At 72, it's time I spent time with family and friends and to enjoy the golden years.I am disclosing the tax obligation this choice created so you don't make bad assumptions such as CG would be the whole tax consequence of a liquidation.Here' what my CPA projects for the 2016 tax year: Net Gain 600k on the sale of 6-units...Looks like we will owe the feds about $145,000 and the state an additional $27,000 (I already deducted the amount withheld at closing;  Calif 3.5%).Due to the higher AGI, $30,000 of your social security is taxable.

Or is "taxable compensation" as well as the "treat of loosing one's license" the crux of the matter, here?!

Denimarck I was living off of taxable investments - dividends and periodically selling some stock. 

For the reasons already mentioned by others in this thread, it's not clear whether or not this arrangement would provide a tax advantage (pros: depreciation and repair deductions; cons: significant additional taxable income to LLC, loss of primary residence sale exclusion).

Since you have no historical taxable basis to write off against that sale price, you may find yourself having to pay taxes on the full sales price, not just your profits.Happily, there is a way to heal these self inflicted wounds.  

[Gross Income] - (Total Tax Deductibles: Op Expense - Interest - Prop Depreciation) = Taxable IncomeIE[8000] - (4000) - (2000) - (1000) = $1000 Taxable IncomeAssuming I have a tax bracket of 28%; $1000 * 28% = 280I have to pay $280 of taxes on my $8000 rental income.Extra Question: How do you determine the market cap rate? 

The first thing that leaps to mind is that the rental income you receive is taxable. 

You don't need to, when you sell a property in your 401k it would not be a taxable event because it is a tax-deferred account.

You are playing dangerous game here... if you are one day over 60 days the entire amount becomes taxable distribution 

Now, if you don't have many choices (good balance of your funds in taxable vs qualified accounts like IRAs), then I've done the analysis w/an investor in our syndication and their CPA to show it still makes sense to make the investment based on expected returns.However, since real estate is so tax efficient, strategically speaking if you have choices, ample cash in taxable and qualified plans, you should hold income producing investments inside your IRA that are not so tax efficient like notes that just distribute income in the way of interest.