Business & farm

Aside from all the other issues discussed (legal, sales tax, etc), from a purely income tax standpoint, there are tons of issues in this transaction:

• The medical equipment is "technically" your friends since it was his former employer that owned the property and he somehow magically ended up with it.
• Since this equipment is technically his, him receiving the equipment should have been accounted for in some type of a transaction.  The facts don't provide what type of entity the "old" employer is and this impacts the tax implications of this part of the transaction.  
• So now we get to the point of what is the basis in the property that your friend has.  And now what type of property do we have here?  Inventory that we are trying to sell?  I am not sure I can reach the conclusion that this is a capital asset that produces capital gain.
• Now we get to the facts that say he will allow you to sell the property, BUT he wants 50%.  So now you have a partnership that is 50/50.
• With the partnership, your friend technically has now contributed all of the property to the partnership.  As noted above, your friend put in assets with a FMV of $XX and you contributed nothing.  Essentially you are receiving an interest in the partnership that if you liquidated today would provide you with 50% of the liquidating proceeds.  This is a taxable event to you; i.e. a capital interest.  The value of that would need to be determined.
• And now your friend has contributed property with a FMV that most likely exceeds his basis which must be accounted for under Section 704(c); built-in gain property.  What this means is that if the property is sold for the FMV or lower, all income needs to be allocated to the contributing partner; your friend.
• This "simple" event is way more complicated than you think it is.  It not like it is a garage sale where you are selling something for way less than what you originally paid for it.  
• Finally, since this is your friends property, he can't shift income tax consequences, without tax impact.  The only way is for your friend to sell the property, pay the tax and then gift you 50%.  Yes, I do know you stated your friend is in another state, but you could sell the property on his behalf.  But this still does not address what his basis is in the property, probably zero since I am sure that it was not handled correctly when he took possession.
•  As has been stated and I will reiterate, I would seek legal counsel on the many issues involved and you need to make sure that the legal counsel understands tax law as well or has a partner that can provide counsel.