Section 179 on commercial property on schedule E

[inquiringminds]

Individual has commercial property and takes 179 expense on 5 year property on schedule E of form 1040. IRS says he is allowed to take the 179 depreciation. Assets entered in Fixed Asset manager Program and on the asset entry worksheet  cost is included on Section 179 deduction line.  Tax program is not allowing the 179 depreciation expense and is carrying it over to 2022.  How do I resolve this?

[sjrcpa]

Is there a net income(loss) limitation in play?

[inquiringminds]

No net income(loss) limitation 

[dkh]

What does line 11 of F4562 show ?  There must be some business income limitation that is carrying it forward. 

[TaxGuyBill · Accepted solution]

Section 179 is only allowed if the rental rises to the level of a "Trade or Business".

ProSeries automatically assumes rentals DON'T rise to the level of a "Trade or Business", so it does not put the gain/loss of the rental on Line 11 of Form 4562.

I've done overrides on line 11, but I just found out there is a "depreciation options" worksheet that as a spot that you can enter the additional income/loss on line 3b of that worksheet.

[inquiringminds]

form 4562 line 11 shows zero but prior years and current year return show net income from Schedule E

[TaxGuyBill]

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@inquiringminds wrote:

form 4562 line 11 shows zero

but prior years and current year return show net income from Schedule E

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I'm confused.  You said line 11 is showing zero.

Then you said it is showing net income from Schedule E.

Which is it?  Or is net income from Schedule E $0?

In the past, the net income from Schedule E has never gone to Line 11 of the 4562.