What is worst is when they run out of time on their current hard money loan and are paying penalties/very high rates for going past the maturity date. 

Marry the house, date the rate!

Current lease term (expiration date, month-to-month)7.

As far as taxes, I suspect it will be much higher at some later date, as of now the appraised value for tax purposes is only at $1m or so.

The reg cited in your original post says (c)Payments to which subsection (a) applies(1)In generalExcept as provided in subsection (d), this section shall apply to any payment on account of the sale or exchange of property which constitutes part or all of the sales price and which is due more than 6 months after the date of such sale or exchange under a contract.Q1: Since we are not financing for more than 6 months, does the imputed interest component not apply?

In the JV agreement make sure there is a completion date and you still have an interest rate on the note.

I work backwards from “what do I want for cash flow per month and by what date” and what is a realistic return and does that get me there?

The option has two components: a price and a date.

I have literally told my previous accountant that, If my taxes aren’t done by X date I’m coming to pick up all my documents.  

Like many of my fellow Canadians and many Americans, when I think beach holiday, I think Mexico.