Got a 1040 with a Sch C (net profit $100,000) and Sch F (net loss $8,000). The farm has some equipment purchases that are included in fixed assets but could qualify for Section 179 if not for the net loss on Sch F - it is my understanding that 179 cannot be used if the business is sitting on a loss. Since the Sch C is currently profitable, can 179 be used on the farm anyway since the combined net income would still show a profit? Or is the Section 179 limitation applied per schedule?
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It is my understanding that the Section 179 deduction will be allowed if there is total net earned
income from any source (to the extent of that source) on the same return, including W-2 wages on Line 7, if any. -
See Pub. 946, p. 21.
The limit is "the taxable income from the active conduct of ANY trade or business during the year." It even includes wages.Evan Appelman, EAComment
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