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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 9187
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Can an officers compensation be added back to a "C" Corporations

Resolved Question:

Can an officer's compensation be added back to a "C" Corporation's taxable loss if the loss was created by the Section 179 deduction, in an effort to allow the entire Section 179 deduction?
Submitted: 2 years ago.
Category: Tax
Expert:  Lane replied 2 years ago.

NPVAdvisor :

Hi, I'm not sure I completely understand ... the compensation would already be a part of that loss (part of what created the loss)

NPVAdvisor :

The 179, compensation and all othr expenses are a part of the loss, anc as a C-Corp can be carried forward

NPVAdvisor :

See this:

NPVAdvisor :
(a) In general. Under section 179(b)(3)(B), a taxpayer may carry forward for an unlimited number of years the amount of any cost of section 179 property elected to be expensed in a taxable year but disallowed as a deduction in that taxable year because of the taxable income limitation of section 179(b)(3)(A) and § 1.179-2(c) (“carryover of disallowed deduction”). This carryover of disallowed deduction may be deducted under section 179(a) and § 1.179-1(a) in a future taxable year as provided in paragraph (b) of this section.

(b) Deduction of carryover of disallowed deduction— (1) In general. The amount allowable as a deduction under section 179(a) and § 1.179-1(a) for any taxable year is increased by the lesser of—

(i) The aggregate amount disallowed under section 179(b)(3)(A) and § 1.179-2(c) for all prior taxable years (to the extent not previously allowed as a deduction by reason of this section); or

(ii) The amount of any unused section 179 expense allowance for the taxable year (as described in paragraph (c) of this section).
NPVAdvisor :

Make sense?

NPVAdvisor :

I still don't see you coming into the chat here ... I'll move us to the "Q&A" mode ... maybe that will help ... (We can still continue our dialogue there, just not in real-time as we can here)

NPVAdvisor :

Let me know if we're on the same page

NPVAdvisor :

Lane

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 9187
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

To clarify, an "S" Corporation can only utilize the Section '179' deduction to zero out pass thru income on Form 1120S. However, the Section 179 deduction can result in the S Corp having a pass thru loss if the deduction is less than the Officer's Compensation, which is disregarded for purposes of determining the '179' deduction. I just wanted to confirm if this was the case with a 'C' Corporation

Expert:  Lane replied 2 years ago.

I understand, but it is not.

Because the C-Corp is not a pass-through, it's all corporate income or loss at the corporations tax rate and can be carried forward.

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 9187
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you
Expert:  Lane replied 2 years ago.

Thanks Scott.

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 9187
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you
Expert:  Lane replied 2 years ago.


Scott,

I think we have another question out there that we've left hanging (inless you are potentially a different Scott).

Either way, just let that one go and say "FOR LANE ONLY," at the beginning of a separate one, and if you want to have some continuity, just paste the original into the new question, and we'll let the other one time out.

Thanks again,
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 9187
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you

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