C-Corp to S-Corp depreciation

[cientax]

The owner was a C-Corp for 2007 and made the S-Corp election for 2008. Because of the income, the section 179 was limited and not allowed full depreciation and now has carryover to 2008. And my question is posted below.

Does unallowed depreciation from 2007 C-Corp carryover to 2008 S-Corp return?

[kcjenkins]

Don't have time to look up a cite, but I believe it does.

[cientax]

Don't have time to look up a cite, but I believe it does.

Thank you, I'll see if maybe I can find something. I thought it was straight forard.

[jainen]

>>maybe I can find something<<

Try Section 1371[1], which says, "No carryforward, and no carryback, arising for a taxable year for which a corporation is a C corporation may be carried to a taxable year for which such corporation is an S corporation." This is the basic rule, covering a whole lot more than just Section 179. It doesn't get more straightforward than that.

[kcjenkins]

Thanks, Jainen, glad you corrected me on that. I knew I should have looked it up.