But I would like to use my chance to comment on this to emphasize how much of this situation really reflects on how you've managed the landlord-tenant relationship to date.In a high-regulation area-of-operation like California, cordial landlord-tenant relationships will get you past a lot of garbage like this.

Check your local and state regulations regarding this business model.  

They must provide you a copy of the rules and regulations.

Even if you have a cpa who isn’t well-versed, she’d be enlightened once she reads the irs tax regulations cited above. 

The card company will reverse that charge because the tenant is their customer.  3rd party payment processors don't have the regulations placed n them for investigation, etc that banks do. 

We are working with a consultant on staffing and regulations. 

And it's worked for generations and the wealthy for a very long time because mutual insurance companies understand the human lifecycle quite well (law of large numbers), they're well regulated, make safe and sound investments and in several cases have paid out dividends consecutively for over 150 years (Mass Mutual, Lafayette Life, etc).

Because of the location, this is permissible per county regulations, even though the residential neighbors are having a tough time with it.So, we have to move and convert our home into a STR (we cannot sell the property because it is 2 homes and an elderly family member lives in the other home and cannot move).  

The subsequent item you reference is "self-employment income" for purposes of self employment tax under Sec. 1402. 401k has its own definitions and regulations, which are related to - but independent of - those referenced. 

Water Supply Company is private and owner doesn't have money to build more wells and is already in some big dispute with state regulators.