Getting Rental from parents as gift vs as a purchase -- effects on depreciation/taxes

[John M.]

My parents bought a rental back when I was in college and now they're going to give it to me. My name is already on the deed as are their names from when it was initially bought.

I'm trying to figure out the best way to transfer the property to just my name.
They've been taking depreciation out of it for 15 years.

Anyone have advise?

If they gifted it to me, then I don't think anyone has to pay taxes(not sure???), but I would lose a lot of depreciation on my taxes and I would capture ALL of the gains on my taxes if I ever sold it.

If they sold it to me at market, and forgave $26,000/yr of the loan as a gift, then they would pay the taxes now on the sale, and I would gain the full depreciation and I would escape the gains on my taxes if I ever sell..
My parents have some stock they can sell at a loss to offset their cap gains under this option.

What other options are there?
Is option 2 the obvious choice, or am I missing something.

Thanks