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2020 form 1065 M-1 is off by section 179 carryover

JackW
Level 3

2020 Form 1065 with 2020 section 179 carryover-My schedule M-1 is off by the section 179 carryover amount to tax year 2021.  Where does the section 179 carryover for 2020 Form 1065 show up on the M-1?  Should it flow through to the  schedule M-1.  If I put the section 179 carryover on Schedule M, line 4a it appears as an item on the books but not on the return.

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2 Replies 2
sjrcpa
Level 15

Deduction on tax return not on books  I read OP wrong


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JackW
Level 3

In 2020 there is more 179 depreciation than there is business income so on form 4562 box 13 there is 19,501 (carryover of disallowed deduction to 2021. My schedule M-1 line 4a has 19,501 (expenses recorded on books this year and not included on Schedule K etc. line 4a depreciation) because of the 179 limitation  and line 9 Income has zero. Re Schedule M-2- on screen 28 I checked the box recompute Sch M-2  line 3 if partnership books are not on tax basis. When I do this Schedule M-2, line 3 ordinary income is 19,501 greater than the book net income on line 1 of the Schedule M-1. But I took a look at what I did and the balance sheet is now out of balance due to the tax basis capital accounts. Now I am really confused.  Do I need to check the box to "recompute Schedule M-2 line 3 if partnership not on tax basis" since difference tween books and tax have to do with a 2020 Section 179 c/o to 2021? I thought my tax returns were tax basis but got confused when I had a 2020 Section 179 c/o to 2021.   

Thank you for your help.

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