Can an S corporation or a partnership pass through section 179 deduction on its Schedule K-1 if it has a loss on Line 1, Ordinary Income / Loss?
A. Both an S corporation and partnership are subject to the taxable income limitation when computing the amount of section 179 which can be passed through. The entity can only pass through section 179 equal to the entity’s taxable income. When computing the taxable income of an S corporation, the entity can add back in the amount of wages paid to shareholder/employees. When computing the taxable income for a partnership, the entity can add back guaranteed payments paid to partners.
Related Questions
- Is the income reported on Schedule K-1 from a limited partnership, such as AllianceBernstein Holding, considered Unrelated Business Taxable Income (UBTI)?
- Can an S corporation or a partnership pass through section 179 deduction on its Schedule K-1 if it has a loss on Line 1, Ordinary Income / Loss?
- Can the Parent Corporation Take the Section 83(h) Deduction for the Option Payment?
