Investing with mother in law

[Weasel Whisler]

I purchased my 4th deal in the last two years in Dec. A 3/2 I picked up for $200k my realtor told me I could sell for $295 after rehab.  

This was my first flip, my previous 3 other deals we're rentals with light rehab.

After 3 months and $30k in rehab and nights and weekend work, it went on the market. After 4 weeks on the MLS, not one viewing. My realtor now says it's $20k over priced. But at $295k, my profit would only have been $25k. So if I sell for $275k I wouldn't make much.

I owe $170k to the bank with 6.5% interest.  My MIL has 150k in cash she is willing to give me. I'll have to use another $20k to pay off the bank.

I just found a family to rent at $1850/month. My monthly payment is $1500.

What is a fair way to structure a deal with my MIL and how do I pay off the mortgage with the bank and not have to pay the IRS for the $ sent from MIL?