Just like if your accountant does your taxes, there is no way the IRS will ever audit you and find you out of compliance. 

But the norm if it's audited is to assume that the 1031 was flawed. 

Entities are mainly used for asset protection.However, some would argue that by structuring you will lower your chances of having an audit of your taxes due to the lower ratio of audit for entities compared to claiming it directly in your 1040.If you are using a multi members LLC taxed as a partnership, this LLC will only file an informational tax return (1065) and each member will pay the taxes on their own tax return, based on the K1 that the LLC provided them.

The problem for you is that when you get audited, you will need to explain to the IRS where the $4500 each month came from.

Some people disregard these rules, but that id tax fraud if you are audited.

She said if I did not report the sales on my end of year business return, I could be audited since they check sale tax returns against tax returns.  

I performed an HOA audit, if you will, by counting all the absentee owner houses.

The worst would be an audit and loss of the exchange - pay the tax and pay some interest. 

Maybe some owners are looking to sell.http://www.wave3.com/2018/09/18/audit-reveals-problems-section-housing-louisville/

During your due diligence you'll want to back up the financials with one year's utility bills, copies of the service contracts, and a lease-file audit (comparing the leases to the rent roll).