What would you do with this 1st yr P'Ship return?

[AZ-Tax]

1st yr P'Ship return has losses in the double digit w/o the Sect 179 depreciation which carries forward to 2015 according to my tax software. The assets are small hand tools like a hand drill, buffer etc. I was considering deducting those hand tools (assets)under the "tool" entry in the "Other deductions worksheet" vs. Assets. This would increase each partner (2) Ordinary Business Loss on their K-1 for which each partner could use to lower their income tax liability.

[kathyc2]

1st yr P'Ship return has losses in the double digit w/o the Sect 179 depreciation which carries forward to 2015 according to my tax software. The assets are small hand tools like a hand drill, buffer etc. I was considering deducting those hand tools (assets)under the "tool" entry in the "Other deductions worksheet" vs. Assets. This would increase each partner (2) Ordinary Business Loss on their K-1 for which each partner could use to lower their income tax liability.

You could look at the de mimimis or bonus depreciation.

Personally, I don't think the immediate write off that produces a loss makes much sense when the depreciation in future years would decrease SE tax in addition to FIT.

[BOB W]

The next question is" Do they have other income to take the loss against for 2014 and is it enough to want to max out deductions?"

[AZ-Tax]

The answer is YES

The next question is" Do they have other income to take the loss against for 2014 and is it enough to want to max out deductions?"

The answer is YES.

[taxea]

I agree with Cathy. If the 179 creates a loss or adds to a loss it is a waste of the asset depreciation. I rarely use 179 for startup businesses because as the income grows the yearly depreciation becomes more useful.

[Burke]

You and kathyc2 make good points. It merits consideration figuring it both ways, and is highly dependent on both individual's marginal tax rates, current and future. Don't forget to factor in the state tax as well. Some of them have different rules on 179 deductions.

[Bees Knees]

I don't like using Sec 179 to create a loss. As others have pointed out, the depreciation deduction in future years can help to reduce SE tax in those years. Something that can help to reduce that 15.3% SE tax is something to take seriously. The current year marginal tax bracket for other income would have to be at least 15.3% higher than in future years to justify giving up that SE tax deduction in future years.