Section 179 Carryover problem

[jwolosenko]

I have a section 179 carryover of $2000 from 2017. I cannot use that carryover in 2018 because of income limitation (no earned income). Is this carried over to 2018 and subsequent years if I can't use it?

[tagteam · Accepted solution]

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@jwolosenko wrote:

I have a section 179 carryover of $2000 from 2017. I cannot use that carryover in 2018 because of income limitation (no earned income). Is this carried over to 2018 and subsequent years if I can't use it?

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You can carry a disallowed Section 179 deduction for an unlimited number of years.

See https://www.law.cornell.edu/cfr/text/26/1.179-3

[jwolosenko]

Thank you. Very helpful

[neel1]

We want to stop carryover from previous years. 

[VictoriaD75]

Are you no longer in business? If so, you would need to alert the IRS by "closing" the business on your tax return. If not, can you provide more detail on why you wish to stop the deduction? Did you dispose of the asset?

Closing a business

[vadim.yarovoy]

I bought a car for my business in 2019, and the 179 deduction (with special depreciation) came down to $16K. We would like to carryover and use most of the deduction to next year if possible (we are not limited by income in 2019). Can we do that or it only happens when there is income limitation?

[ThomasM125]

No, you must take the deduction in the current year if you have sufficient income to allow it. However don't need to elect the expense option, you can depreciate the vehicle using normal depreciation and your deduction in the second year will be significantly higher than the first year deduction.

[brscott]

My carryover problem is with the software.  I have a large carryover and no earned income.  Form 4562 (D&A) recognizes that and shows the disallowed deduction in line 13.  Section D1 (QBI) details the correct income and subsequently generates the correct QBI on the 1040.  However, Sch E shows income for the partnership that generated the 179 deduction that has been reduced by the amount of the disallowed deduction.   This lowered income is carried forward to the 1040.  Has anyone figured out how to correct this situation?

[MarilynG1]

@brscott If you have Income on Schedule E, you have to take the Carryover 179 Depreciation Deduction for a Schedule E asset. 

Click this link for more info on Carryover 179 Deduction.