You will still be liable for the self-employment taxes on the salary portion of your income but you'll just pay ordinary income tax on the distribution portion. 

During the ordinary course of the year and holding property:Yes, they are added to basis if they taxpayer doesn't itemize just as they are deductible on Schedule E otherwise.In the year of purchase:One example of this is here in Illinois, We paid 2011's property taxes in June and September of 2012.If I purchase a house in May of 2011, I receive a credit for the 2011 property taxes from January - May.

Also a back patio would be nice in the better weather. ( I am in Texas.)

This home features vaulted ceilings, stainless steel appliances, ceiling fans throughout, an enclosed patio and a fenced back yard.

If I haven't renewed a lease for a tenant beyond the first year, and they are now there 2+ years, would it be out of the ordinary to issue a new one now? 

I worked with her case manager to provide documentation of the substantial damage to the property, the 10 letters of HOA violations from the board, photos of people not on the lease living in the property and living in tents on the back patio.

This would mean that it is not ordinary income subject to your marginal tax rate, state tax rate and self-employment tax.However, you should get with a professional and items such as date acquired and intent will be important to determine if it is a flip subject to ordinary income or a capital asset subject to capital gains tax rates.

We make the tenant responsible for ordinary landscaping.

The general IRS rule is that you can deduct expenses that are “both ordinary and necessary” for your business.

With passive loss limitations, you are able to offset up to $25,000 in passive losses against your ordinary income (w-2 wages) if your modified adjusted gross income (MAGI) is less than $100,000 and then is phased out if your MAGI is greater than $150,000.