They did an audit and found out I had a 1 inch meter instead of a 3/4 inch meter which requires a higher base charge per meter.

I told him I was going to do the above and report the $10k in cash I paid him to the IRS so he can endure an audit.  

In the meantime I've been utilizing any opportunity to learn about real estate, from working as an intern auditing apartment complexes to working as a leasing specialist learning how property management companies operate to make it a lot easier on me when I begin investing.

There doesn't appear to be an audit down the road after closing to make certain you are in compliance.  

Unfortunately we were in the middle of an ISO recertification audit when I got back from work, so the timing wasn’t good.

For most people in 1 property an LLC is not totally necessary, especially because you will be living on the property it may actually get you audited, because the IRS does not want people taking business deductions on their primary residences.

I used to be Managing Broker of 1150 agents and audited all the files and let me tell you, we are NOT all created equal!!!

The funny part was I sold the house and paid off the car loan 3 months later.To top this off the family member who loaned me the money was audited by the IRS !

As the majority of real estate owners do not have audited statements for their holdings it is not uncommon to rely  on either management prepared operating statements or tax returns.

Or does it just get accepted as a matter of course, and then they audit you later if they want to?