A Dealer buys and sells real estate as relatively quick transactions (also known as "flipping"). The Dealer counts in the eyes of the IRS as a self-employed individual, with the appropriate tax responsibilities, in addition to having to realize the entire gain immediately upon sale of a property.
A Developer buys and changes the use of the property. The biggest tax implication is that the Developer has to capitalize the expenses (direct and indirect) involved in developing the property, and then apply those expenses upon the sale or use of the property.
A Professional deals with real estate the majority of his/her working time and owns 5% or more of his/her business. As a Professional, you can "take a full deduction for any real estate losses against your other income."
Rather confusing, I think. But that’s why I would suggest you: A) Read the original article, and B) Consult your tax accountant.
(Thanks to Urban Trekker Blog for bringing this article to my attention.)