@Paul PassafiumeTo learn about the IRA conversion rules see the following:https://www.irs.gov/retirement-plans/retirement-pl...To learn about the 401k conversion rules see the following:https://www.irs.gov/retirement-plans/retirement-pl...

According to the CCA rules and regulations for the city of Cleveland:5:01.I "Any person receiving rental income from any property must file a return whether or not there is any tax due."

The rule sort of says that you don't allow pets, but you do, with a fee.

Is the conversion legal as in they got U&O for 2-family and zoning supports it? 

If you do not inforce rules do not make them.My solution was/is to issue a notice on the 2nd if full rent is not received by midnight on the 1st and tell them that repeated late payments will result in a eviction.

Does the 50% rule include only operating expense, or does it also include debt coverage and taxes as well?

Specifically, you have the ability to avoid passive activity loss rules set by the IRS.What does that mean? 

There are special rules on those.

Over the past decade or so, as I have been able to move up to buy a larger house to support the growing family and then buy a house at the right school district, I continued to hold on to my older houses and renting them out.

Do the 1031 exchange rules allow me to co-invest on a new property with another person?