Taxable gain would be selling price less cost basis3.

The deductions simply lower your taxable income. 

Carl - The earnings on a life insurance contract are only taxable if you withdraw it.Regarding loans...You are not borrowing "your" money.

One just need read the law for a very easy understandingThe preceding sentence shall not apply to any foreign taxes described in subsection (a)(3) or to any taxes described in paragraph (1) and (2) of subsection (a) which are paid or accrued in carrying on a trade or business or an activity described in section 212.And then the reference from the above law to IRS Code 212(1) It has been paid or incurred by the taxpayer during the taxable year (i) for the production or collection of income which, if and when realized, will be required to be included in income for Federal income tax purposes, or (ii) for the management, conservation, or maintenance of property held for the production of such income, or (iii) in connection with the determination, collection, or refund of any tax; and(2) It is an ordinary and necessary expense for any of the purposes stated in subparagraph (1) of this paragraph.And for even simplified version, just look at the IRS guidance on the subject...What Deductions Can I Take as an Owner of Rental Property?

However, I learned that if I convert this one to rental house, the cost basis has to be the purchase price instead of the market price at this moment. which means if I convert the house this year and sell it in a few years, the 100k appreciation happened when I was using it as primary residence is taxable. 1031 is an option but what if I need the sales proceeds for other purpose?

Anything less than that could be taxable I believe.Not 100 percent sure so I’m tagging Dave Foster who is a 1031 expert

Will this be taxable - if yes how much and what is the tax rate?

You get taxed at the NET taxable rental income.    

Financiing, brokering, acquisition etc. won't count towards this number.3rd bar: Need to keep records of  time and activity to document his status If he meets these tests then he should be able to actively put losses against other taxable income Pros on here....please correct if any of this is misleading.

If that’s true, the operating income/loss of the MMLLC would pass through to only my tax return and the other investors would not experience a taxable event until the MMLLC issues a distribution.