my section 179 deductions

[ihikaru1]

My section 179 deduction is not adding it to accumulated depreciation so the balance sheet is off.

The balance sheet on page 4 Schedule L Accumulated depreciation shows $159,317. My section 179 deduction is $23,756.00. This is causing my Assets to be $23,756 higher then my Liabilites. 

My book accumlated depreciation is $183,073 so its off by the exact amount of the 179.

Is the asset section of TurboTax not complete and still have updates coming?

Jake

[MelindaS1]

Do you typically enter your tax return adjustments into your bookkeeping/accounting records, because the presentation of the Schedule L "Balance Sheet per Books" will depend on whether or not your normal accounting method reflects tax adjustments or not - TurboTax doesn't default to adjusting the balance sheet for tax depreciation (as the IRS wants this to be reflecting of book accounting, not tax accounting).

If you do not keep your accounting records on tax basis, you'll want Schedule M-1 (directly underneath the balance sheet on page 6 page 5) to reflect the depreciation.

To update Line 6a Deductions included on Schedule K, not charged against book income this year (itemize): Depreciation, 

1. Select Forms
2. Select Form 1065 p5-6 Form 1120S p3-5
3. Scroll to Schedule M-1 Smart Worksheet
4. Scroll to Line 6a, enter your tax Sec. 179 amount into the box. 

This will create a book-tax difference so your ending capital per Schedule L is not out-of-balance by amounts that are not included in your book accounting.

If you do keep your accounting records on tax basis, 

1. In Step-by-step, 
2. Federal Taxes
3. Balance Sheet
4. Quick Entry
5. Less: accumulated depreciation
   • In the End of Year column, enter the total accumulated depreciation, that adds in the Sec. 179 amount

This method presumes you are also making this entry in your business' Quickbooks (or other software). If you are on cash basis, you made need to make an adjusting entry to move this purchase from expenses into accumulated deprecation; you may also consider opting out of filing Schedule L altogether if you are under the threshold. 

More guidance:

TurboTax - What's a Section 179 deduction?

Edit: For Schedule L on an 1120S, you'll follow the same navigational steps as above, but you'll reference back to these IRS instructions. 

[Edited 02/11/26|4:35pm PST] @ihikaru1 

[ihikaru1]

Thank you for the quick reply. I do not keep my records on tax basis so I would need to follow step one but this calls for a form 1065. I file on a 1120S for an S-Corps. Can you share the steps for 1120S please?

Jake

[ThomasM125]

On an S Corporation, your accumulated depreciation is listed on line 10(b) of Schedule L, which is on page 3 of Form 1120-S. You can add the section 179 depreciation to the book accumulated depreciation listed there and manually enter the new number on that line and that should bring everything into balance. You use the Forms menu option to bring up the form.