If so, would we only pay capital gains on the $57K ($180K-$123K)?

I would personally pick option C.Place tenant myself and self manage for the following reasons:I don't like giving away 10% of my rents.No one is going to care about my property more than me.I have systems in place that allow my to self manage with minimal time.I have a great support staff that I can text when there is a repair that is needed.I rarely take calls from tenants and tell them to text me to keep from getting caught up in their drama.If they don't pay rent on time and it is a repetitive problem I file an eviction to train them they must pay on time or go somewhere else.They can pay rent with Zelle, paypal or deposit rent into my bank account (most deposit into my account)It is their job to pay rent on time I do not collect or chase rent it comes to me.My rental portfolio is very passive with little interaction required by me.

I use a scoring system that helps me get the top application identified, and I concentrate on that one until they prove themselves out or not.My applicants gain points for holding the job for a year or more, lose points if they have held it 3 months or less, gain points for having lived in the community for five years (to me low risk is they have been commuting, but moving to commute often backfires in my area), etc. 

In my case it was a tiny portion at the edge of the property and had little effect on me.Yet another possibility is that this garden and the encroachment has been there for some years and the neighbors may have gained possession of part of the property via adverse possession.  

If this is the case, would you still be subject to the state capitol gains tax.

While you can hire 3rd parties to take care of everything, you still need to manage them and note Investing is anything but passive.

Investor you want to be meaning Passive or not, self-managing or hiring a management company, A, B C neighborhood etc The fact that everyone is telling you to do it if you can is easy when it isn't their money.  

@Shiloh Lundahl , my JOb is been a Realtor and a Wholesaler,  I know, it is in the same industry but I love making active income and invest for long-term passive  income,  first, I got some SFH, rented on section 8,  but now selling them and with a goal of acquiring my first Mobiel home park.Been an agent is really great because I do not sell houses, I sell homes, all my clients and now my friends, some of them are already  interesting on investing on RE as passive investors 

i was gifted a house... im looking to sell the house now and want to avoid capital gains tax.... can i gift the profit from the sale of the house to a family member and avoid capital gains tax?

What do you think of 100K gain in a year?