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Section 179 Deduction is limited or disallowed on S-Corporation in Lacerte

by Lacerte Tax 2023 Updated 10 months ago

Why is Section 179 Expense Deduction not showing on the Schedule K, Schedule K-1, or the Schedule M-2, line 5?

The elected amount of Section 179 expense first appears on Form 4562, Line 6.  The elected amount can be limited on Line 9 by the Maximum amount on line 1, or by Threshold cost of section 179 property on Line 3, or both.  If the Section 179 deduction calculates on Form 4562, Line 12, it will appear on the Schedule K, Line 11, and on the Schedule K-1, Box 11. 

If the Section 179 deduction is not flowing to the Schedules K or K-1:

  • Check the Form 4562 to verify the elected Section 179 expense is not being limited by Maximum amount (Line 1) or by Threshold cost of section 179 property before reduction in limitation (Line 3).
  • Verify if there is a loss on Form 1120S, line 21.  If there is a loss at the S Corporation level, Section 179 deduction calculation will stop at Form 4562, Line 9, Tentative deduction and will not pass through to the Shareholders.  A worksheet will generate for Form 4562, Line 11, Business income limitation showing the income limitation calculation.
    Note:  The amount of disallowed Section 179 expense will appear on the General Information sheet as a carryover to the next year.
  • Go to Screen 20, Schedule K Income & Deductions and verify there is no figure entered in the field Section 179 deduction [A], under the Deductions section.
  • Confirm that Screen 33, Schedule K-1 Overrides does not have an entry in field Section 179 deduction under the Deductions section.  Check each Shareholder listed at the top of the left-hand column.
  • Check the Depreciation Schedule - Regular to verify that there is Section 179 showing on depreciable assets.
Lacerte Tax

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