Tax Guru – Ker$tetter Letter

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Sec 179 Limited At Entity Level

Posted by taxguru on February 27, 2006


Subject: Question regarding 179 expense

I happen to stop by your web site and read your article regarding 179 expense.
I am a major stock owner of a S corporation.
Last year, the company got not a samll loss
I have other source of income and overally I have some income to report last year.
In this case, may I apply section 179 expense deduction for the S-Corp.
Your prompt and kind reply will be highly appreciated.
Best regards 


As your corporate tax accountant can tell you, an S corp with a net loss before counting the Sec. 179 deduction cannot claim Sec 179 on that year’s 1120S. Sec. 179 is limited at the S corp level, and it doesn’t make any difference whether or not the shareholders have other income to offset it.

Work with your corporate and personal professional tax advisors to work out the best strategy for your unique situation.

Good luck.

Kerry Kerstetter


Thank you for your kind and concise answer

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