Also remember the time these returns will take to amend along with the possibility of opening up audit periods/red flags with the IRS due to amendments.Doing this yourself on turbo tax likely won't be your best bet considering all of the details.

Property management involves overseeing and maintaining rental properties on behalf of the property owner.

Get yourself in front of it first, you also completely ignored any risk factors(for reserves).And trust me, as someone who bought 40 + in one year, there's a ton more work and a ton, ton more capital involved.

Bet you don't refund them when they fail, do you?

@Heather Luu  the first thing that comes to mind is if that check was from the insurance company or insurance company funds, it might be time to get them involved.

If they don't have one, I bet they know somebody.Answering your questions:1.

You materially participate in an activity if you're involved in the operation of the activity on a regular, continuous, and substantial basis.

Locally in PA, im just involved with commercial real estate. 

Without a VERY good and valid reason, it may be fraud.You may want to get an attorney involved and/or the appropriate state board.

Nonpassive income: Real Estate Professionals, STRs and K1s from businesses where you have hands-on involvement aka material participation.Each group has its own rules, and generally they cannot offset one another.