I think that the 3115 is only for a " a timely filed return" and not for an amended return.  I wonder if it can be taken on 18 for example even though the property was sold in 16, probably not.  From what this guy told me, the auditor is definitely a PITA and didn't allow him to deduct real business expenses because he told him they might've been "personal"
About the subcontractor issue, the guy said that the subcontractor is willing to write a statement that he received the money and he is even willing to show his tax return in which he claimed that amount also.
Any feedback, advises are highly appreciated, thank you