That cost is the commission paid to the agent selling the product, the profit to the insurance company issuing the policy/product, and the outside costs for administering the product such as accounting fees, auditing, etc.  

I'm a CPA myself (audit side) who moved into private industry in 2010.

@Thomas LebensAttorney fees -$15-$25kThis includes a PPM, subscription agreement and operating agreement.Does not include LLC formation506b- add $10-$15k per year for audited financialsWebsite - assume you have oneInvestor portal - $7-15k per yearTax returns -$5k yearlyFundraising - if you don’t have connections and need to market to raise money assume an client acquisition cost of around $5-6k for every raise of $50,000

I was audited and IRS said I owed them high 6 figures in taxes for 79 and 80.

The IRS trusts you until they decide to audit you, they have no way of knowing your exact expenses, but don't make expenses up or in the words of Liam NeesonThey will look for you...They will find you...and they will.....

Or some other value that you could justify to the IRS if audited.2. 

)Their accountants give them a detailed form to log the hours to hopefully stand up to an audit if one occurs.It's true NNN is mostly passive so really can only count maybe a few hours a year toward that.

Otherwise, don't worry about it.2) reduction in audit risk.

Audit any agreements you have that go off of a calendar year?

And if the buyer did the same, with a separate valuation for the same property, doesn't that increase audit risk, since a seller is stating carpet was worth nothing, or minimal, and the buyer wants the carpet worth as much as possible, to write it off?