That would make up half ($900) of the income shortfall ($1800).My lender's recommendation is that I amend my 2012 tax return to represent as income the three months I paid to the seller and pay the additional taxes on that amount (a negligible $383), as well as pay off a car loan ($6000 outstanding balance at 0.5%, that is free money I would rather NOT pay off with investment reserves).

I received the amended paper work signed it and sent it to the sellers lawyer.

At that time you can sign it as is, refuse to sign it at all and go elsewhere, or modify the agreement with what you want and negotiate with the brokerage and then sign an amended agreement.If the brokerage has an early cancellation damage clause and you signed it you will be hard pressed to recover anything from them.

When the delays on title became evident (which is really the SELLER'S problem), you should have amended your contract to give you time to deal with resolving these problems.

Perhaps you want to consider amending your returns and reporting the income as ordinary income.

You might consider a joint venture partner and requesting the short sale bank to amend the contract from your company name to your company name "and" the name of your joint venture partner. 

Build in the contingencies to your operations so that you don't need to amend Articles and Operating Agreements later on. 

If you're feeling the need for even more regulation, note that you should also (or rather) get your contractor license if you intend to Flip - if you're also brave enough to try and grab up a property worth the hassle. " Washington House Bill SBH 1843 (amending RCW 18.27) provides, in part, that if a person or entity buys residential real property and intends to renovate it and sell it for a profit and further will be reselling it within 12 months of purchase and, finally, plans to spend more than $500 in renovations, the investor, or their entity, must be a licensed Washington general contractor. " I sure wouldn't want to rip anyone off.

Leases, amendments, modificationsCurrent or future lease concessionsSecurity depositsCurrent occupancy - Physical or Economic??

You may be able to make an amendment to late fees, but would only be if they agree.