Security deposits do not belong to the owner until/unless the tenant leaves and there is damage beyond ordinary wear and tear. 

@Dan TrinhYou are not required to create an entity to deduct expense on your tax return.If you do not create an entity - the profit of the sole proprietor will be reported on your individual tax return.For an expense to be deductible it has to be ordinary and necessary to your business. 

@Jesus Ramirez Income from wholesaling is treated as active income, subject to self-employment tax in addition to regular income tax (at ordinary rates).An LLC is one option but your entity structure should be decided after a full analysis of your situation by your CPA and attorney.

For instance, if the farm has "hot assets" (e.g. unrealized receivables, substantially appreciated inventory, etc) your FIL would have to realize ordinary gain from the sale and can't defer that through installment.A Sec 754 election needs to be discussed as well if you're buying out your FIL's interest but your BIL is staying on.A good CPA is going to cost you, but will save you far more than his/her fee by doing things correctly and efficiently."

I'm not an expert on this, but I believe that property inside the 401K would still pay ordinary income taxes.Just some food for thought

This expression came about as a combination of the shift of profit from ordinary income to capital gain, the fact that the property is reported on two consecutive tax returns, and attorney interpretations of some old case rulings. 

Mine says the tenant is responsible for "ordinary" pest control or anything caused by their living conditions.

@Farzan SetayeshNothing out of the ordinary, but I use the combination of the following consistently:- google photo for agent photo/video sharing- docusign for executing docs- acrobat X for all other doc edits- whatsapp for texts and phone calls- online money wiring or ACH for large items- paypal or venmo for smaller items- zelle or ACH for collecting rent- yelp or taskrabbit for misc repairs- lawnlove for landscaping or snow removal - skype for group meetings- Dropbox for online record storage- google voice for call forwarding - email for all tenant communications - autodraft for all utility & mortgage payments- online payments for all taxes & insurance - google earth to survey neighborhoods for out of town purchases - amazon or HD for online parts ordering The automation & streamlining of low value tasks enable me to preserve time for higher value activities.

I suggest you look for any sign of distress or anything out of the ordinary.

Limited passive loss cannnot offset you ordinary income.