Partner Section 179 Expense Deduction

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Section 179 expense available to distribute to partners is limited to the partnership’s actively conducted trade or business income as defined in IRC Section 702(a). Even though a partner’s Schedule K-1 may show income due to specially allocated income or expense items per the partnership agreement, if the partnership overall has a loss, Section 179 expense cannot be distributed to any of the partners in the current year. However, any disallowed deduction can be carried over to future years and distributed up to the amount of partnership income in a given year.

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