Discussion:Section 179 carryforward shareholder
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Discussion Forum Index --> Basic Tax Questions --> Section 179 carryforward shareholder
Discussion Forum Index --> Tax Questions --> Section 179 carryforward shareholder
| 3 November 2009 | |
| If an S-Corporation elects section 179 but business income limit disallows the deduction and shareholder gifts interest does the new owner get to use the section 179 carryforward???? | |
| 3 November 2009 | |
| Section 179 limits are applied at both the entity level and the shareholder level.
Just to clarify what I think your statement said: Business income on the K-1 PLUS W-2 wages to your shareholder limited the deduction on that shareholder's 1040? Therefore, your shareholder has a carryover of unused section 179 deduction to a future year. I haven't researched it but my instincts are that could only be used by your original shareholder. New owner of that stock would not get this, they'd only get the tax basis of the interest by stepping into the shoes of the original stockholder. I think that tax basis would be reduced by the 179 deduction in full regardless of any tax benefit to the original shareholder. It may be lost forever if your original shareholder cannot have enough wages and share of profit in his final K-1 to permit using it. If you meant the S Corp elected section 179 but couldn't pass through at the entity level, giving the S Corp itself a carryover to a future year, all shareholders during the year the carryover is allowed would pass through to K-1's in that year. | |
| 4 November 2009 | |
| I meant what you said in the last paragraph. The 179 was disallowed at the entity level due to the business income limitation. Therefore, I want to ensure that it will carryforward and my new owner will get to use it because this year the corp has profits. | |
