Active = Income earned from Material Participation.Whether that's SMB, W-2, contract income, or prof real estate.This is income where ordinary tax is paid and losses offset other income.

I meant yearly K-1 reports showing yearly income from cash flow (prior to year of sale), would those be taxed as ordinary income please?

It's pretty common practice to have something like that in a property management agreement, and if it falls under that limit they're going to pay it and not notify the owner except in regular monthly updates because it is below the threshold of what is an ordinary expense in the course of business.

It is a lot of money, but taxpayers also pay a lot in taxes and there should be some money for these types of things. 

Got this from the sponsor - Real estate gain is 1231 - but there will also be recapture of depreciation which is ordinary income.With a few unknowns before the actual k-1 is released, it's hard to make any concrete decisions but was just wondering if I should sell some long-term held stock at fidelity to offset the gains

I'm sure your lease and the law require the tenant to return the property in the same condition it was received, minus ordinary wear and tear.I would file again.

The system is what's really broken:1) S8 should have a time limit - get free housing to get your life in order and move on.2) S8 should have strong requirements for taking care of the home taxpayers are paying the rent for. --- We haven't seen a S8 inspection report in over a decade that required a tenant to fix damages they obviously caused.

It will have to be a pass through/disregarded LLC to keep the tax payer the same and the 1031 valid.

This will work for ordinary losses, but not from negligence or unlawful activity.

You're in the business of flipping houses, so any self-employment taxes on the ordinary income most likely aren't being calculated in QB.