@Chris SeveneyRegarding the accounting/taxation of the fund - you want to make sure the accounting firm has the knowledge and capacity to take on the work.Does the accounting firm know answers the to the following questions.Do they specialize in partnership taxation -Do they know how a partnership return is impacted if there are foreign investors, tax exempt investors, individuals as investors, entities, etc.Do they know how to deal with the taxation of the operations - If this is a real estate fund - do they know the in and outs of 1031 exchanges, how different items are depreciated, 1250 property, 1245 property, bonus depreciation, section 179 expense, etcDoes the fund operate in multiple states - are they familiar with the various state tax laws.Will the fund allow composite return to be filed in behalf of its investors - does the firm know which states offer composite returns and in behalf of which entity types they can be offered for.etc etc etc

It has to do with understanding of real estate taxation - something your current CPA apparently lacks.

But as I had mentioned initially, preferably it would be great to avoid the taxation all together. 

You might get double taxation. 

It's my understanding that you cannot live in it, either the one you're selling or the new one, although there are rules where you can 1031 exchange but then years later, move in and convert it to a residence, although I don't know how that works for taxation purposes.  

We just have no clue how good we have it in the US vis a vi taxation.. 

@Pete KayYou may also be subject to the 3.8% net investment income tax which puts the tax at around 37.8%.You may want to look to seeing if you can invest the gains into a qualified opportunity fund.

Some of the other comments in the thread have me thinking that my CPA probably isn't on the up and up when it comes to real-estate taxation.

You open yourself up to more options if you are open to the idea.There are approximately 20 accountants on the bigger pockets message board that specialize in real estate taxation.

@Rob KoThe answer to this question depends on several factors - the general guideline is that you will not be faced with double taxation at the state level.