how to limit 179 deduction from s corp K1

[Terry53029]

Have a client with S Corp K1.  Has 179 line 11, but he does not materially  participate in the S Corp, and I can't seem to disallow the deduction with out overriding. Can someone point me in the right direction. I would think that if I did not check box referencing materially participate on the K1 the program would not deduct it, but it does.

Thanks

[IRonMaN]

I think you already found the right direction - the program is handling it correctly.

[Terry53029]

The program is deducting the 179 from clients income, and I believe section 469 says if TP does not materially participate it must be carried over, and can't be used this year

[sjrcpa]

I thought if they're passive they can't use 179 period.

[Terry53029]

sjrcpa I agree they can't use it this year, but I think it can be carried over to next year. This is from section

469:  Except as otherwise provided in this section, any loss or credit from an activity which is disallowed under subsection (a) shall be treated as a deduction or credit allocable to such activity in the next taxable year.

[Terry53029]

Also assuming we all agree that the 179 should not be used, how do i accomplish that in the program

[IRonMaN · Accepted solution]

You learn something new everyday 😀

You would think that is something the program would handle correctly.  Sounds like you might have to just ignore the section 179 entry on the K-1 worksheet.

[sjrcpa]

@Terry53029 Agreed. But if the activity is always passive...

In Lacerte, we make sure the activity is marked as passive and it will not allow the 179 deduction. I don't know ProSeries.