@Jeffrey McintyreThe IRS/Court cases have listed several methods determining the cost between building and land.As Long as you use one of the methods and document it; you should be fine.I do see many accountants just allocating a random figure between land and building across all their clients.

Jenny Chung,To add to Will Barnard's post, if there is a trust issue from the wholesaler to you, then just have the escrow party (i.e. title company, attorney, etc.) disburse a check to the wholesaler directly, this way your hands are clean and he doesn't feel the same apprehensions you have.All you would have to do is create a simple disbursement or allocation of funds letter and this will give the escrow company the written authority to disburse a check direct to any party you desire.If the wholesaler is adamant about receiving funds up upfront, then it is a scam. 

Achieving (more importantly justifying) Qualified Real Estate Professional status is doable but complex and you’re going to need your own property in order to justify having annually spending that amount of hours (it is highly unlikely that any QREP audit would hold water based on you (or non W2/1099 income spouse) allocating the required hours on someone else’s passive deal).

I'm hoping investors allocate some of the resources and energy spent hiding in the cloaks of secrecy on being a good real estate operator who avoids claims from arising in the first place as opposed to falsely believing you have greater protection. 

I just don't know how to allocate it.

See below for how to do that.Step 4: Deduct as Schedule E rental expenses the allocable mortgage interest and property taxes from Step 3.Step 5: If there’s any net rental income left after Step 4, deduct as rental costs allocable indirect expenses — maintenance, utilities, association fees, insurance, depreciation and so forth on Schedule E — but only to the point where you zero out rental income.

By centralizing funds through a holding company and allocating them strategically within my portfolio, I can optimize its overall performance.Moreover, leveraging the tax advantages of this arrangement can significantly simplify matters and yield greater benefits.

The primary residence unit does not qualify, so the purchase price must be allocated between investment and personal use.

Many lenders have brutal release fees to break up a blanket loan these days; many are 125% of the allocated principal balance.  

But they will allocate their proceeds so that equity is concentrated in one of the replacement properties.