Why is 179 expense not flowing to the front of the 1065 (line 16a) or 1120-S return (line 14)?
This occurs because both the 1065 as well as the 1120-S are considered “pass-through” entities. A pass-through entity does not deduct any section 179 expense at the partnership or s-corp level. Any 179 expense is passed through to the partner or shareholder on Schedule K-1. The partner or shareholder will then report that amount on their personal return (K1P or K1S screen). Limitations in deducting the 179 expense on the individual return, if any, are figured at the partner/shareholder level, not at the 1065/1120-S level.
The tentative section 179 expense is figured from entries on the 4562 screen and appears on:
- Form 1065, page 4, line 12 and on each K-1 box 12.
- Form 1120-S, page 3, line 11 and on each K-1 box 11.
For more information, see: