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Is it better for a C Corp to have a Sec 179 carryover or a NOL carryforward?

elintx
Level 2

Company has profit this year but purchased more assets than it can take as a Sec 179 deduction in 2018 so I took bonus depreciation that created a NOL.  Since NOLs now can only be carryfwd and only can use 80% in a future year with the remaining 20% carryfwd until used up I don't know if I should just forget about a lot of the bonus depreciation and take all Sec 179 and have that as a big carryfwd.  What should I do - carryfwd a large Sec 179 or take bonus depr. and carryfwd a big NOL?

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rbynaker
Level 13
I might recommend they file an extension and deal with this in September.  After 8-9 months of activity they might have a better idea about how 2019 might look.  There's no "one size fits all" answer.

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10 Comments 10
taxiowa
Level 8
Level 8
Does client expect a large business income next year?  Then it is more prudent to carryforward 179 so that it offsets SE tax next year.  However I know the standard deduction does not carryforward.  So maybe client should be showing income of 12K to be offset by standard deduction.  Although you don't give many details of what type of return and any other income taxpayer has.
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elintx
Level 2
This is for a C Corporation.
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elintx
Level 2
Will the price of oil be higher this year (they manufacture parts for O&G industry)?  Will the client purchase a lot of fixed assets this year?  I asked and they don't know so really can't say what kind of income or expenses they will have.
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rbynaker
Level 13
I might recommend they file an extension and deal with this in September.  After 8-9 months of activity they might have a better idea about how 2019 might look.  There's no "one size fits all" answer.
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elintx
Level 2
Not an option because I want to get paid for doing the return ASAP!
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abctax55
Level 15
Ever heard of a retainer?
"*******Tax software is no substitute for a professional tax preparer*******
( Generic Comment )"
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IRonMaN
Level 15
So how do you tell the client that they really should wait but they can’t wait because you want to be paid ASAP?

Slava Ukraini!
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itonewbie
Level 15
This practice may be in breach of Circular 230...
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Still an AllStar
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abctax55
Level 15
And if it isn't...it should be.  Plus it's morally wrong.
"*******Tax software is no substitute for a professional tax preparer*******
( Generic Comment )"
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itonewbie
Level 15
:+1::+1:
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Still an AllStar
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