My first concern would be that this simply does not pass my sniff test.  Was there a related party involved?  Did the equipment get damaged somehow and was sold as scrap?  It obviously wasn't in service for very long if it only had 10% depreciation.  Something that's maybe worth $50K-$70K was sold for $1K?  I smell a disguised gift.

But to answer your question, no depreciation recapture if there's a loss.