One issue came up and need your help:The stabilized value will be $20M Debt: $12MI was going to raise $4M for 50% and keep the other 50% (I really like the space-great credit tenant-I pushed hard to get 4.5% increase - newer built-best location etc.)TAX issue: My basis in the asset is closer to $5M (50%=2.5M) when raising $4M for 50%, how can I structure to not incur a taxable event?

Partnerships by definition have two or more partners.Maybe you have a single-member LLC.However,Transfers to an LLC or a limited partnership is generally non taxable event. 

I guess I would self-manage and basically just not count any of my managing as an expense when reporting my business taxes (thus increasing my total taxable income but not having to pay SS/Med tax)But then what happens if I don't pay a med/ss tax for the next 40 years of my life?

And stepping outside that box is a risky thing these days.So you'll need to watch out for that as well as the extra level of protections necessary to secure the property for you and either provide a profit incentive to the unrelated party or protect them from a taxable event.

Is the sale of the 1st note for 62k taxable? 

Execute the business portion sale now (you can't 1031 any of it so whatever is taxable is gonna be taxable). 

Although I haven't decided to hold these properties indefinitely, there isn't really a reason I can't just let them pass through my estate and then under current law all the taxable gain goes away and no significant transactions cost are incurred.

If so, then contributing to 401k probably makes sense.If not, then 401k may not make much sense for you (unless it's a Roth 401k, but you didn't mention it, so I'll assume we're talking about a traditional 401k)Sidebar: Assume that all of your retirement income will be fully taxable. 

We can track our taxable income vs. our cash flow monthly.

Also, if either of us wanted to transfer full ownership to one of us later on, will that result in a taxable transaction?