Forgot to mention the trip is tax deductible.

Yes, that's definitely against the rules and yes penalties can be levied.

(Note: I have also built in that they will be deducted if their work site on a job is not cleaned up.

Any gain is taxed at your normal tax rate to recapture depreciation you have taken as a deduction on the house, and as a capital gain thereafter.Basically, a 1031 exchange is just a tax strategy which allows for deferred taxes.

yes but you can also deduct that $54k from your income.  

However, there are things you can do to minimize and deduct from your tax liability.

Contractor paid the deductible on my builders risk policy to get the work redone. 

If your tax returns show the net income (after deductions) you need to qualify and everything else on your loan application looks good, it should be easy to get the loan funded. 

But still, interest is returned back to your account,  so trying to deduct it on your taxes seems sketchy.  

Dee, since Solo 401k plan is a tax-deferred retirement account, it does not affect your personal tax return, there are no depreciation deduction and you all income and gains are sheltered from taxes.