Discussion:K-1 Disposition of Prior Sec 179 Exp
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Discussion Forum Index --> Tax Questions --> K-1 Disposition of Prior Sec 179 Exp
| 24 September 2006 | |
| Client has a K-1 with box 17E for two assets there were disposed of with prior section 179 expense. How do I treat this? One of the assets is a 2003 Trailer of which $17,323 was Sec 179 and the K-1 says $0 (no) depreciatio allowed or allowable. The other asset is a 2001 Navigator of which $12,000 Sec 179 was previously reported and $5,536 was allowed or allowable. | |
| 25 September 2006 | |
| Does anybody out there know how to treat this on the 1040?
I would greatly appreciate guidance. | |
| 26 September 2006 | |
| You're going to need more information to complete the transaction. You'll need to know sales price, original cost, expense of sale, etc. Line 17E is information for the sale of assets for which Sec. 179 expense was passed through to the shareholders. Hope this helps. | |
| 27 September 2006 | |
| All of this information has been supplied as supplemental information from the K-1. I just don't know where on the tax return these numbers belong. Can you help? | |
| 27 September 2006 | |
| Once again - does anybody understand this? I have a Trailer purchased 10/31/03 and sold 10/31/05. Sales price was $10,000 and purchase price was $17,323. Section 179 expense deduction previously reported was $17,323. The K-1 says there no depreciation allowed or allowable.
I put this informtaion on 4797 on the 1040 return and come up with the $10,000 gain. It was my impression that I would have to recapture some of the 179 - the amount in excess of what normal MACRS would have allowed for the two years the asset was held. I'm struggling to grasp what I need to do. | |
| 27 September 2006 | |
| I thought 179 recapture applied when a business asset fell below 50% usage. Nevertheless, would not ordinary income in this case be 10k? Think 1245 property recapture on a sale is the lower of recomputed basis or amount realized over adjusted basis - which is 10k. Didn't your 4797 show the 10k as ordinary income? | |
| 28 September 2006 | |
| You need to link your k-i line 17e to a worksheet "DISPOSITION OF ASSETS FOR WHICH SECTION 179 EXPENSE WAS PASSED THROUGH" once done the sale gets reported on form 4797. Of course you need all the details including - date acquired, sold, expense on sale ect... | |
Death&Taxes (talk|edits) said: | 28 September 2006 |
| I think you will come out with the same answer if you recapture the excess of the 179 over depreciation allowed until disposition. Assuming no mid-quarter convention in 2003, You would have accumulated depreciation of 10671 and a 179 recapture of 6652 [17,323-10,671]. Then you would subtract the new adjusted basis of the trailer,6652, from the 10,000 and have a gain of 3348, and a total gain of $10,000. Either way, the depreciation of the 1245 property is recaptured and your gain is 10,000. | |
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