You seem to be focused on cash flow based on the emphasis placed on the 10 Cap in your pos but you also describe the neighborhood as "shady" which I interpret to be a lower barrier/ at best "C" neighborhood.

However, the method of handling the 1099 income on the tax return may vary depending on the circumstances and interpretation of tax laws.The approach your CPA has taken, where each property is reported separately on Schedule E and then adjusted on a statement for property 3 to match the total 1099 income, could be viewed as a cautious approach to ensure compliance with IRS reporting requirements.

Even professionals find this topic very complex and challenging to interpret.

I agree that putting "scam" in the title (even with the question mark) was a bit hot-headed.My interpretation of James' position is that there is no opportunity for further diligence on validity of leases (specifically, if they have been paid historically). 

Here are sources to consider:For Schools: https://www.greatschools.org/For Crime: https://crimemapping.com/Crime stats can be difficult to interpret.

Tax season often leads to creative interpretations of what can be considered a deductible business expense.

Let me know if I interpreted your comment correctly.

But, prove me wrong with a specific code saying otherwise, and I'll bow down.Just because a law isn't super specific, doesn't mean some weird interpretation should be inferred. 

@Ashish D.There have been a lot of honest responses thus far and very fair for you to interpret.

They interpret the statutes and rules and provide a letter to the client stating the justification for the transaction and the risk of an adverse ruling.