Is anyone aware of an instance where this arrangement was overturned?

You might find yourself creating a situation that looks okay on paper but gets overturned in an audit because it lacked economic substance (substance over form).The IRS would likely challenge the use of multiple entities and an ESOP.Once upon a time you could donate a property to the fire department to burn down, take the donation and essentially have a property that was demoed and ready to rebuild.The bottom line is that many of the choices that might have changed the outcome today have already been made.

This will change my return on equity from 37% down to 29% using Dupont's ROE.

I initially had the mentality of using leverage to pick up as many properties as possible to maximize ROI and ROE.

There will be a ROE versus cash flow tradeoff here and I agree that Frank's book specified above is a good place to start.

I think that ROE is more important than ROI (E is for equity).

So many of the dumb laws like SLC's mandatory inspection have been overturned by their good work.

Even though you no longer have a mortgage payment by paying it off, I feel that increasing your portfolio every few years by pulling out equity so that your ROE stays above 10% is the best way to reach financial freedom.

The party who joined title in the QCD could bring a challenge but most likely they will simply be afforded their legal right of redemption and will not likely be able to stay the action or overturn a ruling to the same.  

Judges take a very, very close look at transactions with elderly people and even if your deal is reasonable it can be overturned in the end.