Section 179 asset sold not showing up on K-1

Forum|Forum|3 years ago
December 9, 2022
2 replies
14 views

I have disposed of an asset that was section 179 in 2018 with a current basis of $0, so all gain. The program calculates the ordinary income recapture and capital gain (sold for more than purchase, lucky duck), but the ordinary income from 4797 does not flow through to the shareholders K-1, only the capital gain. Any help would be greatly appreciated, thank you in advance!!

ProSeries Professional

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Best answer by dkh

Form 1120S or 1065? Look at Form 1120S page 1 line 4 or on Form 1065 page1 line 6 for the 4797 ordinary income. The amount doesn't flow as a separate line to the K1.

dkhAnswer

Level 15

Form 1120S or 1065? Look at Form 1120S page 1 line 4 or on Form 1065 page1 line 6 for the 4797 ordinary income. The amount doesn't flow as a separate line to the K1.

jake1Author

Level 3

Ugh...ordinary income, thank you very much!

dkh

Level 15

😁You're welcome.

taxiowa

Level 8

While it is true that the gain is ordinary it will not show up on Page 1 of the 1065 nor the 1120S return. If an asset on which section 179 was taken is sold, the gain does not automatically transfer to form 4797 or the front page of the tax return. Hence it also does not flow to the K1. This is because the 179 taken may or nay not have been allowed at the shareholder level.

A 179 disposition report prints along with the K1 to show shareholders or partners the selling price and 179 deduction taken and which year. this is info for them to enter on their personal returns. If you do the taxes for all owners and know that 179 was allowed to them in full, I suppose you could manually enter sale on 4797 so it flows to K1.

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