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1120-S Section 179 carryover doesn't reduce QBI in Lacerte

by Intuit Updated 1 month ago

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Section 179 carryover is not reducing the Qualified Business Income on an S Corporate return. Why does it show on the Form 4562, but not on Form 1120S, page 4, line 24?

Per https://www.irs.gov/pub/irs-drop/td-reg-107892-18.pdf page 198:

Previously disallowed losses. Generally, previously disallowed losses or deductions (including under sections 465, 469, 704(d), and 1366(d)) allowed in the taxable year are taken into account for purposes of computing QBI. These losses shall be used, for purposes of section 199A and these regulations, in order from the oldest to the most recent on a first-in, first-out (FIFO) basis. However, losses or deductions that were disallowed, suspended, limited, or carried over from taxable years ending before January 1, 2018 (including under sections 465, 469, 704(d), and 1366(d)), are not taken into account in a later taxable year for purposes of computing QBI.

For this reason, Lacerte disallows Section 179 deductions when the asset was placed in service in an earlier tax year. However, Section 179 Carryover will be tracked and used for assets placed in service in tax years 2018 and later. This portion of the carryover can be used next year (limitations may apply).

Lacerte Tax 2023

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