That is why depreciation is sometimes called a "Paper loss".

My understanding is that with the LLC, the business liability coverage should cover most lawsuit situations, and if it isn't enough, the LLC's asset (i.e. the property) is the only thing that is at risk for a loss to me.

In most cases, rental properties financed by debt have tax losses, even if they produce positive cash flow.  

What the primary concern is ensuring that the existing lender that your are now paying is listed as the 1st loss payee on the policy (mortgagee clause).

If one qualifies for the exception to the Passive Activiry Loss (PAL) due to Modified Adjusted Gross Income (MAGI) at 100K or under, can he/she deduct rental losses where no rental income existed that year?

Maybe I knew about the impending job loss and I took action steps to ensure I could fulfill the terms of my lease.

The basis for depreciation is the lesser of: The fair market value of the property on the date you changed it to rental use, orYour adjusted basis on the date of the change—that is, your original cost or other basis of the property, plus the cost of permanent additions or improvements since you acquired it, minus deductions for any casualty or theft losses claimed on earlier years' income tax returns and other decreases to basis."

The way I read it, this implies that any income from a passive investment in a syndication deal is subject to UBIT, whether or not the K-1 shows a loss.

I've had a dozen calls this week on a total fire loss slab listed at like $140k - for the dirt!

Hopefully you will be cash-flow positive but show a loss for tax purposes.