THREE WEEKS LATER, After discovering the guy was homeless and, unbeknownst to me, was living in his truck and then subsequently squatting in a bedroom, hiding his sh!

The subsequent quit-claim of the 20% to the "girlfriends" son really a quit-claim to the majority owners middle son as well - all three children being adults now.

During the second and subsequent years of the lease, or during any renewal of the original lease, the security deposit may not exceed 1 months rent.

As long as they acted reasonably to avoid the premature move out and they effectively communicated that to the owner within a reasonable amount of time, and then subsequently took reasonable steps to mitigate the loss and days of vacancy...that may just be a part of being a property owner.  

No-I did not hand him a shoebox and the taxes were no more complicated then the previous and subsequent year.   

The building department refused to issue an occupancy permit, and he subsequently lost the property.  

I agree with Jon Holdman that what Jodi Melssen did will not stand up in an audit; if there is no audit then that might not matter ...Now, if Michael Siekerka does a rehab that is subsequently rented, then sells that property after it was a rental - that scenario would become eligible to be considered as a relinquished property for a 1031 exchange IMO, because that rehabbed rental property was not inventory, it was an investment.

Since you inherited the situation, you should consider increasing the rent to at a bare minimum "fair market" and just a bit higher after the subsequent renewal.

Also, if the entire account balance of a Roth IRA is distributed and the IRA owner later makes contributions to a Roth IRA, the five-year period for qualified distributions does not start over with the subsequent contribution.

This guy tells you that he'd "take care" of someone and, subsequently, the person ends up dead tells me this dude has connections.