FYI for those Operating or building models.

It seems that fully depreciated equipment / assets cannot be transferred out of certain entities for less than some market value (likely "FMV", but may be some gray area there). LLC allows it in some cases, but not Corporations.

This makes restructuring or even changing entity status challenging, without triggering a potentially large tax burden. In my case, a very significant fraction of the value of the assets.

I thought that the IRS was mostly concerned about preventing people from depreciating something twice (i.e. making sure that you step up the basis according to what it is sold at), but apparently it is more nuanced than that!

If you have any flavor to add, advice, or different knowledge of the above, please post or message!