Tax Implications of Deal

[Kody King]

Here is the deal: 

Father in law is selling me a rental property that he has owned for 25 years. I think he originally purchased the home for 35K. The home recently flooded and lost a significant amount of value while he owned it. I offered to buy it for 20K . I'm rehabbing the property and would like to either flip it or rent out. The ARV will be around 85K after I put about 45K into it.

My question is in regards to the best way to structure the deal from a tax perspective? Should he simply sell me the property for 20K or should we do some type of partnership structure to lessen the tax burden? Any thoughts would be appreciated.