1040-US: Form 4562, line 11 - Business income limitation,--- what list of income qualifies? Another service listed 4797 line 18. to be able to write of 179 deduction.
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New Member

1040-US: Form 4562, line 11 - Business income limitation,--- what list of income qualifies? Another service listed 4797 line 18. to be able to write of 179 deduction.

is 4797 line 18 included on line 11, where in instructions dose it say that?  I did by hand include on Dep options line 3b,  just wanted to be sure it was ok.
3 Replies
Level 2

1040-US: Form 4562, line 11 - Business income limitation,--- what list of income qualifies? Another service listed 4797 line 18. to be able to write of 179 deduction.

i ran into the problem of my section 179 being limited.  why?  because turbotax does not enter / calculate your eligible business income.  it only calculates Sked F and Sked C at Line 3a.  plus some other items.  in my case, i had very little positive income from F and C.  F had a big loss and C had a gain so it was pretty much a wash.  

section 179 is limited to actual "business income" where you materially participate.    so if you have net biz losses, you can't take any 179.  

in my case the key was line 3b, where i could manually enter my rental real estate income.  that is because i classify myself a real estate professional who actively participates in my rental properties.  once i manually entered this at 3b, my limitation went away.  furthermore, my calif. state tax dropped dramatically too.  so this is an extremely important oversight on the part of turbotax software.  turbotax should automatically include Sked E income (for r. e. professionals) at this page which is called "Depreciation Options" in your list of forms.  which carries over to Form 4592 "Section 179 Summary".    took me forever to figure this out, especially in view of all the other arcane deprecation rules such as the new Special Depreciation Allowance.  further note on the latter: if you elect SDA instead of 179, then you are forced by irs regs to use SDA for all of that class of property across your return.  i didn't want to do that.  so i went back to using 179, where you can elect to deduct all of an item in year 1.  which amounts to the same result, as far as i can tell.  

New Member

1040-US: Form 4562, line 11 - Business income limitation,--- what list of income qualifies? Another service listed 4797 line 18. to be able to write of 179 deduction.

I want to thank you for taking the time to explain this.  I have been banging my head against the wall trying to figure out why Section179 will not "take".  I also MATERIALLY participate in my rentals.  That is all I do and I do it full-time.  I have 14 units and manage them 100 percent myself and it is my SOLE income.  It is alot of work.  But I digress.  I intended to Section 179 a Dodge Grand Caravan because I am always carrying so much stuff in my Subaru.  Anyways I have been trying for months to get this to work.  It is why I filed for an extension.  I have not tried to do as you describe, but I have found the Line 3b in the Depr Options worksheet and can see it is WRONG.  So I am going to correct it manually using Forms view.  I wanted to take the time to thank you since you took your time to put an explanation out there.  Also hello TURBO TAX - fix this !!!!!!!!!!   By googling I can see others have this problem also, it is not new.  I updated my software on October 14th and a correction has still not been made.  I highly doubt I will use Turbo Tax next year and I have been using it for over 10 years.  It is not the error, it is the fact that the error is KNOWN and REPORTED and Turbo Tax has not fixed it.  Inexcusable. 

Level 10

1040-US: Form 4562, line 11 - Business income limitation,--- what list of income qualifies? Another service listed 4797 line 18. to be able to write of 179 deduction.


@midwestPerson wrote:

It is not the error, it is the fact that the error is KNOWN and REPORTED and Turbo Tax has not fixed it.  Inexcusable. 


 

If you only knew the large number of that applies to in TurboTax, it is likely you would never use TurboTax again.

 

For many or most people, rental properties do not rise to the level of a "Trade or Business".  The program assumes that is the case, and therefore does not factor in that income on 4562.  As you found out, the error is that the program does not give the option to declare that it IS A "Trade or Business" for purposes of Form 4562.

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