Asking for help! Ptr to SCorp Question

[JG EA]

This year a partnership K-1 is gone and now an SCorp K-1 in a different EIN is replacing it. (According to the client.) The SCorp EIN is the same as EIN on the client's W-2.

There was no Final K-1 for the Ptrship last year. But it is gone.

My questions:
1. Does client's basis and suspended 179 losses go with the new Corp?

2. New Corp has lots of shareholders - all the employees - is my client passive in the Corp? Or does it just depend on what he does in the corporation NOT counting his wages? He is not an officer.

[JG EA]

I will extend this return if necessary to research, but would appreciate any help you can give no matter how little. I am talking to the client tomarrow.

[JG EA]

OK I am quoting myself

1. Does client's basis and suspended 179 losses go with the new Corp?

I have more information now. The S corp took over and the partnership is gone. The client is not passive. So now my question remains: Does his basis and suspended 179 losses go with the new corp? And if so, now that he's not passive can we take his little bit of suspended 179 losses?

[veritas]

I guess I have many questions.

You said there are suspended 179 deductions. We are taking about deductions/losses suspended at the partners level. The only way a 179 deduction can pass out to the partner is if there is income at the partnership level. So I am trying to imagine why just 179 is suspended. Are there not other losses suspended too?

What happened with the partnership? Was it liquidated?

[JG EA]

Thank you for answering me back!

There were gains at the partnership level in box 1, and there were 179 deductions also. He was a limited partner. My program told me not to take the 179 deduction and to suspend the deduction.

The partnership just stopped and became the S Corp. (Their accountant said it "rolled over". HA!) Anyway I'm willing to take that explanation since in TTB it says "Do not check “Final return” box for a partnership that
terminated because of a sale or exchange of at least 50% of the total interest in partnership capital and profits"

[veritas]

Limited partner is the key

The Sec 179 deductions were not suspended they are lost. No Sec 179 allowed for limited partners which are passive.

Bad deal for your client since the Sec 179 deductions reduce his basis.