“Before he finds a new preparer, any recommendations I could pass along about what he'll need to do & what forms he'll need to file? (4652? 3115?)”--->Needless to say, you need to be sure to depreciate your rental property because the IRS assumes that you took it even though you actually do not take the depreciation on the rental property. So, if you don't take the depreciation, you will STILL have to pay taxes on the property when you sell it through so called depreciation recapture! When you sell property that has been subject to the allowance for depreciation, you have to figure your adjusted basis. Your adjusted basis is generally your cost plus improvements, less the amount of depreciation allowed or allowable. Hence, if you did not claim all the depreciation you were entitled to, you still have to use the amount that should have been claimed as an adjustment to your basis. Generally, rental income and rental expenses from rental property are reported on Form 1040, Schedule E. You need to use the Form 4562 for the depreciaiton of the rental property.
On Form 1040, Schedule E, you need to report rental income and rental expenses including mortgage interest, property tax, depreciation, and repairs. If your rental expenses exceed rental income you may report a loss of up to $25,000 on your tax return( I mean as long as you actively participate in management of the rental property), limited for adjusted gross incomes above $100,000. If you also use the dwelling unit as a home, or rent it at less than fair rental value, certain restrictions apply to the tax deduction of your rental expenses on your tax return.
Please visit the IRS Website here; http://www.irs.gov/pub/irs-pdf/p527.pdf