I have a question about how to treat a tax issue for a house flipping client. I have a client with a partnership that flips houses. It’s just him and his sister. He does the work and she only contributes cash. I know for my client he is considered a dealer and all income is ordinary. But what about his sister? Will her portion of the income be considered ordinary or it’s ok to assume her income is passive? I read a lot about this but I’m still a little confused. I read that all income from flipping houses should be ordinary and people that flip houses are all considered dealers. But what about the sister? Is she an investor or a dealer?

 

Thank you in advance for your help,

Anastasia