The average ALF I was involved with had two lawsuits pending that were filed by relatives on behalf of their parents and lawsuits filed by workers for injuries, overtime pay, improper payroll classification, for not paying taxes and for not paying worker compensation insurance.9) LABOR COSTS - If you go small-time with only one or two residents you will still not make enough money to make the business worth watching over elderly persons 24/7, cooking their meals, bathing them interviewing for new residents and paying the mortgage and costs to start the business When you run a larger facility you have to hire workers and now you are in a vicious circle spinning faster and faster and spiraling out of control.

Therefore it might be the case that these administrative entities (which are in charge of such classifications for such account) may not agree with the assertions of the plaintiffs.

Maybe sit in on a class if you can. 

@James Wise nailed it on the head that your real concern is only if you are violating a protected class. If

Some others that I've used/am considering/had recommended to me:On-site, coin-operated laundry machines (most relevant for multi-family properties)Renting out storage space in basement or on-site shedRenting out unused off-street parking (where I live, winter RV parking is at a premium)Converting non-conforming to conforming rooms (including basements) to allow for re-organization and classification as bedroomsAdding accessory dwelling unit(s) to your property (may not even require separating lots)Separating utility metering (or installing individual unit readers) on multi-unit properties that are currently metered togetherDepending on your market, furnishing a portion of your units and renting them out fully furnished to shorter-term renters*Some (most) of these will depend on how individual properties are zoned, what zoning requirements are in your locale, and what there is demand for in your market.

I think most experienced investors who use that type of classification to define properties would place a majority of our properties in the B class with a percentage in C class and a percentage in A class. 

Any property that has been condemned or vacant for more than 6 months will have lost its zoning and reverts back to original zoning classification.

We do not need to alter any of that information because none of those things are changing, but only indicate to the secretary of state and the IRS that the LLC will now be held by two members.My understanding is that I need to file with the IRS a change of entity classification.

However,   if your home is zoned/classified as a duplex (any L zone classification I think)  then you cannot use this exception even if you live on site.   

It's based on zoning classification and lot size.