Take the last three years' Profit and Loss statements and average them together.

Maybe you have some capital loss carryforwards lying around.

Hello everyone, I am selling an apartment building in California using a 1031 exchange (to buy property in the Midwest) and am wondering if I can use my passive loss carryovers and disallowed losses for that property to offset any boot because I am planning to use the cash pullout as reserves or repair money for when the replacement property is vacant. 

What you are proposing is the classic money loss situation unfortunately.

Also, have you grouped your properties, active or passive, to be able to use losses on one against gains on another?

I bought with a cash-flow on day-1 and could tolerate two vacancies before creating red-ink, so it's crazy to be penny-wise and vacancy foolish.I know there are those here on BP that harp on hobby vs professional business operations, but there's more to the bottom line than just GSI - - consider the opportunity losses created by vacancies.

What do you guys use for book keeping, to categorize transactions and generate Profit and Loss reports for your CPA? 

My property has a capital loss.

The bank stopped paying the taxes because it's a loss either way. 

@Keith Meyer The subject you appear to be referencing in the link is Passive Activity Loss Limitations under Sec. 469 of the IRC.