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\subsection{Observations}  To examine the observed properties of dwarf galaxies in the LG, we use the compilation from \citet{McConnachie2012}, which includes all galaxies known at that time within $3 \mpc$ of the Sun.  %We select ``dwarf'' galaxies as $\mstar\lesssim10^9\msun$, including the LMC ($\mstar=1.5\times10^9\msun$).  We also include the more recent measurements or upper limits of cold atomic gas mass from \citet{Spekkens2014}.  %We do not include the recently discovered ultra-faint satellites of the MW from the Dark Energy Survey \citep{Koposov2015, DES2015}, though if they are all quiescent, their inclusion would not change our results.  We define ``satellite'' galaxies as those within $300\kpc$ of either the MW or M31, motivated by the observed sharp transition in star formation, gas, and morphological properties within this distance.  %$300\kpc$ also coincides with the median virial radius, $\rvir$, for our simulated MW/M31 halos (see below).  Observed dwarf galaxies show a tight correlation between their morphology, star formation, and cold gas content: all spheroidals have little-to-no detectable cold gas \citep[e.g.,][]{GrcevichPutman2009, Spekkens2014} or ongoing star formation \citep[e.g.,][]{Weisz2014a}, and almost all irregulars have significant cold gas mass and ongoing star formation.  Thus, we define ``quiescent'' galaxies as those with $\mgas/\mstar<0.1$ or with colors and morphologies that resemble spheroidals if they have no cold gas constraints.  By this definition, the only star-forming, gas-rich satellites are: LMC ($\mstar=1.5\times10^9\msun$, $\mgas/\mstar\approx0.3$) and SMC ($\mstar=4.6\times10^8\msun$, $\mgas/\mstar\sim1$) around the MW, LGS 3 ($\mstar=9.6\times10^5\msun$, $\mgas/\mstar\approx0.4$) and IC 10 ($\mstar=9\times10^7$, $\mgas/\mstar\approx0.6$) around M31.%(While Sculptor has $\mgas / \mstar \approx 0.096$, we consider it quiescent based on its morphology and lack of recent star formation \citep{Weisz2014a}).  %KaisinKarachentsev2013,2014 for Halpha upper limits on satellites of M31.  %\textbf{Halpha is not a good indicator of recent star formation in dwarfs ~ DW}