All of my negotiators recommend a deal after an exhaustive financial analysis and after verifying that all the requirements of a short sale are met (Like being listed with an agent, executing a 4506T, providing a hardship letter, bank statements, tax returns, Arms Length affidavit, budget, etc..) and then signing off and verifying all of the requirements are met so that when its all done, a subsequent audit from an outside entity or regulatory agent will confirm that it was done properly and NOT just because some talented negotiator thinks it should have been done.

It's worth it to me because I get to avoid filing a Schedule E which are heavily audited.

I'd probably start with seeing if you could find a commercial general liability that would cover all aspects of your businesses, if that's obtainable, then you won't be paying insurances "per job" so to speak, and the rating factors (gross revenue/payroll) would be fine because you won't be getting audited on something that you didn't use.

The bottom line is this: if you get audited and present this article to the IRS as to why you did what you did - it will have no significant whatsoever.

But so many are talking about "flipping" these days and I think there is legitimate concern when an investor is using this vocabulary that even if they hold over a year there is a risk of them being perceived as dealers not holding property for productive use.As with most everything these days, due to the relatively few number of audits there isn't a great bank of case law yet on "flippers" who hold property over a year.  

Bassett, CPAThe IRS audit rate has tripled since 2008 for some types of tax returns.

The partnership/LLC has most likely held the property long term as an investment, but once you drop out of the partnership/LLC and into tenant in common ownership and perform the exchange, there is a good chance the California Franchise Tax Board could audit you and disallow the exchange. 

Unless you have personal friends with no financial stake that are using only that programs ideas to find auditable success I'd pass.

You will be sorry if you dont and the IRS audits your return.

Has anyone been audited by the Employment Development Department / DE 231TA?