andBoth are prohibited from investing in assets listed under I.R.C. 408(m).The Self-Directed IRA and Solo 401k DifferencesIn order to open a solo 401k, self-employment, whether on a part-time or full-time basis, is required;To open a self-directed IRA, self-employment income is not required;In order to gain IRA checkbook control over the self-directed IRA funds, a limited liability company (IRA LLC) must be utilized;The solo 401k allows for checkbook control from the onset;The solo 401k allows for personal loan known as a solo 401k loan;It is prohibited to borrow from your IRA;The Solo 401k may be invested in life insurance;The self-directed IRA may not be invested in life insurance;The solo 401k allow for high contribution amounts (for 2017, the solo 401k contribution limit is $54,000, whereas the self-directed IRA contribution limit is $5,500);The solo 401k business owner can serve as trustee of the solo 401k;The self-directed IRA participant/owner may not serve as trustee or custodian of her IRA; instead, a trust company or bank institution is required;When distributions commence from the solo 401k a mandatory 20% of federal taxes must be withheld from each distribution and submitted electronically to the IRS by the 15th of the month following the date of each distribution;Rollovers and/or transfers from IRAs or qualified plans (e.g., former employer 401k) to a solo 401k are not reported on Form 5498, but rather on Form 5500-EZ, but only if the air market value of the solo 401k exceeds $250K as of the end of the plan year (generally 12/31);When funds are rolled over or transferred from an IRA or 401k to a self-directed IRA, the amount deposited into the self-directed IRA is reported on Form 5498 by the receiving self-directed IRA custodian by May of the year following the rollover/transfer.Rollovers (provided the 60 day rollover window is satisfied) from an IRA to a Solo 401k or self-directed IRA are reported on lines 15a and 15b of Form 1040;Pre-tax IRA contributions on reported on line 32 of Form 1040;Pre-tax solo 401k contributions are reported on line 28 of Form 1040;Roth solo 401k funds are subject to RMDs;A Roth 401k may be transferred to a Roth IRA (Note that from a planning perspective, it may be advantageous to transfer Roth Solo 401k funds to a Roth IRA before turning age 70 ½ in order to escape the Roth RMD requirement applicable to Roth 401k contributions including Roth Solo 401k contributions and earnings.)

Everything I've read from books indicates that income is treated different for appraisal purposes based on where it is derived.  

You need to know how the "waterfall" works with respect to distributions to you and the other partners, what liabilities you have for any debts the LLC incurs, what obligations you have, when and how financial information is provided, how key decisions are made by members, management authority and who has it and what it entails, how and when managers can be removed, hold periods for your investment, how additional capital calls work, etc. etc. etc.

And a corporation may retain the income, but it still pays federal taxes on it, and then when it is distributed to the shareholders, they pay tax on it AGAIN! 

How exactly will the profits be distributed?