The IRS gets very suspicious about business transactions between relatives. Working together, relatives could engage in sham sales of business or investment property in order to produce fake tax deductible losses. The tax code contains a simple rule to prevent this: You cannot deduct a loss on the sale or trade of property, if the transaction is directly or indirectly between you and a relative.
For these purposes, "relatives" includes your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.).
So you are required to recapture the depreciation no matter what, and you will pay taxes on that recaptured depreciation up to a maximum of 25%.
All the above is covered in IRS Publication 544 at https://www.irs.gov/pub/irs-pdf/p544.pdf
