I can't show income, but my credit is in the 650s.

Will the profit be counted as self- employment income or long-term investment income?

With you, and not leading with taxes!

Their history of large rental income didn’t add anything to the value because you could buy the identical house across the street and do the same thing. 

The other thing to consider is the tax implications.

I've never had a tax sale turn out to be void, but it is my biggest fear with Alabama tax sale investing.

Hundreds of websites allow people to create fake paystubs, tax returns, W-2, bank account statements, and more.

With the 40,000 profit is there anything I can do to defer my tax?

This provides me some legal protection as well as tax benefits.It depends on the person, most small time investors should just put in their personal name as long as they qualify for conventional financing. 

I have also sent personal hand written letters to people who are listed on the tax records of properties that are vacant.