It is the income you derive from working at a job or owning a business.

I think you're asking if the status quo is the best investment scenario, so I'll answer it that way...Personally, I would put what you believe the FMV is as purchase price, with the cash down on the house being all of your equity (however derived), your current loan being the loan terms and the $4k being the rental income, with all expenses of course whatever they actually are.

The underlying economic resilience of the area is derived from demographic (population) growth and median income.

Furthermore, where the economic benefits to the individual participants are not derivative of their co-ownership, but rather come from their joint relationship toward a common goal, the co-ownership arrangement will be characterized as a partnership (or other business entity) for federal tax purposes.

The sponsor derives their sale price with an exit cap rate (NOI / Exit Cap Rate = Sale Price).

"A person's success is partly derived by how many difficult conversations they are willing to have."

And returns to investors are net of all fees, so if someone invests $100k into a private equity deal, they get $100k worth of capital in the deal, plus distributions and returns derived from a capital event. 

First, you need to understand how these two values are derived.

But I also want to see whether there are possible reasons for she/he to derive that number that I am not aware of. 

Yes, any income derived from other states you will be required to report.