Assets disposed with Section 179 claimed

[cpabsd]

Where would I find the information regarding how to treat? The system is not allowing the loss due to the Section 179 that was claimed. It is an S corp. I just want to verify the treatment is proper. I could not locate it in Pub 544.

[jklcpa]

If you are preparing the S corp return, the loss should be showing up on 4797.

Are you preparing the personal return? The sec 179 may be suspended if the taxpayer does not have sufficient basis in the S corp. It will stay suspended until basis is restored to the point of being able to absorb the loss. Make sure to enter the basis information so the system has enough data to perform the proper calculations.

[cpabsd]

I'm preparing the corporate return. The program is putting the loss on Schedule M-1 Line 5 and not completing the Form 4797. I'm confused and cannot find any information on this being proper treatment. It is different than prior years.

[jklcpa]

Sorry, it's an item that will show up on line 17d of Sch K and on the K-1 in box 17. The system should be generating a statement attached to the K-1 for the shareholder to report his or her share of the transaction on the 4797.