Section 179 recapture after dissolving S-Corp -- how to report K-1 Box 17-K info on 1040?

[SandalsCA]

Hello,

I dissolved an S-Corp in 2021.  TurboTax created a Section 179 disposition report that was included with my K-1.  How do I report this information on my 1040?  There just a few assets--filing cabinet, desk, etc.--that were old and were disposed of.  Everything would be fully depreciated under MACRS except for two items.

I cannot determine how Section 179 depreciation recapture would affect the basis (and subsequent disposal) of these two items and how I should report this on my 1040.

Additionally, do I need to report anything for the other disposed-of assets that would be fully depreciated under MACRS?

Thanks for your help!

[AliciaP1]

When you enter your K-1 into TurboTax for your personal return, you will mark that you have information in Box 17 and progress through to answer the info for the box.  When you enter code K, TurboTax will prompt you to enter the details from the Section 179 disposition report.  With this information, TurboTax will calculate any recapture that needs to be reported.

For more information on entering your K-1 please see Where do I enter a K-1 that I received?

[SandalsCA]

Hi Alicia,

I went through the K-1 interview again, and this time, it asked me for the depreciation information regarding Box 17.  Thanks for the tip.

I filled out the information from the Section 179 Dispositions Report, but TurboTax didn't say anything about Section 179 depreciation recapture.  It just lists out the "sale" of the assets for $0 on Form 4797.  With the basis at $0 because of Section 179 depreciation, it nets to $0.

I'm not sure how to make TurboTax trigger a Section 179 depreciation recapture for the one item that would not be fully depreciated under MACRS.

In the interview, it asks for the date the property was acquired and sold.  It asks for the purchase price ($600) and the sale price ($0).  The next screen asks for the "depreciation value."  I put $0 since traditional depreciation was not taken.  The next screen asks for the Section 179 expense.  This is where I entered the full Section 179 expense (which was the purchase price of $600).  There is also a line for Section 179 disallowed.  Is that where I'd put the recapture amount?  Or does that mean the Section 179 expense that was disallowed back when it was elected?

Thanks so much for your insights!  I can't figure out how to get the Section 179 recapture entered properly in TurboTax.

Original:

Thanks for your reply!  When I entered the K-1 in TurboTax Deluxe, I marked there was information on Box 17, Code K.  TurboTax only asked me if it was an installment sale and then moved on.  It didn't let me enter any other information about the Section 179 depreciation recapture.

[AliciaP1]

No, your "depreciation value" should be the full cost, because, with the Section 179 election, you fully depreciated the asset in one year rather than over multiple years.  This change should correct the calculation.  

@SandalsCA