Sec 179

[Unregistered]

Scorp bought new assets for 180,000. Scorp has 4 share holders. each one is equal. So each SH will deduct their share of sec 179 on their return.

I do not think sec 179 will make any diff as far as scorp income is concerned as it is a pass through item

But I think scorp will be limited to approx. $102,000 (sec 179 limitation for 2006)

Does this sound right?

[Matt Sova]

179 limit

The Section 179 is first limited at the entity level. For 2006 this is $108,000. The 179 then flows through Sch K to the K-1's and is deducted at the personal level. Each individual is also subject to the limit so you have to be aware of that and if any shareholder belongs to any other S-Corp, partnership or has an Schedule C that is also utilizing Section 179.

[Jiggers]

Sec 179 & S-Corporations

You have to meet the business income limitation for the S-Corporation and each shareholder must meet the business income limitation.

If the S-Corporation has a loss, no Section 179 to pass through to the shareholders.

See IRS Publication 946 for a more detailed explanation as there are exceptions.