Why didn't J Scott estimate for any flipping Capital Gains tax?

[Parker Steele]

I'm reading J Scott's The Book on Flipping Houses, which is full of great information, but he leaves out Capital Gains tax from the Rehab Analysis Worksheet. Not only that, but there is no mention of it in the entire book. My understanding, assuming you've owned the property for under 2 years, is that you're taxed on the profit - sales price, minus renovations, commissions, closing costs and fee, original purchase price. 

Are there any CPA's or flippers who can offer advice from experience? Also, what are the tax implications if you're treating each property as an LLC via an S-corp? Which entity ends up paying the tax?

Thanks! 

[Scott Hawley]

Teri S. that isn’t how it works. If you buy a 100k house in December, you do not show a 100k expense on your taxes to offset 100k in gains that year.

When doing your taxes, you have to list the assets as inventory. You would have a small loss for the expense of the closing costs, but the expense of the house would just be inventory that you carry into the next year.

I hope that helps! I’m not a CPA, but I get advice from a great one. If the above is confusing, please seek one out.