Capital gain that keeps the taxpayer at or below the 15% tax bracket is taxed at 0%.  

If you buy it with the intent of fix and flipping it the profits are ordinary income, subject to income tax and SET. 

In that event, the LLC might be viewed as the taxpayer for the property even though it is deeded to your name.  

Is this short term cap gain or ordinary income with employment tax implications?

And now for my CONDO CONVERSION question: 1) I was just informed by my lawyer that if I do a condo conversion, then any gain from the sale is automatically taxed as ordinary income, regardless of how long I held it (because the IRS views the intent as a "flip").

I usually see it referred to as being a 25% rate, with no reference to what tax bracket the taxpayer is in.

If this is the case, then you will not get to use the net passive loss allowance to offset up to $25K other ordinary income with tax losses on your rental property.  

Income from fix and flips is ordinary income and subject to ordinary income tax and SET.

The ROI sucks, but at least I can sell and get my money back (but there might be a big tax payment due because of recapture, but the property will surely cash-flow after 20 years without the mortgage).

If your AGI is under 330k you will not see much impact from doing REP - using passive losses to offset ordinary income.