One of my applicants showed up with little credit but no defaults, no evictions, and only traffic violations and verified income high enough to cover well over 3 times the rent and I accepted the tenant despite there being some signs.He paid the rent in time for the most part until a few weeks ago when he stopped and I could not get ahold of him.

They were perfectly acceptable 20 years ago, but now many areas are limited to one guest per calendar month. 

He testified that he used his personal bedroom exclusively forbusiness purposes but later testified that he slept and ate in his bedroom.

So while moving back into it for 2 years does bring the 121 exclusion back into play, that exclusion is reduced based on the percentage of Non Qualified usage over the holding period.  

I have a 10x8 shed that I use exclusively to store real estate materials and supplies.

We currently accept rent from tenants using a variety of 3rd party apps-Cashapp, Venmo, Zelle but are moving away from accepting payments in our individual names and want to start accepting payments directly to the LLC/business accounts, but LLC accounts do not accept Zelle and there is a fee for using business accounts on Venmo.

For example, I mention that every adult must pay a $30 application fee, pass my credit/criminal background, make a combined income of 3x the rent, and whether or not the property accepts pets.

I haven't accepted the offer.  

Your income isn't high enough for it to make sense as a rental and the closer you get to your residence limit the greater pressure you will have to sell it before losing your exclusion in whole or part. 500k right now can make $15k per year income with zero maintenance or tenant risks. 

For these ultra exclusive co ops the fact that the tenants can turn down anyone for any reason is a big plus.