I then asked the date of their last audit by the custodian. 

In general, smaller buildings in NYC are difficult to manage as they entail a slew of services (rent collection, bookkeeping, maintenance visits, tenant disputes, leasing, local law compliance, payroll, insurance, insurance audits, etc.) that aren't cost effective for the owner of a small building, and the fees aren't enticing enough to afford the best talent in property management space.

If you are audited, you may be requested to show that you’ve been renting the correct percentage of the new property.

My EA for my Audit says unless expenses for looking at an investment turn into an actual investment, the IRS does not consider them an expense.   

I've heard of audit cases from the California Dept of RE to ensure PM's, but yeah, the insurance seems steep so I wouldn't be surprised if they didn't have insurance.All that aside, ridiculous that they're suing both.

When properly established and utilized, a self-directed IRA or Solo 401(k) should not have any issues in the event of an IRS audit.  

I think that's going to be a tough sell to the IRS at audit.As for documentation - I've not yet represented anyone at audit where the IRS questioned the date placed in service.

So, you really need to do your due diligence in finding a mortgage broker/RMLO.Get references, then see if those references have any relationship with the LO,Look to their last state audit and compliance exam, if they never had a compliance exam, move on.Do they have the net worth to buy, at par, any loan they do that is non-compliant?

I was always impartial to having them.

Then, when you get audited you find out that the problem is an underlying matter that you failed to disclose (not knowing) when you got assistance and the IRS has no liability in giving you that assistance.