If there was not a covered insurance loss there isn't likely to be a covered loss for you either.Rather than worry about what State Farm might do, don't you you have a trusted advisor agent that you can talk to at the agency for advice?

So losses from that specific rental may be utilized.  

I have REPS by actively and materially participating in my rental property portfolio, and also work as a real estate broker full time (1099 collecting commissions through a single member/purpose LLC) from buildings I sell.My losses from my rental properties (LLC #A) largely offset any federal and state taxes from my brokerage business (LLC #B).

This means the $80K LLC profit is subject to both ordinary income tax and self-employment tax (15.3%), regardless of your high W-2 income or capital loss carryover.

If you have a mortgage on that property, you will likely show  a tax loss after including depreciation.

Since your combined income exceeds $300K, passive losses from long-term rentals are limited unless either you or your wife qualify as a Real Estate Professional (REPS).

You can end up with net income or, as is very common for rental properties, with net loss.

.- Alternatively, complete the repairs and sell at top market value, maximizing your return despite the short-term headaches.However, if the ARV is too low and won’t justify the $50K+ in repairs plus remote-management stress, You might be better offer selling now, even at a loss.

The properties on an overall basis have tax losses. 

I've accepted that I will take a significant loss on this, and have already learned a ton from it, but I would like to reduce the total loss as much as possible.