Discussion:Section 179 and S corp loss

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{{ForumNewPost|UserID=Ksnoopytax|Date=12 December 2007|Text=Here are the facts:

My client is a 100% shareholder of three S-corps. S-corp 1 has net income of $20,000 and SH wages of $30,000 and basis of $70,000. S-corp 2 has net income of $40,000 and SH wages of $30,000 and basis of $30,000. S-corp 3 opened up a new store this year and purchased $100,000 of equipment on a lease with a $1 buyout. S-corp 3 also has SH wages of $30,000 and basis of $10,000. Before the purchase, S-corp 3 was breaking even for the year.

What I would like to do is Section 179 all of the equipment for the year on their tax return. I believe I can do this because of [[Reg. 1.179-2(c)(4)] which would let me use the active trade or business income from S corp 1 & 2 to increase my overall Section 179 deduction. I also believe SH wages comes into play here to increase my allowable deduction? Also, how would my S-corp basis be affected? Even though I have the ability to take a larger 179 deduction because of my other "active trade or business income" am I limited to $10,000 because of my basis in S corp 3's stock?

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