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

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

I am a tax accountant and Enrolled Agent licensed to represent taxpayers before the IRS.

Rehab projects are not considered capital assets (investments), so they are taxed as ordinary income, not capital gains.

I represent taxpayers before the IRS.

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.  

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").

You'll need to take the tax payment, pay it, get the lien release, record it, etc.

Rather than being an insidious tax, UBIT is a long standing means to protect tax-paying businesses from unfair competition. 

To have a successful 100% tax deferred exchange there are a number of requirements the taxpayer must follow.