This leads me to believe they found another apartment that was more appealing to them and have complete disregard for a signed lease.

Oh I apologize, I didn't see the other response or your answer to it so disregard my first reply. so if I understand this correctly then you are wanting  to take control of a home in default by making an offer to buy it subject to the existing mortgage and then you want to assign it as LO and you will use the option deposit form the TB  to bring the mortgage current and pay yourself too right?

Please disregard this post. 

I hate to be depressing but if a LLC is a single member it is usually disregarded, if you are managing your rental property as the manager, you again are liable.  

Stephanie, an additional tax concept to be aware of is the Step Transaction Doctrine, which says that intervening steps layered into a transaction to circumvent tax rules are disregarded.

Flipping (except in very rare circumstances) is self employment income and, with strong income for the last 2 years, you'd have no problem qualifying.While it's true that some mortgage brokers can and will qualify you with capital gains income, the fact of the matter is that capital gains, by its very nature, is considered to be transitory and unreliable income.The underlying issue is that your taxes are not being filed correctly and, in the event of an audit, you'll be writing some pretty large checks, possibly with some "intentional disregard" penalties.My advice:  Amend your last three years of tax returns to show the income correctly.  

This will take a lot of work and money, but you should easily be able to sell EACH side for more than a half million, considering your old (I say old because they don't really make 1-1s in Austin anymore) house is worth a quarter million.Again, the info you gave is limited, so if any of my assumptions are off, feel free to disregard, but most likely you are in a good position to significantly increase your net worth.

The relative maybe totally wrong, but I never disregard information on a subject that I am not familiar with. 

Simple, disregard the law and pay the fine.

Can I create 2 new disregarded LLCs and have the 1031 LLC that files as an S corp be the member of those LLCs or would that disqualify my 1031?