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IRS Red flags. There are also certain stuff you should not do destroy raise warning signs to IRS and you may get audited. First, do not report significantly rental income loss, there are plenty of expenses you will discover to decrease your pre-tax income. Second, do not over complicate your asset protection structure. Having too many business entities on top of each other, or having domicile headquarters in Las Vegas, NV, tax free state serves as a red a flag. Reporting losses for more than ye