This is the way that I read Publication 527.
The Pub portrays improvements as expenditures that may be capitalized and depreciated.
The Pub portrays betterments as expenses that would then be subject to the quote from page 5 above.
My understanding of the stance that the IRS takes is based upon the nature of the business, active participation versus passive participation.
The IRS considers a rental activity to be a passive activity by its nature. And the IRS considers a self-employment activity to be an active participation activity by definition. The IRS sees no problem expensing or amortizing start up costs for a self-employment activity.
This is my take. I am sure that you will be able to find vigorous discussions on this blog on this topic. Best wishes to you.
@kata123
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