Worst case the irs says he should have charged interest and he owes $20-30 in taxes. 

Seller financing still implies a transaction and therefore a tax event.

Every day I wake up to look at Google News and there is at least one article about Foreclosure, or Fixed Income Tenant can't stay where they have been from before the Covid or the Widow who has lived in the 2/1 house for 50 years cannot pay the increases in Property Tax, Home Owner's Insurance, Lights, Water and everything else.

I plan on reinvesting the profits into another new construction, so I'm wondering if I can do a 1031 to avoid paying the capital gains tax.  

@Michael Shea I'm not a tax accountant, but I've done the rent by room strategy for over 6 years as a house hacker, and I've recognized rent by room tenants rents in the Schedule E part of the tax return.

Did you know about various tax credits available for real estate?

Think of it like the escrows you likely pay your mortgage servicer for Insurance and Taxes, or your estimated taxes to IRS.  

Also taxes are to be considered.

Tax BenefitsIf you are down one but up the other three, it can make sense.

Our current focus is working on 1-4 unit fix and flips, but eventually work towards being able to refinance properties and keep and cash flow them.My question is  tailored on the the way I should structure our relationship for the legal and tax base purposes.Should I secure the deals under my business and pay my partner out of my business operating account?