I'd pay close attention to how community groups are lobbying and factor in potential regulations or additional taxation into any profitability model.Research what happened in Anaheim, Santa Monica and understand the risks of going into this sort of business.

Hello,We are in talks to buy a portfolio of rentals from an individual who's spouse recently passed away. They are considering doing owner financing and we have been talking about possible benefits or drawback for eac...

Over the years I have been told that if I were to sell a "High Volume" of parcels the IRS would deem me to be a dealer and profits on parcels held for a year or more would lose their Long Term Capital Gain taxation benefit and be taxed as ordinary income.  

I'm thinking about converting to a full corporation but I'm not thrilled about all the filings and double taxation.

He is a CPA and holds a Masters in taxation. 

That could potentially expose you to liability on a personal level (That should answer Question #2)I'm not even sure you need and LLC, if not for protection (Since most LLC's are flow-thru taxation entities (unless you elect to be taxed as a corporation)I would suggest to form and LLC if you plan to use it for liability protection.

A "S' corp is another method, similar but allows the single taxation despite being a corp.

Because the IRS knows the LLC is wholly owned by a tax-exempt IRA, they will not expect such income to show up on a tax return.Income that is passive in nature such as rent from real property, interest, dividends and royalties will be exempt from taxes under the umbrella of the IRA.There are, however, two types of activities that can expose the IRA to trust taxation as Steven indicates.  

And then use retirement funds to purchase other passive income producing assets such as trust deeds and shelter that income from taxation. 

We want to maximize her ownership % so that more of the room rental stays in her pocket instead of ours ( we would just pay tax at a much higher rate and end up giving it back to her).