Thanks for your wise input Bob. Normally your guess would likely be the case. Here the tenants were third parties knowingly provided below market rents to assist them in various circumstances. The LLC's intention was to be profitable while in certain instances doing good for individuals within the community. A good thing but as with imputed interest the IRS sometimes sees things differently or perhaps closed a legitimate loophole to broadly. You points are helpful though. I think a case can be made for the value of quality tenants that care for a property and the fact they were unrelated might be a help in the event of scrutiny.