Sec 179 and Depreciation Recapture

[Tomcpa04]

My situation is this: Partnership disposed of an asset (Job Trailer) on which Sec 179 was taken on the full amount. The Partnership gave it away (zero sales price) as the cost to move it exceeded it's FMV. Since there is No Sec. 179 recapture on a sale or disposition and since any Sec 179 recapture would of just increased the assets basis which would of resulted in a loss on the disposition. In this case there is No depreciation recapture either. The net result is still going to be No Gain No Loss, computed as follows:Loss on disposition, lets just say if Sec 179 was recaptured ( $100 ) Ordinary Loss. Sec 179 recapture ($100) Ordinary Income, the net result is zero. Is my thinking correct? Realize that this transaction is being shown on the Partners return not on the Partnerships. The Partnership just reported to the Partner this info on the "Partners Disposition Report for all Assets with Sec 179 Expense taken" Sec 1245 Property.

[dkh]

Shouldn't you be able to enter the $ info from the "Partners Disposition Report for all Assets with Sec 179 Expense taken" Sec 1245 Property.   All calculations would have been done with the Partnership return.  

[Tomcpa04]

Yes & I did that!!!! But thats really not my question. In a nutshell my question is: Based on the given facts, there is 1) No Section 179 recapture ie Sale or disposition and 2) there is No depreciation recapture. Remember the disposition was at zero dollars and the asset was completely depreciated buy way of Sec 179. My research indicates that Sec 179 Recapture does not apply if the property is sold, exchanged, or otherwise disposed of and in this case there no depreciation recapture since there is no gain. All depreciation is recaptured as ordinary income , limited to the gain on the sale. Therefore, gain on sale is zero so no depreciation recapture either. So, Other than completing form 4797 page 2 there really isn't anything I need to be concerned about. Correct?

[dkh · Accepted solution]

I agree with your conclusion

[Tomcpa04]

Thanks dkh: I have always found all the recapture rules a little confusing and form instructions can be even more confusing.I guess I was just looking for someone else to support  (or at least agree ) with my conclusion.