Quick question:Quick question - How much total capital gains tax (both fed and state) would be for a property that I bought in 1997 for $500,000 and sold today for 1,000,000?

Currently, he has a mortgage balance of $55,000, and is behind on property taxes in the amount of $16,000.

how is it described on the tax account ?    

You get potential cash flow, tax shelter and appreciation.

Just make sure they specialize in tax and have significant experience dealing with real estate investors.Here is a great list of questions to ask a potential accountant: http://www.biggerpockets.com/forums/51/topics/70447-questions-to-ask-a-cpaAlso check out the www.NAEA.org page in your search.

The taxes are $1532 about $127 per month, if I offered 100k and got a conventional for 20%down @ current rate the note would be about 600 with PITI. 

The property is owned by a non-profit student org and receives some benefits with regards to property tax.  

There may also be unpaid taxes as well.

With what the owner wants to walk away with/owes in taxes/my assignment fee, the price is still 60 cents on the dollar, but you are buying the squatter. 

I highly recommend The Book on Tax Strategies for Savvy Real Estate Investors by Amanda Han, you can get it right her one Bigger Pockets.