Hello and thank you for your question.
A repossession is treated like a sale or exchange (IRC 1231) along with the sale of your lease. Schedule D and Form 4797 are used to report a sale or exchange of business property that is used in the trade or business.
Here is schedule D for form 1065:
Instructions w/ quote from pg 1 under "Other forms you may have to file"...:
"Use Form 4797, Sales of Business
Property, to report:
Here is IRC 1231:
§ 1231. Property used in the trade or business and involuntary conversions
"...any recognized gain from the compulsory or involuntary conversion (as a result of destruction in whole or in part, theft or seizure, or an exercise of the power of requisition or condemnation or the threat or imminence thereof) into other property or money of..."
For the equipment, you will have what is considered IRC 1245 property, subject to ordinary income recapture when it comes to your depreciation formerly claimed. More specifically, here is IRC 1245:
"...Except as otherwise provided in this section, if section 1245 property is disposed of the amount by which the lower of-
(A) the recomputed basis of the property, or
(i) in the case of a sale, exchange, or involuntary conversion, the amount realized, or
(ii) in the case of any other disposition, the fair market value of such property,
exceeds the adjusted basis of such property shall be treated as ordinary income..."
You may wish to note IRC 1055, here, and apply to your specifics, etc.:
..."a redeemable ground rent shall be treated as being in the nature of a mortgage, and..."
..."For purposes of this subtitle, the term "redeemable ground rent" means..."
Let's look at IRC 707, here:
"If a partner engages in a transaction with a partnership other than in his capacity as a member of such partnership, the transaction shall, except as otherwise provided in this section, be considered as occurring between the partnership and one who is not a partner."
As far as filing on Schedule E rental income that you have received from the partnership goes, I tend to suggest an accountable plan... That is, the partnership reimburses you for your actual costs, which are documented with receipts and substantiated etc. If you are not renting, but rather getting reimbursed (this is a fine line), then you may not be required to file Schedule E. In addition, the partnership will not be able to be construed as 'washing' income subject to self-employment tax (partnership income) into rental income for you (income not subject to self-employment tax).
I do suggest that you see a tax professional to help make the determinations as to how to apply the above code sections to your personal facts and circumstances, and to further help you treat any rentals/reimbursements from the partnership correctly. My suggestion as to how to treat the above would change pending your specifics and the fair value of rent would have to be carefully determined/documented...