Now I'm more knowledgeable and can shop around.The Fed is looking to hire 87,000 new IRS agents and over half of all audits are on people making less than $70,000 a year. 

That's why contractors get audited ofter and usually fail.

. :) George,Landlords are not required to issue 1099s; however, I highly recommend it as an audit prevention measure.Before you write the check make sure they fill out the form. 

You would also need to have your books audited by an independent public accountant, and file a form D with the SEC electronically. 504 Reg D would be semi easier, but also a lower fundraising ceiling.Basically, in the SECs view, if you are a business entity (LLC, LP, C Corp, S Corp, etc) and you want to raise money by selling securities, even if it is only to 1 person, then you need to either register or operate under one of the registration exemptions.Good news is that would be worst case in terms of set up, and you would only need to do that if you were talking about more than a few investors, or if you wanted to grow the company by soliciting additional investments after the company was formed. 

I sense some financial impropriety.The question I have for the community is: Is there a Texas law that allows for me to get an audit of the material and labor costs?

We just went through an audit on a network marketing company my wife does and learned this the hard way.

Obviously I would prefer to list this income as other so it is not subject to a 15% Self employment tax, but I also don't want to expose my self to an Audit, and be found to have done something illegal.Some thoughts I had were, "are the scope of my LLC's activities so extensive as to rise to the stature of a trade or business?"

Do a lease audit and see what kind of tenant you have a check lease numbers against rent rolls and current P&l statement.For expenses there are rules of thumb for each category.

per week though and keep a log in case they audit you though.Also, if you can, perhaps rent out an extra bedroom in your own home.

You would make citizens spend 6.1 billion hours each year struggling to decipher the tax code to avoid penalties and audits.