Assets disposed of with section 179 expense for a 1065 or 1120 client

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When an asset is disposed of by an S Corporation or a Partnership, the gain or loss is calculated without regard to the section 179 expense taken on that asset. According to Form 4797 instructions, the section 179 expense deduction should be reported separately on the Schedule K. Allowed or allowable depreciation is used for calculating the gain or loss for Form 4797.

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