You mentioned it was rented since 2014. What have you been using for depreciation for the last 5 years?
To clarify Carl's answer to your first question, you use the lower of (1) the Adjusted Basis when it was converted to a rental or (2) the Fair Market Value when it was converted to a rental.
The Adjusted Basis when it was converted is usually (a) the purchase price, PLUS (b) cost of any improvements made BEFORE it was converted to a rental, MINUS (c) any depreciation (such as if you used it for a Home Office).
Any improvements made after it became a rental are depreciated as separate assets.
When you enter the K-1, it should have a question about passive loss carryovers.
If you have been depreciating the wrong amount, you can amend that last 3 tax returns. Form 3115 (which should be done by a tax professional) would only be needed if you completely missed depreciating something.
