Selling 4 properties in 1 year tax man wants 54k

[Briley Roe]

okay guys, I have been flipping houses for 12 months. I have/ sold 4 properties in the lelast 4 months for a profit of 270k. My cpa is estimating around 50k in capital gains. What write offs/loopholes does anyone know of to help me in this situation. 1031 exchange is out of the question. I am wanting to use the money to pay off personnel debt. I have the cash to pay the tax man, but it will put me in a bad spot as far as having capital to continue my business.

Any advice would be great. I am still a full time w-2 employee w the fire dept. 

[Julius Vincent]

Hey@Briley Roe - Sounds like you've been busy. Nice work! Here are a few thoughts:

1. You're likely being taxed at ordinary income rates, not capital gains, since flipping is considered an active business. That could mean you're paying self-employment tax on top of federal and state income taxes. Your CPA might be calling it capital gains, but the IRS likely sees it as business income unless you held the properties long-term.

2. If you're flipping as a sole prop, you're getting hit with self-employment tax. An S Corp could help reduce that going forward by splitting salary and distributions. 

3. Make sure you're deducting everything...mileage, tools, subs, cell phone, home office, interest, even meals and travel if they're business related.