I have a client that will have a gain on the sale of farmland inside an s-corporation. (Yes, I know why should that be, well the land was already in the corporation when I became the accountant and no one remembers why). However, if the individual would purchase some milk cows would he be able to use 179 expense on these cows when he is leasing them to his son. Does the gain on the farmland qualify as busniess income to be eligible for the 179 expense since he has no other business income? It appears to me it does qualify because form 4797 instructions state the sale of farmland should be on part 1. This would retain its character and therefore be business income on the personal return. I am just a little uncomfortable with it but it does appear correct. Any thought greatly appreciated.
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