179 deduction treated as self employment on K-1 in TT Business

[WilHen02]

I have treated assets used across two rental properties as deductions to the general LLC rather than against a specific 8825 form. These rental incomes would not be QBI if a profit. The net effect is to create a negative self employment income on the K-1.  Part 111 line 14. This obviously lowers the QBI within H&B return. Is placing the assets under one of the 8825's the only correction available ? Or is it better to not take the 179 ? The recapture of deferred depreciation will be spread out over a longer time when the second property becomes profitable again.

[ThomasM125]

It would probably be simpler to assign a portion of the cost of the assets to each rental reported on the Form 8825's. For instance, if the asset costs $10,000 and the use is equal between the two properties, enter the asset as costing $5,000 to be reported on each Form 8825. It is OK to take the section 179 if available, but it won't be deductible until you have positive net income generated by the properties.

[WilHen02]

Ultimately as I worked the forms I became limited by the total 179 loss limits. The best outcome would have been to leave the assets where they belonged and simply take the standard depreciations over time.  I will put them back where they belong.  Long trip back to where I began. Your outcome may vary depending upon the income / loss of your various properties.