That's a problem. If "YOU" are the one who took all the depreciation, then "YOU" are the one who has to recapture it. If your son recaptures depreciation that he did not take, I can practically guarantee him that he will be audited 24-36 months down the road and it will not be a pleasant experience. It will also $COST$ him quite a bit. Additionally, it's a 100% certainty that if you did not recapture all the depreciation you took, you will be audited too. Count on it.
"Other wise, I will end taking the whole depreciation amount from previous yeas "
Since you took 100% of the depreciation in prior years, you don't have a choice here. You are "required" to recapture every single penny of the depreciation you took.
" I protested during the closing, but was not given one check instead of two. "
Your son should have immediately endorsed his check over to you. Period.
Then, if you wanted to split the total profit with him, that's your choice and that split does NOT get reported on ANY 1040 tax return.
It would be handled differently with IRS Form 709 - Gift Tax Return which has nothing what-so-ever to do with "anybody's" tax liability. In fact, the name of that form 709 is even a misnomer because "NOBODY" will pay ANY taxes on your "gift" to him. All you're doing with the form 709 is fulfilling a legal reporting requirement, and that's it.
