This is why the easement 'investing' is typically based on VERY generous, if not fraudulent, appraisals - no one would ever actually pay what the appraiser is claiming.

For this rent value you'd want it to be something like $170k and lower OR have a much higher appreciation rate (which is akin to gambling and not investing since it is a bet on something happening in the future in order to make sense as an investment).Surely the NET rent is what is taxable. 

Do you really want to take that gamble in court? 

This is investing not gambling.

Factors Courts Consider in Piercing the Corporate Veil(see www.nolo.com/legal-encyclopedia/)There is no real separation between the company and its owners.The company's actions were wrongful or fraudulent.The company's creditors suffered an unjust cost.The most common factors that courts consider in determining whether to pierce the corporate veil are:whether the corporation or LLC engaged in fraudulent behaviorwhether the corporation or LLC failed to follow corporate formalities[A]whether the corporation or LLC was inadequately capitalized (if the corporation never had enough funds to operate, it was not really a separate entity that could stand on its own), andwhether one person or a small group of closely related people were in complete control of the corporation or LLC.Some corporations and LLCs are especially vulnerable when these factors are considered, simply because of their size and business practices.

Like pay with fraudulent funds then request a refund when they cancel?

Yeah, auctions in my opinion can be a little bit of a gamble and you only get the deals when someone doesn't show up to outbid you so you aren't controlling your lead flow.

He has receipts and a fraudulent lease.  

If so, is it just a gamble in hoping you don’t get caught?

Don't want to catch yourself gambling on a bet that wont pay out