If you exceed that limit, can you still play this game, subject only to having to allocate your expenses by ratio of abnb days to total occupancy days? 

The garbage bill is split is allocated by number of weeks and split in half.

Hidden behind the balance between cash flow and ROI for rehab, I also made actual money on what I allocated for maintenance, repairs, management, and reserves, as underwritten because I had 1031 before spending those funds.I have completed eight 1031s since, and have used contractors for capex, with significantly higher returns on the value... mainly because these are now commercial-type loans, not residential.

They say all the units were "allocated" meaning they are in the due diligence period like I am. 

It sounds like your parents provided you a loan and do not own the property.The gain will be allocated to the person who owns the property(The one on title).

I’ve had 0% vacancy, and don’t allocate for this because I know he’s going to stay for a long time to come.

Could also just put the property into an LLC, allocating the funds into a LLC owned bank account using you to sign.

But equally important for you to think about is going to be the allocation of your net proceeds in the purchase. 

Even worse, all of the depreciation recapture taxes allocable to the $500K will be recognized and due in the year of sale. 

I was lucky enough to have a small penny stock I was allocated to hit and used my real estate passive losses to make my gain tax free :) Sometimes we get lucky!