The Sec. 179 deduction is limited to a taxpayer's income that is derived from a trade or business and that includes w-2 income. There's a revenue procedure on this.........https://www.irs.gov/pub/irs-drop/rp-19-08.pdf

Thank you for your reply and the link to the information.

Unfortunately, it doesn't say whether Section 179 deductions passed through from a K-1 can be applied to (i.e., subtracted from) earned income as calculated on 1040 Schedule SE.  TurboTax adds Box 12 and Box 14 from the K-1 to Schedule SE, even though the IRS instructions for Schedule SE specifically list Box 14 (which on the K-1 is used to report earned income), but not Box 12 (where Section 179 deductions are reported).

Thus, what TurboTax is doing on Schedule SE with respect to pass-through items from K-1s seems contrary to the IRS instructions.

I remain concerned.

Thanks,

Helmut 

You are totally correct. Turbotax misses this major deduction, and has since at least 2017.

See this post in Intuit's "Professional" tax software Lacerte, which also doesn't automatically reduce the Section 179 deduction from Schedule SE Line2. You have to manually go in there and change it:

https://proconnect.intuit.com/support/en-us/help-article/partnership/schedule-k-line-14a-self-employ...

I was able to enter it as a "loss" on line 7 by going to Forms > Open Form > Schedule SE Adjustments Worksheet > Lin 7 "Less other SE exempt nonfarm profit or (loss)"