Section 179 carryover

[nbk826t]

I deducted the entire purchase price of my equipment on the year it was purchased. Now I have a loss of $79k for 2023 due to it? Does this sound correct? Can I use only a portion of the carryover?

[NeilM7]

The Section 179 Deduction cannot create a loss for a business. Any excess Sec. 179 Deduction is carried over to the next year and is subject to the Sec. 179 Business Income Limitations for that particular year. You would calculate both the Sec. 179 Deduction and/or Carryover amount on Form 4562, Depreciation and Amortization. Note that a combination of Sec. 179 Deduction and depreciation or Bonus depreciation could create a loss for a business.

[Cindy4]

Yes, you can use a portion of the carry forward net operating loss, if you have taxable income.  You can use up to 80% of the taxable income amount.   It sounds like you elected the bonus depreciation for the equipment.  This election can create a loss.

For instance:  You have 50,000 in taxable income for 2024.  You can use up to $40,000 of the NOL carry forward to offset taxable income.  Any unused amount can be carried forward to the next years until used up.

If you're using TurboTax from year to year, your carry forwards should populate.

Hope this helps!

Cindy