Section 179 and Section 1245 Property Sale

[tp83]

On a 1065 Partnership Return  have a piece of property that is considered 1245 property and when it was purchased  took a Section 179 deduction on part on the amount and then depreciated the rest. The asset has now been sold for slightly less than the original cost but with a gain due to the 179 and a few years of depreciation. Is all of that gain subject to the 4797 form on the individual partners return even though only a portion of it was under Section 179? I understand if it has all been Section 179 deducted. That is what the program is doing and so we loose the Sec 199 deduction on the individual return for that amount vs. an asset that had the 4797 on the partnership return.

[M-MTax]

Well that's a separately stated item so it goes out to the partners no matter what. I'd say the program is dealing with it correctly but without knowing your basis, prior deprec., etc. it might not be.

[MaryK4]

Yes, the gain from the sale of business property is reported on Form 4797.  The depreciation/ 179 caused the gain by adjusting the basis.  The Section 179 allows tax to be deferred by increasing the depreciation deduction, but it is added back with 1245 property when the property is sold.

@tp83