I have faced this for many years and has not been an issue (yet), and survived the scrutiny of an audit.

I work in audit, so I do all the due diligence before the tax work is done.

Not a CPA or tax professional.I’ve never audited every single line item of my S-Corp tax returns for over 18 years, and I’m truly curious why it really matters in one years instance, what corporate account was used to conduct business, as long as the financial information is accurate and correctly reported from said dedicated business account.This should be a separate issue from proper and legally correct business operations, ie a checking account with correct tax ID, no outside commingling of funds with self or other business entity.

IT was a guy who was a sailor of some kind I believe, and he had witnesses attest to his hard work that allowed him to challenge the audit result successfully.

The filthy rich do that in remote areas and go through a company that is very experienced in doing that because it is also one of the most audited things by the IRS.

Many do not qualify and having a PM does not help your case.You may want to read up on IRC 469 and review the IRS's Audit Technique guide. https://www.irs.gov/pub/irs-mssp/pal.pdf

Under audit, if you don't have the time log for you and everyone else you will not be able to claim these losses. 

I was recently flagged for tax audit, and one of the asks was to show all hours spent on real estate.

We just don't want our clients to face issues if they were ever audited and I'm giving you the same advice! 

All you would need to say really is that you materially participated in the business during the tax year and just be prepared in the case of an audit/IRS notice.