the carryover at the partnership level may be because of the trust Only corporations and individuals can take 179. Trusts (other than grantor trusts) and estates are barred by IRC 179(d)(4) from taking section 179.
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Individuals 179 allowable computation. Business income or -Business loss (reduces any other business income) for any trade or business you actively conducted, computed without regard to: any section 179 expense deduction, the deduction for one-half of self-employment taxes, and any net operating loss deduction. Also include all wages, salaries, tips, and other compensation you earned as an employee (1040, line 1a). If you are married filing a joint return, combine the total taxable incomes for you and your spouse.
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the following is a thread from the Tax Advisor. You can't do what you desire regarding the unused 179. Since we can't see the 2021 return and know nothing about this 3rd party trust (whatever it may be), the 2021 return and k-1s could be wrong so you should consult a tax advisor. Wait too long and the tax benefit of that $39K could be lost as an ordinary deduction which could result in a capital loss should the partnership terminate
Because the deduction allocated to the estate or trust provides no tax benefit, Regs. Sec. 1.179-1(f)(3) provides that the business does not reduce the basis of the asset by the portion of the Sec. 179 deduction allocated to the trust or estate. (likely your tax software did not properly account for this if the trust is a non-grantor trust)
Example 1: A partnership with a nongrantor trust as a 25% partner acquires an asset for $1,000 that qualifies as Sec. 179 property and places it into service. The partnership elects to apply Sec. 179, and thus $250 of its Sec. 179 deduction is allocable to the trust.
In this situation, the partnership would reduce the basis in the asset by only $750, rather than $1,000, leaving it a $250 basis in the asset. Thus, if the partnership immediately disposed of the asset for $100, it would have a $150 loss allocable to all partners instead of a $100 gain allocable to all partners.
The increased basis at the time of disposal benefits all partners and is not allocated solely to the trust. In the end, the partnership gets a total deduction of $1,000 (the $750 deduction and $250 of basis), but the timing is spread out. Likewise, Regs. Sec. 1.179-1(f)(3) provides that the partnership can claim a depreciation deduction under Sec. 168 for the basis that remains because the Sec. 179 deduction was not allowed for the trust. In Example 1, the $250 that would have otherwise been allocated to the trust as a Sec. 179 deduction can instead be depreciated by the partnership over the depreciable life of the asset, starting in the year the asset is placed in service. However, just like the $150 loss mentioned earlier, the depreciation deduction is allocated to all owners and not just to the trust. In essence, the $250 tax benefit (which the trust would have obtained if the Sec. 179 deduction had been allowed) instead is allocated among all the owners, either in the form of additional depreciation deductions or a higher basis upon disposal of the asset.
But can the trust or estate obtain overall tax benefits comparable to those of the other owners who do qualify for the Sec. 179 deduction? Partnerships can, under Sec. 704(a), allocate most items of income and expense based on the partnership agreement. Therefore, individuals drafting partnership agreements should keep in mind the possibility of trusts or estates being owners.
Drafters could include a provision in the partnership agreement that allocates Sec. 179 deductions to nontrust partners and additional other expenses to trust owners. This would prevent the trust from being allocated a Sec. 179 deduction that it is not allowed to use. This type of provision bears some risk, however, since the IRS conceivably could argue that the deduction does not have substantial economic effect (as described in Regs. Sec. 1.704-1(b)(2)) and thus is invalid.
