I have a large amount of passive activity losses on my tax returns which will carry forward (not REPS so can't offset my W2 income) I don't know anyone who retired early/quit W2 at the age of 40 from their stock portfolio.

Please keep in mind that "suspended passive losses" or losses that are generated that are passive by nature, will STAY passive losses, and CANNOT be used to offset active income.

You might consider cutting your losses and selling it, or investigate STR options.

According to passive activity loss rules, every business is obligated to adhere to specific criteria, especially when it comes to short-term rentals.

You will still be faced with the passive income loss limitation.In my opinion, continue buying quality real estate investments and allow the depreciation to shield your cash-flow.This will allow your real estate investments to grow tax deferred.

Schedule E typically caters to rental income and certain types of passive income, while Schedule C is tailored for reporting profits and losses from a business or self-employment. 

If you more than one owner/member in a LLC, the LLC will file a 1065 partnership return, but all that does is spit out a K-1 (like a w2 or 1099) showing the profit / loss that you need to report on your 1040 form.If the LLC is single member, then you will basically continue file addition SchE for your long term rentals. 

When income from rental properties is considered passive, it is subject to passive activity loss (PAL) rules.

Current CPA says you can form an LLC and take any losses as a K1 loss on your personal taxes. 

If you have a down year, the answer can really hurt you the following year, making it harder to recover.