As an S corporation, some tax items are deducted on page 1 of the tax return and other items are separately stated on schedule K.
The items that are reflected on page 1 of the 1120s are what determines the loss reported on Schedule K line 1.
The separately items, which Section 179 is one of those items, is reflected on Schedule K. This deduction may or may not be utilized. It is only utilized if there is sufficient business income to take the deduction. This will be determined when completing form 4562 line 11. This is where the business limitation is determined. Keep in mind, that if an S corporation shareholder receives wages from the company, these are considered business income for purposes of this limitation. You need to make sure any wages earned are included in the amount reflected on form 4562 line 11.
Should you be limited, any unused Section 179 will be carried over to the next year.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
