S Corp Equipment Purchase Greater Than Income Better to do Section 179 vs Special Bonus Depreciation vs Depreciate Over Years

[cbusa]

If you have an S Corp with an equipment purchase greater than the s corps income for the year is it better to do a  section 179 deduction vs Special Bonus Depreciation vs Depreciate Over Years? Is there a limit on how many years you can carry forward? Can you carry back?

[tagteam]

Re the new rules for NOLs see https://www.irs.gov/newsroom/net-operating-losses

Note that your S corporation will not have an NOL but, rather, will simply pass an ordinary (business) loss through to you on your K-1. This may result in you having an NOL on your individual income tax return (1040) and that would require further analysis.

See https://www.irs.gov/publications/p536#en_US_2022_publink1000177330

[Mike9241]

the 179 limit is computed on your 1040 not the 1120s.  say the S-Corp has a profit before 179 of $30K.  179 is $50K and you took a salary from the S-Corp of $40K. your business income for 179 purposes is the $30K + the salary of $40K giving you business income of $70K which means the 179 would be allowed in full in this example.  this is no carryback.  another consideration is do you have basis for your actual loss. 

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form 7203 was first required for certain 2021 returns

but you might want to use it to see what your basis is for 2019

https://www.irs.gov/pub/irs-prior/f7203--2022.pdf 

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there is no business limitation for Special depreciation, but you still need basis to take the loss.

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179 can be more flexible because you can take 0% up to 100%. the remaining cost is deprecation using MACRS and the class life. if you do not take 100% 179 in the first year you cannot take more in ensuing years 

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it's really a matter of how you want our taxes to come out subject to any loss restrictions due to basis limitations.