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Gabriela Brondo
Gabriela Brondo, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 6
Experience:  MBA, CPA
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I also have an s corp dissolution with 179 disposition of

Customer Question

I also have an s corp dissolution with 179 disposition of property. I read the questions below submitted 8 yrs ago. Have a question regarding your answer to #4 followed by a question of my own regarding 179 recovery period.
question & answer for #4 below: On Form 4797, Part III, Line 22 - depreciation allowed or allowable. If ONLY sec 179 expense deductions were taken, leave this line blank? Or am I supposed to calculate the amounts of depreciation that would have been allowed were it not for taking the sec 179 expense deductions?
You will include Sec 179 expense claimed as part of depreciation allowed or allowable on Line 22.
My question: BUT the IRS 1120S instructions say:"The shareholder's pro rata share of the depreciation allowed or allowable, determined as described in the instructions for Form 4797, line 22, but excluding the section 179 deduction." 1) Could you clarify?
Also 2) If I took a 179 deduction for property with a recovery period of 7 years that was not met - example chain saw 179 deduction in 2012 with 7 yr depreciation recovery period - do I need to reclaim some of that deduction on my final 1120S for 2015? If so - do I do this on form 4562 as part of 1120S or as shareholder on 1040? Thanks
Submitted: 10 months ago.
Category: Tax
Expert:  Gabriela Brondo replied 10 months ago.

Good evening,

My name is***** allow me an hour to look in to your questions.

Thanks,

Gabriela

Expert:  Gabriela Brondo replied 10 months ago.

1. The following statement you refer in the instructions: "the shareholder's pro rata share of the depreciation allowed or allowable, determined as described in the instructions for Form 4797, line 22, but excluding the section 179 deduction." Refers to information you key in to Schedule K, Line 17d on the Form 1120S. This information is part of the information requested be provided with respect to all Dispositions of property with section 179 deductions (code K).

  • The corporation must provide all the following information with respect to such dispositions (see the instructions for Form 1120S, line 4, earlier). Description of the property.Date the property was acquired and placed in service.Date of the sale or other disposition of the property.The shareholder's pro rata share of the gross sales price or amount realized.The shareholder's pro rata share of the cost or other basis plus expense of sale (reduced as explained in the instructions for Form 4797, line 21).The shareholder's pro rata share of the depreciation allowed or allowable, determined as described in the instructions for Form 4797, line 22, but excluding the section 179 deduction.The shareholder's pro rata share of the section 179 deduction (if any) passed through for the property and the corporation's tax year(s) in which the amount was passed through.
Expert:  Gabriela Brondo replied 10 months ago.

2. The fact that you did not meet the recovery period does not matter. You took the deduction and if you disposed of the property any depreciation (i.e. the Sec. 179) would need to be recaptured if you sell the property at a gain. See chapter 3 of Publication 544 under Section 1245 Property. You would record the sale of the disposition on Form 4797 when filing your Form 1120S. Any gain or loss would pass-through to you on the K-1.

Expert:  Gabriela Brondo replied 10 months ago.

Hope this has helped … let me know if you have questions

Expert:  Gabriela Brondo replied 10 months ago.

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Thank you,
Gabriela L. Worrell, CPA

Expert:  Gabriela Brondo replied 10 months ago.

Hello,

I wanted to see if I was able to answer your question.

Thanks,

Gabriela

Expert:  Gabriela Brondo replied 10 months ago.

Hello,
I wanted to see if I was able to answer your questions.
Thanks,
Gabriela