It's unclear, but if he was renting during the last 10 years, even though he didn't file, depreciation was allowed under the tax laws. The tax laws say a taxpayer must use the higher of depreciation taken or allowable in computing gain/loss. How much cash he receives is irrelevant. His gain is Gross sales price less selling costs. less tax basis (cost reduced by depreciation higher of allowed or allowable). For rental real estate, depreciation would be recaptured as a Section 1250 gain, which has a preferential tax rate. Since the property was disposed of he's allowed to deduct suspended losses. However, its possiblle that he had an NOL in some of those 10 years. The fact that no return was filed for 10 years potentially creates issues for which a tax professional would be needed
