Follow-up comments:
- You don't avoid Section 751. Regardless of how or when the asset was depreciated, you still will be subject to Section 751; or your partner will.
- Doesn't matter whether the asset is fully depreciated or not, your partner will still have their prorata share of depreciation recapture; to recognize as ordinary income.
- The only way you would not have any Section 751 is if the LLC had zero tangible personal property; which does not appear to be the case.
- You don't need to complete the form 8594. You purchased your former member's LLC interest.
- As a result of partnership tax law, your selling member is "deemed" to have sold assets. It is the "look-thru" partnership concept. Not an actual sale of the assets, it is a deemed sale for partnership tax purposes.
- That is the whole point of Section 751; not being able to convert ordinary income into capital gain.
- You do need to complete form 8308 for the selling member.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
