Splitting Profits in House Flipping

[Gale Waldron]

I am relatively new to house flipping. Three of us (friends) put our money together to invest in properties to flip (3 last year). I am concerned with keeping good income tax records and while the other two investor friends are paying their taxes due, they have a cost basis method they use to report their part of the income from the flipping of the properties. I am with the understanding that we all should be using a schedule k1 form, but I am not sure. We do not have a real business, rather we have verbal agreements as we all know and trust each other. Is there more than one way to correctly report our part of the income on a property flip?  We live in Florida. Thank you.