Interest is always taxable, no matter how small.

On the other hand, if your passive income is high, having these deductions will definitely help to reduce your taxable income. 

I just sold my business and in looking for ways to offset capital gains taxes stumbled across a strategy in which a STR can write off all depreciation in year one via a cost segregation analysis, thereby reducing taxable income greatly for a specific year.

Eventually their rentals will start to turn a taxable profit and those losses can be “unsuspended”.  

That sucks.In general, I would think converting shares to a promissory note would not be a taxable event, but if the note never gets paid back, the note default would certainly be a taxable loss.On the other hand, you have probably taken depreciation.  

QI is telling my friend (buyer) this would not constitute a taxable boot as the money is not guaranteed to the buyer. 

- Total 6 yrs  i.e 4 yrs (75% was rental and 25% primary) + 2yrs (100% primary)- $300k capital gain / 6yrs is the net gain per yr - $200K for 4 rental yrs + $100k for 2 primary yrs- So $150k (75% of $200k) is taxable and the remaining $50K (i.e 25 % primary) + $100K (2 yrs 100% primary) i.e $150k in total will be tax-free? 

I deducted property-related expenses, such as mortgage interest, property taxes, and maintenance costs, from my taxable income.

The NC return is correct as is in my opinion.Remember that states often piggyback off Federal amounts, often AGI or taxable income (then make upward or downward adjustments for things like 179 or depletion).Since the passive loss did not enter the taxable income calculation at the Federal level, it won't flow to the state return when NC piggybacks.

Selling for $1M with a $100k mortgage is not taxable, if you paid $1M for it.