Primary home lived in it for two years (2012) - Home converted to rental property in 2014.  Under audit, Need help with supporting educ on 168 reg, Auditor claims to use the purchase price in 2012 as opposed to FMV in 2014 which is higher.  Auditor claims because reg 168 states to use the lesser of the two?  He is new in the field and want to make sure I am correct to use the FMV before he takes taxpayer to the cleaners denying so many other deductions.   Auditor also denying expenses from the property management report claiming he does not see the actual payment made to the property management?  He is indeed a difficult auditor.  Help anyone!  thank you