Level 15
01-31-2021
12:26 PM
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What was his basis at time of converting. You say he used FMV, but that may or may not be correct.
If the property was not available for rent, then no deductions, except on his personal schedule A. Can only take property taxes, and mortgage interest. You should research pub 527:
https://www.irs.gov/forms-pubs/about-publication-527