Is he just flipping houses as an investment or is he buying, and fixing, then selling. When preparing the tax return for a TP who buys and sells real estate, it is important for tax purposes to determine if the taxpayer is an investor in real estate or is operating a business that buys and sells real estate, and does it rise to IRC section 162, a trade or business is an activity conducted with continuity and regularity and has as its primary purpose earning income or making a profit. In determining whether or not an activity rises to the level of being a section 162 trade or business