It might be able to be done without even losing a bedroom, but even if it goes from 4 bed 2 bath to a unit with 2/1 and a 1/1 unit, the rental income (or sale price) should be higher than a 4/2 SFR in the area.That said I'm not sure if there's something I may be overlooking.It already has 2 exterior doors positioned nicely with separate porches and room to have cars parked on different sides of the house (it's on a street corner).I looked up the zoning regs for how the plot is classified and it is allowed by right (don't need to apply special allowances or rezoning) to have multi-family housing on the plot.The rehab would already have it gutted enough that the changes to plumbing and electrical would be easier.I don't have any idea how hard it is to get separate metering for water/gas/electric. 

My apologies - I didn't mean to be so abrupt and short with my answer but honestly, the email you received just hit a chord with me.Imagine a gas station sending you an SMS telling you that they would no longer sell gas to you if you don't start driving more.

For feelings of dread I have also heard of that being a gas leak situation, so there are multiple options depending on what the tenant wants to do and what you are willing to do for them.

People expect a gas or charcoal grill too. 

Everything cost money in this business from gas to ink for your printer. 

A flip is a business, so it is subject to ordinary income tax.The IRS does not care if you buy a house, improve it and resell it or you buy bread, mustard and lunch meat and make sandwiches - to them it is the exact same business model.You can search the vast number of writings I've done on this subject on Bigger Pockets.I agree with your CPA in all aspects and here is why.Running it through an LLC:  If this project comes in at a loss, how is your investor going to prove out their share of a loss or report it? 

Found a 4-plex in residential area (population <3,000) about 45 minutes away.Purchase Price: $92,000 (MLS) Bank Appraisal: $99,000 (appraised "sale" value)Mortgage: 20% Down, 5/15 ARM (self-employed, first mortgage)Rent Roll: Full occupancy = $2,050/mo; currently = $1,630/mo (3 units with long-term tenants, studio unit vacant)Roof: No leaks but needs shingles in 1-3 yearsHVAC: One gas boiler, hydronic/radiant heat and hot water; no ACOther: 2500 square feet. 

Electricity and gas varies month to month, so why would you mix that in with the rent unless they are being charged a flat fee every month. 

Close to getting final approval, about 4 revisions, involving architect, civil engineer, arborist, gas line designer, and some other folks.

I am currently a full-time engineer with an oil and gas company in Corpus Christi, TX.