I am so sorry to hear that you and your Dad are having to wrestle with the situation of having a squatter not paying rent!
From an earlier post, you seem to be aware that you cannot claim the loss of potential rental income resulting from these squatters as an expense on Schedule E.
Technically, the squatters are non-paying renters for the Sch E so, complete it in TurboTax as I outlined above. I wish I could offer you more than how to make TurboTax align with IRS in this type of situation.
Your father needs to engage the services of a Real Estate Attorney who is familiar with the laws of his State, County and Local jurisdictions.
This will help with both the eviction process and also documenting his efforts for the IRS should the need arise upon examination of a return or sale of the property .
