sec 179 partnership and trust

[gman]

An partnership filing form 1065 has two individuals and a trust that are receiving k-1's from it. A sec 179 is taken on schedule f- flowing thru on k-1's
If partnership is unable to use the section 179, should that share of the 179 be divided among the other two k-1s?

[Roland Slugg]

I could not understand your question. Please proofread it, and if you also find that it's unclear, rewrite it so it is.

[BHoffman]

An partnership filing form 1065 has two individuals and a trust that are receiving k-1's from it. A sec 179 is taken on schedule f- flowing thru on k-1's
If partnership is unable to use the section 179, should that share of the 179 be divided among the other two k-1s?

If you meant to say that you think the TRUST is unable to use the Sec 179, then NO do NOT divide the 179 between the other two partners.

Issue the K-1 forms to each partner, including the trust partner, with the correct amount of Sec 179. The trust is probably a revocable living trust and the tax effect will be reported on the trustee's 1040 tax return as though there is no trust.

[TAX4US]

Isn't the deduction for the 179 coming from a partnership determined at the shareholder level. So as in agreement with above, I think all 3 should share the 179 assuming equal ownership in the partnership.

[JudyL]

Isn't the deduction for the 179 coming from a partnership determined at the shareholder level. So as in agreement with above, I think all 3 should share the 179 assuming equal ownership in the partnership.

There is a limitation determined at the partnership level first, then at the partner level also.

[Burke]

If you meant to say that you think the TRUST is unable to use the Sec 179, then NO do NOT divide the 179 between the other two partners.

Issue the K-1 forms to each partner, including the trust partner, with the correct amount of Sec 179. The trust is probably a revocable living trust and the tax effect will be reported on the trustee's 1040 tax return as though there is no trust.

And even if the trust is not an RLT, you still divide it three ways, even if the trust cannot use the deduction. That part is simply lost. You cannot transfer it somewhere else.

[gman]

Drake

When I talked with Drake, they told me the amount could be split between the others and not carried to the Trust k-1. There is a screen in Drake where I can do that, but was not sure if that was allowed.

[Burke]

That is not correct. Look at the partnership agreement. We are assuming all interests are equal. But it may be possible that the partnership agreement says otherwise and attributes a lower percentage to one or the other. If that is the case, then you can apportion differently in the manner described in the agreement. All software has that option.