You give the vendor the completed 1099 and you report it also to the IRS in your tax filing.

He is also wondering if the taxes would be less if he just sells the property outright.

Running the numbers includes calculating the ARV, and estimating the following: rehab costs, closing costs (I use 10% of ARV, that will cover a buyers and sellers commission at 3% each and 2% closing costs on each of the buy and sale), funding costs, staging costs, insurance cost, property taxes while you own it, utilities while you own it  Other tips:Stage every house you flip unless we get back to a stupid market like we had two years ago where you got 20 offers on the first weekend at $50k over ask with no inspection contingencies.

STR is a great way increase rental income and even access some substantial tax benefits. 

This approach would not yield significant immediate cash flow but could lead to equity growth, tax deductions, and property appreciation over time.

If you qualify, it is a nice option.In the IRA format, you need to start with an IRA held by a non-traditional custodian, then have the IRA make a single investment into either an LLC or Trust to obtain checkbook control over the IRA.There are a few firms that specialize in establishing a checkbook IRA trust.If you are investing in non-liability risk assets like funds and syndications, there is a clear advantage to the trust as it is not considered a business and therefore not under the purview of the CA Franchise Tax Board.If you will be investing in rental property, the limited liability protections offered by a LLC may outweigh the cost and headache of California filings. 

I figure the single-family strategy will have more advantageous tax benefits to flipping, and I can flip it more quickly, possibly in just a year and a half.

Relationships with licensed trades may be limited due to a lack of experience, and familiarity with things like permitting, property management, and short-term occupancy taxes could be a hinderance.

Tax compliance: Keeping good records of your income and expenses will make it much easier to file your taxes accurately.

We have a small fee for registering and the city (247 people) implemented a 1% tax in order to do some improvements.