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Old 08-25-2015, 08:31 PM
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Location: Orange County, California
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Section 179

Hello,

I prepared corporate taxes for over 15 years, but simply never came across this before. A construction company purchased large equipment and wants to take the highest possible deduction. I claimed Section 179 of $25,000 on one tractor and $20,600 on the other. Now the amounts show on K-1 (1120S) Line 11, but when I insert the info on the 1040 K-1 worksheet, they don't show up anywhere. Where can I insert the amount to take the deduction? My fear is that it will only effect his basis in the corporate shares, when we really intend to take a deduction on the tax return.

Thank you for your assistance.



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Old 08-25-2015, 11:45 PM
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Quote:
Originally Posted by JohnG219 View Post
Hello,

I prepared corporate taxes for over 15 years, but simply never came across this before. A construction company purchased large equipment and wants to take the highest possible deduction. I claimed Section 179 of $25,000 on one tractor and $20,600 on the other. Now the amounts show on K-1 (1120S) Line 11, but when I insert the info on the 1040 K-1 worksheet, they don't show up anywhere. Where can I insert the amount to take the deduction? .

Thank you for your assistance.
I guess you need to contact the software vendor; you need to use the sec 179 amounts, along with the total cost of section 179 property placed in service during the year from other sources on 1120S Sch K1 box 11.Actually, the Section 179 expense is not reported on page 1 of Form 1120S but instead the deduction is reported on Sch K and passed through separately to each shareholder on the appropriate line of the shareholder’s Schedule K1 box 11. Did you report it on SCh k of 1120S box 11 deductions box?



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Old 08-26-2015, 12:43 AM
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Yes, that's exactly what I did as per my initial message, but now that I plugged the k-1 into the 1040 return, I can't find where the Section 179 amount should go. The software doesn't transfer it to anywhere on the return.

I'm guessing if I have to manually put it in it would be either on Line 21 as Other Income/Deduction, or on Schedule A as Other Deductions, which in this case I would lose 2% of adjusted Gross Income.

Thank you for your reply.



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Old 08-26-2015, 02:01 AM
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Assets containing prior Section 179 will not be report on Form 4797, instead each transaction is listed separately on Sch K of 1120S, Line 17d.UNLESS amount is a passive activity deduction, you need to report it on Sch E of Form 1040 , line 28, column i. I guess you need to chck for help on each of the entries in the software screen.



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