I agree this will be treated as inventory - property held for the sale to customers in the ordinary course of trade or business.All amounts are capitalized to inventory and recovered in the year of disposition.On top of that your gains are ordinary.Even though amounts are capitalized, it is not a capital asset. 

Also know that real estate flipping is automatically active and treated as ordinary business income (unless proper defense is made) - subject to self-employment tax.

Security deposits may be used for:* Unpaid rent owned by the tenant (does not include late fees)* Damage to the premises, exclusive of ordinary wear and tear, caused by the tenant / guest / licensee of the tenant* Cleaning to return the unit to the same level of cleanliness the tenant had when they moved in* To remedy future defaults by the tenant in any obligation under the rental agreement to restore, replace, or return personal property or appurtenances, exclusive of ordinary wear and tear, if the security deposit is authorized to be applied thereto by the rental agreement.There is an exception if the landlord is a natural person or LLC where all members are natural persons and no more than two rental properties are owned with no more than four units total, then they will be allowed to charge up to two months' rent, unless the tenant is a service member.AB12 goes into effect on July 1, 2024, and does not apply retroactively.Full details of the law are available at https://leginfo.legislature.ca.gov/faces/billCompareClient.x...

Tenant shall return the property clean and in the same condition it was received, minus ordinary wear-and-tear.In exchange for early termination, Owner shall pay Tenant $____________ when the property is returned.

This time I wanted to add a property to show that the benefits of cost segs on residential rentals may improve as the income producing properties increases.Not much has changed except for gross rental of 40k, designed to represent net income, has been added (you could also pretend to divide 40 across multiple properties)However, the bonus depreciation not used on the "Property A" gets transferred over to "Property B" (in effect).Although this doesn't offset W-2 income, don't ignore the fact rental income is taxed at ordinary rates, so the benefit is still there.I think the takeaway may be consider holding off on the bonus until you have more properties if there are insufficient, other passive activities to absorb the amounts.

They will not be owned by you.Furthermore, there is the possibility of having to pay tax on unrelated business taxable income if the income you earned is ordinary and not exactly aligned with the not-for-profit's mission.

It is not ordinary but there may be creative tax situations where having a property (business) that loses money would be beneficial in other ways.  

Losses from rental property are considered passive losses and can generally offset passive income only (that is, income from other rental properties or another small business in which you do not materially participate, not including investments).If these passive losses exceed your passive income, they are suspended and carried forward indefinitely until future years, when you either have passive income or sell a property at a gain.Generally, the only time passive losses will offset your ordinary income from a W-2 job or another trade or business from passive activity rule which says you can deduct up to $25,000 in passive losses against your ordinary income (W-2 wages) if your modified adjusted gross income (MAGI) is $100,000 or less.  

So I have nothing but loss for 2022 but as a high W2 earner I am looking for the losses to offset my ordinary income. 

This is because I hear if you buy and sell properties often in one LLC you can be hit with IRS 'trader status' making it so you get taxed on short term capital gains ordinary income VS long term capital gains.