I have an architect client who designs schools.  Had a 179D energy efficiency study done and got him a nice expense deduction that I understand he can claim on the S-Corp P&L and pass through to his personal return.

My question is on the balance sheet on the return.  The expense is a debit.  What's the credit in my journal entry to record this?  He's over the reporting threshold, so he has to fill out Schedule L and complete a Balance Sheet.

My client doesn't own the building (a high school), so he can't reduce his basis in that.  Is it just to equity, so essentially a capital contribution?

I've tried researching this, and can find a lot on the credit as well, but haven't found anything that addresses this item.