Business & farm

Welcome to the world of passive activities.  You have a number of things to consider:

• There are a couple of limits that impact this; one is at the entity level and the other is at the individual taxpayer level.  Receiving this on your K-1 indicates that the first test was met; the ability to take Section 179 at the entity level.
• The total cost you (at the individual level) can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business. 
• Based on the fact that you have "passive income" you probably do not meet the definition of having income from an active trade or business (although I do not have all the facts, but determining this is beyond the scope of this forum).  These rules are based on facts and circumstances, and as such, the threshold for active participation is not the same as material participation as discussed in the passive activity regulations.
• Keep in mind that the limit is based on taxable income of ALL trade or business income.  This would include any W-2 income that you may have or other trade or business income you may have.  So for instance if you also have W-2 income, you will want to make sure this amount is input onto your form 4562 line 11 as business income.
• If you are in fact limited due to the business income limitation, any unused Section 179 will carry over.
• I don't like to see Section 179 on K-1's where most of the investors are probably passive.  There is just no way of knowing what each investor has going on at the individual level and most likely lose the time value of money benefit.