Acquired interest in partnership, sec 179 recapture . . .

[me112233]

Beginning:  Two brothers each own 50% interest in a partnership.

(1)  Son of one brother took over his uncle's 50% interest in the partnership in 2018.  (He is now partners with his dad.)

(2) Several years prior, the partnership purchased equipment, which was fully expensed via sec 179, which means the purchase price of $20,000 led to a sec 179 expense, which was passed through to the then partners -- the dad and the uncle -- for $10,000 each.  So far, so good. 

(3) The equipment was sold in 2019; i.e., after the nephew had taken over the interest in the partnership from the uncle.  

(4) The sale price of $12,000 was split between the two current partners @ $6,000 each, along with info about the $10,000 share of sec 179 deduction taken in the year purchased.  (Reported on line 20 of K-1, with an L code.)

(5)  Now, here's the question:  The nephew did NOT get the sec 179 deduction in prior year, the uncle did.  Does the nephew have to recognize the prior 179 deduction that went to his uncle, and thus pay taxes on a $6,000 taxable gain?  Or can the nephew say he never got the benefit of the sec 179 deduction, and thus recognize a $4,000 loss on his Form 4797. Technically, the nephew never had the sec 179 disallowed, as he never got the sec 179 deduction in the first place, because he wasn't involved with the partnership at time of asset purchase.  From all indications, the uncle was able to use the sec 179 deduction for the year of purchase, but that matter hasn't been verified.

(6) Aside from the core of the question about a new partner and an old asset, could the family relationship pose an problem in all this?

[RollTide68]

When the nephew acquired (gift or purchase) the partnership interest he receives the adjusted basis in the partnership property.

I think he will be responsible for the gain.  I don't think related party will affect the transaction.