To summarize, factually: an individual will have a SMLLC and an S Corp and this is self-rental. The SMLLC intends to be a lender to the sole proprietor, so the loan proceeds used to buy the partnership and the property all belong to the individual, and it's not part of the business operation. The sole proprietor intends to pay themselves interest, to allow both parties to claim it. And they're changing real estate interest to personal interest. The SMLLC is a lender to the S Corp. The fractions to the sole proprietor are the purchase of the rest of the S Corp, to buy out the partner, to shore up the S Corp, and to pay off the mortgage.

It seems this is all personal, including a loan from Shareholder? Are you maybe running the data in circles?