Cost of improvments and deductions
I am new to this forum and to rei. I have just purchased my first fixer and need advice on what to do. I want to be able to deduct the cost of every single nail, piece of wood and paint that I purchase to rehab this property. Do the materials purchased add on to the purchase price of the property? Do I need to establish a corporation? If so, what type if I will only be doing rehabing and will I need a business license.
Robert...... 
rholsti,
Generally speaking, your actual out-of-pocket rehab costs are added to your cost basis and are not deducted as expenses.
Your business entity question should be answered by your personal tax advisor, and CPA. These are the folks in the best position to give you advice on the business entity that would be best for you. General discussions on this question abound in the legal forum.
Whether or not you need a business license will have to be answered by your local taxing jurisdiction. For example, if you will be doing business within the city limits, then some municipal official will have to give you an answer to your question.