179 recapture on 1120S
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Countingcat
Level 3

179 recapture on 1120S

We are an S-corp and I sold assets that need a 179 recapture of depreciation.  The 1120S form does not have a place to report this.  I read something about the recapture being reported on the Schedule K's.  My depreciation expense is not showing the recapture either.  Can someone please explain how this is being handled?  Where would I verify the amount is showing on the Schedule K?  Do I need to enter it on the Schedule K manually?  If so where.  Do I do enter it anywhere on the 1120s?

10 Replies
martinmarks1919
Level 8

179 recapture on 1120S

Need to put that on your 1120S as sale of asset and should flow to K-1 with a report.

Mike9241
Level 6

179 recapture on 1120S

the gain should appear on form 4797 part III and will show up on a separate line on schedules K and K-1

Countingcat
Level 3

179 recapture on 1120S

Why does my 1120s not include form 4797?  The 179 disposition report does not allow me to record the recapture either.

 

Countingcat
Level 3

179 recapture on 1120S

Why are the gains on the sale being deducted from my total income?  It's causing a negative net income.

martinmarks1919
Level 8

179 recapture on 1120S

The gain will not appear on a 4797....it is a PRO RATA SHARE item. It goes on your K-1s on line 17 and there should be a statement alongside that detailing the sale and 179 expense.

Countingcat
Level 3

179 recapture on 1120S

Thanks.  I'm seeing the statement.  The Disposition Report does not show the recapture.  Should I enter it?  It requires me to override the field to do so.

 

Also, as the sales resulted in a gain, shouldn't my net income be increased?  TurboTax is deducting it from my income resulting in a negative net income.

 

 

 
 

 

 

 

martinmarks1919
Level 8

179 recapture on 1120S

Not familiar but pretty sure that gets entered in the interview.....look for a Sec 179 page for an entry. This whole thing about 179 is because when an S corp deducts under 179 the shareholders get that deduction so when it's recaptured the shareholders take the hit for that.

Countingcat
Level 3

179 recapture on 1120S

The interview asked for the sales date and price but never recalculated the depreciation for recapture.  Even so, why would a gain result in a reduction in income? This happens on M-1.

martinmarks1919
Level 8

179 recapture on 1120S

No clue about what's happening in TT Biz but you normally have to put in the amount of the Sec 179 deduction taken in the past.

ThomasM125
Employee Tax Expert

179 recapture on 1120S

There should be an option in the Your Total Business Income section to choose Dispose of Business Property. When you work through that section TurboTax will automatically pick up prior year section 179 if any and properly account for it when you enter your sales information. The sale will be reported on a supplemental schedule attached to the shareholder's K-1 form that is called Shareholders disposition report for all assets with sect 179 expense taken, it will look like this:

 

 

You will see an entry on line 17 of the shareholders' K-1 referencing the statement.

 

It may be that you didn't report the section 179 depreciation in TurboTax when you set up the asset, in which case it might not be dealt with properly when you sold it. If so, you can delete the asset an re-enter it and then report the sale.

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