Dispositions with Prior Section 179 Expense

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Beginning with the 2003 tax year, Partnerships and S Corporations no longer use Form 4797 to report the disposition of property if a Section 179 expense deduction was previously passed through to any of the partners/shareholders. Instead, each disposition is reported separately on Schedule K-1 and includes the description of the property, year Section 179 expense was passed through, date the property was acquired, date sold, sales price, cost, depreciation allowed, Section 179 expense previously reported, etc. Refer to the IRS instructions for Forms 1065, 1120S, and 4797 for additional information.

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