The debtor may need to propose a modified plan that reflects the additional income.

Unless that doctor has a modified AGI of less than $150k (which is unlikely for a doctor, trust me) or has a spouse that's a real estate professional, there's no way he can use regular real estate losses to reduce his taxes...If his return is selected for examination he'll be hit with back taxes, interest, and penalties.

@April BirdsongAs mentioned, material participation of $25k allowable deduction phases out between a modified AGI of $100k to $150k.You might be able to deduct some of the upgrades if they were smaller chunks.. maybe?

A hidden expense that is impacted by capital gains is Medicare payments, if you are close to 65 or older consider the below:The monthly amount you pay for Medicare Part B and D is based on your Modified Adjusted Gross Income (MAGI) from 2 years prior.

Once you choose your depreciation schedule, you cannot modify it mid stream, you are on that path until you either sell the property or deplete the depreciation life of that component. 

The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that’s more than $100,000 ($50,000 if you’re married filing separately).

In this case, I would modify that to: "How much can you afford to lose as a result of a 'good business' decision?"

Definitely a good initial eval.Mark, good to know, what are some modified screening criteria for your markets?

It is fairly easy for business owners to modify their plans to allow it.

He knows what they've done, and I've asked my agent to find out if he will modify the porch back to it's original state.