AdamFull disclosure: I have no affiliation, or interest, in any guru program, scheme, flim-flam, scam, arrangement, system, organization, conspiracy, swindle, hoodwink or hi-jinks.

If your American investment experience is based on flyover turn key schemes you do not have a good representation of US real estate investing.

A lot of miniature ponzi schemes start out that way.  

This rent collection and payment scheme is the perfect Ponzi scheme.  

@Richard JumonvilleRegarding your original questions: Brian is correct, this type of pre-conceived quid-pro-quo is called a "step" or "linked" transaction by the IRS, because it is nothing more than a scheme to avoid an otherwise prohibited transaction and will be treated as such. 

In the Grand Scheme of Social Engineering that certainly did NOT work out too well did it ?

There is a variety of civil penalties that can be assessed based on the facts and circumstances of a particular tax scheme.

The RE divisions in most every state will just look at this as selling RE without a license.. and however the wholesaler flipper wants to couch it will be deemed just a scheme to avert the licensing laws...

Account Closed, if it were me I would go ahead and get it done because it doesn't cost much in the scheme of things and could save you thousands. 

Stinson,In the bigger scheme of things 439 mailings is an insignificant number.