A strategy you also could consider is house hopping/slow flip where you live in a property for 1 year to rent or 2 years to avoid capital gains tax and then sell.

Would love to hop on a call with you sometime if you'd like to discuss more in depth. 

By default, a single member LLC is a disregarded entity and a multi-member LLC is a partnership from the IRS' perspective. 

My question is, would the IRS see it as a successful exchange if I put what I make from the townhome towards my down payment to the owner?

Per the IRS instructions for form 1099-s it notes that this will typically be the contract sales price and "should not be reduced by expenses paid by the transferor, such as sales commissions, deed preparation, advertising, and legal expenses."

What income do you show as NET on 2018 2019 IRS? 

Home based PO box or your office.Get tax ID from the free IRS website.

IRS help documents state that you must file a 1099 for work performed that was more than $600.  

It can be so easy to hop all over the internet and learn bits and pieces.

You will be in the same situation again after another tenant or two.I recommend taking the depreciation amount remaining of the carpets life according to the IRS Publications.