Discussion:Sec. 179 income limitation
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Discussion Forum Index --> Tax Questions --> Sec. 179 income limitation
| 21 December 2006 | |
| My sub S client has about $150K of eligible Sec. 179 assets this year. I want to maximize the election. I know it is limited to taxable income. I know this includes ordinary income from the sub S and the shareholder's wages from the sub S. Would this also include capital gains from the sub S? How about he wife's non sub S wages? | |
| 21 December 2006 | |
| Dston,
The income limitation would not include capital gains, but it would include 1231 gains. 179 is limited to income derived from an active trade or business. Additionally, these limitations are applied at both levels -- the S-Corp and the individual. Therefore the wife's non-S wages would apply at the 1040 level, but not in applying the limitation at the S-Corp level. Kevin | |
| 21 December 2006 | |
| Yes. I have misspoken. These would be 1231 gains and mostly ordinary due to depreciation recapture. I think I have answered my own question. The driving (no pun intended) transaction is from a limo service selling an old limo and buying a new limo. I understand applying the different levels. | |
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