Pro Series users "section 179 expense report" prior year carryover

[AZ-Tax]

2012 the Sch C business purchased the following assets and claimed as Sect 179 assets: Computer, Monitor and Printer all totaling $670 w/100% usage. 2012 form 4592, Ln 8 & 9 has $670. Ln 10 blank and Ln 11 $0 and the $670 was not included on Ln 13 of Sch C. I knew Sch C with $0 or loss prior to calculating home office deductions, home office deductions would be limited but I was not aware 100% business use asset had depr limitations. So now that $670 has become a carryover for future tax years. Does that sound correct or is my software playing tricks on me.

[Gretel]

Are you saying Schedule C is zero or negative? Section 179 is allowed only to the extend you have business income. If this is the only item on the 1040 then the 179 expense will carry over. I recently was surprised by this myself and find it a good planning tool in some circumstances since this carry over will preserve the deduction for SE, whereas bonus depreciation will create negative income and a NOL but SE deduction is lost.

[TaxGuyBill]

As Gretal said, if there is no other earned income on the 1040, OR if you did not check the 'at risk' box, then Section 179 would not create a loss.

For future reference, an 'at risk' Schedule C (I can't imagine any that are not 'at risk') CAN offset other earned income, such as W-2 wages.

[AZ-Tax]

Yes you are correct.

Are you saying Schedule C is zero or negative? Section 179 is allowed only to the extend you have business income. If this is the only item on the 1040 then the 179 expense will carry over. I recently was surprised by this myself and find it a good planning tool in some circumstances since this carry over will preserve the deduction for SE, whereas bonus depreciation will create negative income and a NOL but SE deduction is lost.

Line 30 tentative profit on Sch C is $82 then $400 of partial home office interest and prop taxes were deducted thus leaving a $-318 Net Profit.