179 deduction

[dmaline]

I have a partnership that was terminated because one partner retired. This was a 50-50 partnership (2 brothers). The assets have been distributed. Partner 2 forms an S corporation and contributes his assets to the corporation in exchange for stock. Partner 1 (the retiring partner) sells his share of the assets to the corporation.
My questions is: can we take a 179 deduction on the retiring partner's assets or are we barred from taking it because of the related party rules and/or the orginal use rules?

[Nashville]

Cash

Don't think you can 179 this stuff because it has to be a cash purchase, or at a minimum paid for with borrowed money. I don't know that this is a salient observation or not, but what if he 179d this equipment when he first bought it? If so, is there any basis left?

Interesting question. If he is allowed to s.179 then he can churn this equipment in and out of as many entities as he can put with.

I notice this is your first post. Welcome to our forum, where tax questions are answered and tax problems aired for comments.

[dmaline]

179 deduction

Thanks for the welcome. In fact, part of it was 179'd in the partnership and the retiring partner has recaptured is share on the liquidation. It is a cash purchase (Note) of the assets, so the assets now have basis.
I think the only issues that could prevent the deduction are possible related party rules and the previous 179 deduction in th partnership. However, I cannot find anything on the " original use rule" to if I can or can't take the deduction.
If anyone has a link to this info, that would be great
dm