Secondly, if major work was done, e.g. adding a bathroom, and not properly permitted, it's not legal and the town could make you rip it out and start all over.

For example, if you are working with an attorney and they're providing legal advice it's best to not use that individual as your QI.

Now, In fact, she claims the additional work was not agreed upon because I did not provide her with a cost, then she said I overcharged her for the additional work, now she is claiming  she never agreed or excepted the original estimate.I have time to file a lien, and I will be required to file a suit against her, however, this is a tax question, not a legal question. 

Each “child” series is treated as its own entity legally, but they all operate under one EIN and you can operate them under the same bank account when you do the bookkeeping correctly.

I pointed that out, he knocked off a good chunk of money, I bought it with the intent to make it a legal triplex.   

Just started learning about the tax and legal benefits of RE investing.

@Bryan Williamson A disclaimer first: I am no attorney or financial expert/consultant, so please don't take my response as legal advice or indication that you should act in one way or the other.Now to answer your question: this question have been debated a loooooooooottttttt in BP.

I haven’t done this so I do not know the legalities.

Most have not been vetted by anyone and there's no guarantee they'd be legal in your state or for your specific situation (or anyone's really). 

Everything I've read and/or researched points me away from this conversion, but I do not think I can legally make it an additional bedroom due to the size and set up.