section 179

[Paolooch]

When selling a rental property, depreciation recapture is required. Is there any such special treatment of section179 depreciation for a (very) small business when the business closes, such as in retirement?

[KrisD15 · Accepted solution]

Yes, the 179 Deduction is also recaptured.

Technically, the depreciation that could have been claimed is subtracted from the 179 deduction you took.  The depreciation part is recaptured and the deduction part is paid back. 

Below is a link that better explains the process:

179 recapture

[Paolooch]

Thanks.

TH666

[Paolooch]

In TT Deluxe, under "Enter Business Income that's not on a 1099-misc", there is a line item "Other Income", with an entry box. The On Demand Tax Guidance for that "Other Income" refers to Section 179 Recapture. This matter is something that should be included with my wife's llc business, I think, but I can find no way to get to that part of the software. At least, not that is tied in to her business. I presume that the recapture will affect her income, and that she will be required to pay additional income tax (of course), but also 15.3% FICA, since she is self-employed. Any help on where i go to report on this recapture, and sale of those section 179 assets?

Thanks

TH666

[RobertG]

Normally you report 179 recapture on the business schedule it was used on, when you report the disposition of an asset.

179 recapture is not subject to self employment tax.

How is your wife reporting her LLC business?

If you are in TT Deluxe it can't be on a self-employment schedule C, because Deluxe does not support Schedule C expenses.

@Paolooch

[Paolooch]

Form 4797, Part IV

"Deluxe does not support schedule C expenses."

Don't follow you.  I've been using Deluxe for 25 years, and it does, indeed, include schedule C, and the income and expenses entries associated therewith.  Her LLC return is included in our joint return wages and Income>Business Items>Business Income and Epenses (Sch C) .  The 179 Recapture amount shows up as 'Other Income'.

TH666

[DianeC958]

The Deluxe Program level of TurboTax no longer supports Schedule C expenses you will need to upgrade to the Self-Employed version of TurboTax to report the Schedule C and additional schedules needed properly.