Two flips this year how to avoid self employment tax

[Rich Hupper]

Hi

I bought two properties this year and sold them for a profit. It is my understanding the profit from those flips will be treated as active income and subject to self employment tax. However I didn't even lift a finger to "flip" the property. All i did was buy the property and pay contractors for the work they did. All of my income this year was 1099 income from commissions except the two flips.

Are there any creative ways to avoid self employment tax on the flips by turning the profit from those flips into passive or portfolio income?

Thanks

[Dmitriy Fomichenko]

@Rich Hupper,

Consider establishing Solo 401k plan, which can allow you to shelter up to $55,000 of your income per year into a retirement account. You could double the amount you can shelter if you are married and get your wife involved in your business.