With that said, there is a de minimis election that allows you to expense any capital expenditures under $2,500 ($5,000 if your business has audited financials). 

If they don’t, it could raise a flag for an audit.  

It is required if the IRS audits you later on.

To minimize audit risk, it’s advisable to choose “Other interest” instead of “Mortgage interest” when reporting.Part 2: Forms 1099-INT from Investors to Private LendersForms 1099-INT Explained: Similar to the interest earned on savings accounts, Form 1099-INT outlines the interest that must be included in taxable income.

My thought is that if the IRS audits me, I'm perfectly capable of showing how "Joe Smith" paid my venmo $1K, I transferred it to my personal account, I also have a lease agreement identifying that $1K and Joe Smith's name.

assuming work completes after closing.In the event of an audit, is it a red flag if we claim an "improvement" after the closing date occurred?   

You need to be comfortable that the value of the real estate you report to the custodian will pass an IRS audit. 

When it comes to audit-sensitive areas like STR and REPS, I think the best bang for your buck is to pay someone to do it for you who has been doing it for years. 

Otherwise if the IRS sees a 1099 against an LLC's EIN but never know where that income flows into, they may request an audit?

Imagine she gets audited and it's determine basis was incorrectly calculated and she owes money.