I am sorry but that is not correct. Section 179 DOES affect partners capital, especially now that M2 is on tax-basis. You cannot have section 179 deduction on schedule K1 and no corresponding adjustment for the recapture. That would result in capital accounts going negative eventually. I agree that mechanically both the deduction and recapture are handled at the individual level as there are aggregates for individuals across all business entities that are owned. But the way TT is handling this is NOT correct. I have opened this return in ProConnect and it properly adjusts M2 when there is an asset disposition with section 179 depreciation.
Sale of Section 179 asset is recorded in TT. Gain on Disposition of Section 179 Assets is logged in M1 6a for $XXX. It is then logged on M2 4a. This allows all numbers to tie in to balance sheet if your balance sheet is tax basis.
Hope this helps. TurboTax needs to fix this bug immediately. @AliciaP1 @diversion
