Yes, he bought a foreclosed property for cash, a helluva bargain. He did separately get rent replacement which I treated as rent income. So to calculate his new basis - I took the 4797 amount he's paying taxes on and used it as remodel cost on the depreciation worksheet, is that right?

This now makes sense as versus late Saturday night - if he were to sell the house down the road he will have increased basis and a smaller tax bite then.