Sch E Rental Property

[AnmarieA]

I have a taxpayer who purchased in April 2024 foreclosed property with a 50% partner. The intent of the property was to fix up and flip initially. The title to the property was only put in the name of one partner (not my client). 100% of the debt was acquired by my client and her name is the only person on mortgage as she used her personal residence as collateral. The bank knew she was purchasing this foreclosed property however the debt only references her primary residence. Her partner wants only her to report 100% of the rental income and expense on her tax return and when they sell the house by the end of 2025 they will split the proceeds accordingly.  On her tax filing I will show the loss on the rental property as passive and she will obtain no tax benefit in the 2024 filing. The partners are using one bank account to collect rent and pay the monthly mortgage and expenses to track all the activity for this property. 

The partners signed an agreement stating they are 50% partners in the purchase despite what is on the title and loan agreements. My question is, does this treatment of reporting 100% of the rental income and expense on my client's tax filing cause an issue at the time they sell the property? The 1099-S when the property is sold will not be in my client's name which I am not certain makes a difference. 

Any feedback on if the treatment is allowable for tax purposes would be greatly appreciated.