So even if the landlord approves an expungement (deletion), the judge is not supposed to delete it unless the eviction was not legitimate at the time it was filed.  

There are less taxes in Alberta too.

About 90k that will be taxed at 40% if I take it now.

Yes, do the tax exchange if you can.  

Even if you create a non-CA LLC, if you are managing the business from California, you will likely be deemed to be "doing business" in California and therefore likely subject to CA taxes.

Update, confirmed with the city and it is legitimate if the property is in the name of the LLC, and the LLC is grandfathered in before restrictions were put into place.

Unlike a foreclosure, a deed in lieu of foreclosure does not extinguish any of the liens and encumbrances affecting the property.Most courts recognize the execution of a deed in lieu of foreclosure in a transaction subsequent to the original mortgage transaction as a legitimate alternative to foreclosure proceedings.

So all of the gain and depreciation recapture are initially still tax deferred.However, like Joe said, the down side is later when sold  you lose the 1031 option. the client will pay tax on all gain and depreciation recaptured from before the 1031 also. 

If you do place the property in her name, you've got a Gift Tax (Form 709) to complete. 

If so, there are no transfer taxes due.