These released passive losses are ordinary in nature.  1250 gains and 1231 gains run through Form 4797, Schedule D and the related worksheets because of preferential tax rates.I'd encourage you to maybe run some scenarios through TurboTax or break out the forms, form instructions and related IRS publications mentioned and work through them. 

The resources here are excellent and I encourage you to read, listen to podcast, read and listen more.

I am in the NYC/NJ market and looking to get into tax lien investing, I am not exclusive to my market but I know there are restrictions based on location and prospective investors are encouraged to do due diligence and research.

Hey @Adam Hanson a member of my team @Sean Barnebey specializes in the Tacoma area, I highly encourage you to get in touch with him and he can answer all of your questions as well as helping you find the property that you're looking for.

You're story is so encouraging!

If you want to get an idea of how these structures can protect you from liability be sure to check out this article.I encourage all people entering a partnership to sit down with an experienced attorney to have them draw up a good operating agreement which lays out a strategy for the property.

Why not encourage this?

I really appreciate the encouraging words. 

Thanks for the encouragement Ricky...

This is solely for analyzing and comparing different properties, not for tax purposes or anything else.Illustrative ExamplePurchase price - $100kClosing costs - $5kDown payment @ 20% down - $20kDown payment + closing costs - $25kAnnual cash flow - $3kCash-on-cash returns (w/o closing costs) - 15.0% [= 3 / 20]Cash-on-cash returns (w/ closing costs) - 12.0% [= 3 / 25]I have been including closing costs, because that's the cash out of my pocket on day 1 and also because it's a meaningful amount of the initial cash outlay (e.g. 5/25 = 20% in this example).