Discussion:Section 179 Carryover

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Discussion Forum Index --> Consumer Questions --> Section 179 Carryover


Vitarick (talk|edits) said:

28 February 2007
On Form 4562, line 9, I have a tentative Section 179 deduction of 84,000, but on line 11, I have a business income limitation of 64,000. That allows me on line 12 a Section 179 expense of 64,000 and a carryover of 20,000 to 2007. My question is: Can I take less than 64,000 on line 12 (say 32,000) and carryover the rest (52,000) to 2007? This will spread that deduction over 2 years and equal my withholding this year so I don’t get such a large refund in 2006.

Pegoo (talk|edits) said:

28 February 2007
No you will have to use 64,000 this year and 20,000 next year.

Bx524 lca (talk|edits) said:

February 28, 2007
Alternatively, you could also forego the 179 and take the regular depreciation. Probably not the best alternative, but, it is an option...

Vitarick (talk|edits) said:

28 February 2007
Thanks Pegoo, I think you are right, even though I called the IRS help line and they said I could take as much as I wanted in 2006. I don't think the lady really understood the situation, no matter how I tried to explain it.

JR1 (talk|edits) said:

February 28, 2007
You called them? C'mon, what are you thinking? The way to reduce your sec 179 for this year is to do as Bx suggests.

Vitarick (talk|edits) said:

28 February 2007
That seems like the best option, just take sec 179 up to the limit I want and depreciate the rest. Audio/Video equip and computers I can depreciate over 5 years, off the shelf software 3 years, and furniture/fixtures are 7 years. Is that correct?

JR1 (talk|edits) said:

February 28, 2007
Exactly what I do. Pick and choose which ones I sec 179 and which ones to depreciate to get the answer I want. I'll usually 179 the longest and depreciate the shortest so that it comes off quickly as it can.

Glmpllc (talk|edits) said:

28 February 2007
I agree with all...that being said, there is nothing wrong with a 179 carryover to next year, unless you expect to be limitied again in 2007.

Deback (talk|edits) said:

February 28, 2007
Vitarick - That's correct, and I agree with JR. You can choose the amount for the section 179 deduction in your asset entry worksheets and depreciate the rest, or you can choose to Sec 179 all of the equipment and carryover the unused portion, if you think the Sec 179 expense will be helpful next year.

Death&Taxes (talk|edits) said:

1 March 2007
Have you done the math: Wouldn't the shareholder/officer salary be included to compute the amount allowable? I am assuming a one person S Corp

Rajarora (talk|edits) said:

2 March 2007
I have a question and hope someone can answer it. Thanks in advance.

I have an S corp with two shareholders. 2006 is the first year of S corp and there is a loss in it. S corp also has about $5,000 section 179 expense. I believe this $5000 shall be passed through to the two shareholders on K-1. Both the shareholders have W-2 income. Can the section 179 expense passed through to the shareholders be set off against their W-2 income on their 1040? If not, can this be carried forward to 2007 and beyond?

Death&Taxes (talk|edits) said:

2 March 2007
Are the wages from the S Corp?

Rajarora (talk|edits) said:

2 March 2007
No. From other companies.

Death&Taxes (talk|edits) said:

2 March 2007
You will not be able to pass out the deduction. The limit is computed at corporate level first, but any loss would be reduced by officer/shareholder salary [S Loss of $1,000 but with Officer/shareholder salary of 2500 would permit a 179 of 1,500]

Vitarick (talk|edits) said:

4 March 2007
Death&Taxes, yes I've done the math and included the shareholder/officer wages in the business income limitation. In fact, the business income includes two s-corps, both with sec 179 expenses. One S has profit and other has a loss and when combined and wages added from both S-corps results in income limitation. I'm like JR1 and like to get rid of the 179 as quickly as possible, but in this case my income will likely be high in 07 and need some help to reduce taxes next year, not so much this year---hence my dilemma. If I depre instead of 179 this year, I don't get much help next year.

Delandreth (talk|edits) said:

12 March 2007
I have a question concering the calculation for the Sect 179 limitation for a shareholder/officer of an S-Corp. There are 2 shareholders, both receive salaries, both have the same circumstances: Each has an adjusted basis as of 12/31/2006 of $5500. Each receive a $60000 salary (after 401(k) contributions. Each has Sch K-1, line 1 income of $15500 and line 4 income of $3300. Line 11 is $54000. Line 12 A-$175, R-(Officer's Health Incurance Premiums)$4579. Line 16 C-$339. Please provide me with the calculation to determine how much Sect 179 expense can be taken for 2006?

Thank you for your assistance.

JR1 (talk|edits) said:

March 12, 2007
Without plugging it into a 1040 I think yes, the W2's count as earned income for this...so it should flow thru.

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