I have private money investors but don't want to go to jail

[Shaun Futch]

I have friends and family willing to invest $100,000 each in private funding for me to buy rental cash-flow properties however I don't know how to set up the money transaction in a way that pleases Uncle Sam. They certainly can't "gift" me that much money. Is there a cookie cutter form or contract that sets up the private finance deal and tax requirements? Do I need to just set up an LLC with them as a 50% owner and just have money flow that way? or am I heading in completely the wrong direction?