Yes, add the Improvements to the Cost Basis.
Yes, you can keep the 'purchased' and 'converted to personal use' boxes both checked.
Even though you claimed a Standard Mileage deduction, part of that deduction is depreciation. You will need to add up your Business Miles and figure an average of .20/mi. as Depreciation. See IRS Pub. 463, page 24 for a table. You don't report in Sale of Business Property until you actually do sell/trade-in. Same thing for when you sell the rental property. Keep note (or save form) so you will know depreciation taken amounts at that time.
@brcrump
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