That way you have numbers and an expert opinion to back up your allocation in the unlikely event of an audit. 

Keeps people from taking your public advice and applying it incorrectly themselves.My experience has been that absolutely nothing - not even prior IRS audits - can keep investors from DIY-ing tax strategies incorrectly. :)

It is neither an audit risk nor you cheating IRS.

*Full disclosure not a CPA*Certain conditions need to be met but offsetting your capital gain from the disposition of your interest against passive activity losses seem plausible.Pg 79/154 from IRS Audit Guide:"Passive losses are generally deductible only to the extent of passive income. 

What caught my ear was audits and W2.So, my approach would be to have a back up if your CPA/Enrolled Agent or Attorney says it's okay to do as you've laid out.

Originally posted by "**********":There is two other alternatives besides FHA short refi,or short refi with your bank.A) An audit of your loans looking for any hint of bank boo boo's, a real shot in the dark, especially since your loans were not sub prime or Alt-A.B) Deed in Lieu - Could save your credit and NO deficiency if done correctly.Have a safe and productive trip.A) I am not sure if it was Sub-Prime.

The closing douments and contract as well as all other related documents must match for an audit trial.

This will look like a salary and you will chance an audit.

That inspection of work/billing verification will provide a very nice paper trail and documentation if ever required in an audit.

This way I have a paper trail proving where the funds were used if ever audited.