Thanks all for your replies!  Good food for thought and will certainly go in TP file. 

For 2022, no doubt only 1 unit will be contemplated on Sch E.  I have to enter the assets anyway so I'll whack them up by unit and suspend deprc on the one not in use. 

Bill, good thought about non-qualified use. I'll revisit it w/ TP and get some  clarity. He did mention he would like to leave it as an inheritance for his daughter, but plans have a way of changing.. For 2022 it won't make a difference since I'm not taking expenses for the unused apartment.

Bob, I'll certainly recommend it amending 20 & 21. (there are other mistakes in the 20 & 21 that will likely result in a notice anyway) If I do it, I'm going to charge them so I prefer that he goes back the the last preparer and have them fix their own mistakes. 

Jensen;  Excellent cite. I didn't think it definitive though, because the Court stated credibility issues with the petitioners, which obviously weighed on the decision. In 2015, I had a client sell a 3 family that truly was used as a 'family' house (never rented in 15+ yrs.). H/W,  5 kids, 2 dogs, & Mother in law.  IRS looked at the return with a CP notice, but allowed the 121. The apartment units were never physically altered.

Rick, in NJ no need to "merge" units unless you want to physically alter the building character; including structural, utilities, maybe remove a kitchen, etc... If attempted, it's a nightmare with the municipality. I've seen a few mixed use buildings turned into all habitational. Truly an ugly process. 

Thanks again for the thoughts.