Typically, section 179 expenses do not flow to 1120-S, line 14 and 1065, line 16a because 1120-S and 1065 returns are considered "pass-through entities."

A pass-through entity does not deduct any section 179 expense at the partnership or S corporation level. Any 179 expense is passed through to the partner or shareholder on Schedule K-1. The partner or shareholder then reports 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 or shareholder level, not at the 1065 or 1120-S level.

The tentative section 179 expense is figured from entries on the 4562 screen and appears at the applicable locations: 

• 1065 Returns

  • Form 1065, page 4, line 12

  • Schedule K-1, box 12

• 1120-S Returns

  • Form 1120-S, page 3, line 1

  • Schedule K-1, box 11

For more information, see:

• Form 1065 Instructions

• Form 1120-S Instructions

• Publication 946