Let's understand this part: "the improvements were reported as assets for depreciation."

Assets are something I invest into.

Depreciation is an allowance as consideration for the fact that the asset in use wears out over time.

You can Improve property and that part would Depreciate, such as, having a Rental and putting some improvements into the property for the renting of it, and then someone lives there as the tenant.

Assets you Improve, and then Sell, never depreciate, because you are not using them. That means they are not wearing out. Think of improving the property as the same as buying inventory = it is In Stock and available for sale, once it is done and ready for sale.

So...

Rental activity can have expenses of operation, can have Improvements that depreciate, and should have Rental Income.

Property being Flipped has almost no Expense in this activity, because all the funds expended are being Invested. The property For Sale that isn't occupied, means nothing is depreciating.

And the significant determination to make for Flipping =

Does this operation rise to the level of being a business for your client? Did they do this work, intending to do more, and they have done one or more in the past, and (for example) they did the work themselves, or did they act as a general contractor? When you have this as an operation with intent of profit, the Flipping is a Business = Schedule C, with income and expense. Expense for the Cost of the property sold against Income from the sale.

Or;

There is no intent to do it again and it's not something they do routinely or even on occasion. An example is a landlord buying a place for a good deal that looks like a profitable rental, fixing it for occupancy, and unexpectedly getting some ridiculous offer to buy it and that is a Capital Gain activity.