I have almost zero in taxable accounts outside a savings account.

How many Federal Government jobs is there?

You have $200k in equity but you’ll have a taxable LOSS after selling for $1M or even $1.05M. 

You will report worldwide income on your federal and Kansas tax returns.You will also include the MO activity on your KS return.Your MO return will only include the acitivity within that state, which in this case, is the rental property.In the future, if you have income in MO(either through the sale of the property or through rental income), you will pay tax to MO but KS will give you a credit for any taxes you pay to MO.best of luck

For reasons I don't yet understand, if the property is sold I cannot take advantage of a 1031 Exchange and my gains will be taxed as income, which will be 35% federal and 11.3% CA income tax. 

I can see an explicit exception in CA Tax Code § 17561 that says you can not use the qualifications in Section 469(c)(7) (Real estate professional) to render that income as non-passive, but I see no callout for 1.469-1T and, as such - as a non-CPA - I do not (yet) see a reason why we cannot follow the same rules for CA that we do for our federal taxes; e.g., if the business is not a "rental" business per tax code, we count that income as non-passive and offset other income (W2, etc) similarly.Does anybody else have some guidance (or opinions) on this matter?

I keep getting mixed answers I don't know why this real estate professional tax status is confusing to me along with cost segregation and bonus depreciation no matter how much I read about them If you qualify as a REP you can utilize those losses to offset your Income subject to Federal Income Taxes. 

Take your sales price, minus selling costs, minus any capex, minus purchase price and that’s your taxable gain.

If you don't rebuild or replace, the transaction is taxable. 

So, if I withdraw $60K, about 75.24% of that should come from contributions (since that’s how my balance is structured).75.24% of $60K = $45,014 → Comes from contributions (no tax or penalty)22.38% of $60K = $13,428 → Comes from earnings (subject to taxes & penalty)Taxes & Penalty on the Earnings Portion ($13.4K)Federal Income Tax (24%) → $3,219Early Withdrawal Penalty (10%) → $1,342Total Tax & Penalty: $4,562Net Cash After Taxes and Penalty Fee: $55,437The DilemmaIf I leave the money in my Roth 401(k), continue contributing $525/month, and earn 8% annually, my balance could grow to:$229,865 in 10 years$606,905 in 20 yearsBut if I buy the property, it could generate $15.6K/year in pure cash flow, plus appreciation.