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Fixed Assets and UltraTax CS 2023 help is now on Help and Support. We're still moving articles, but you can find most content for the 2023 tax year there. Continue using the Help & How-To Center for tax years 2022 and older.

Question

How do I indicate the section 179 was elected when the S Corporation was a C Corporation?

Answer

Per the Form 1120S instructions, S Corporations should not use Form 4797 to report the sale or other disposition of property if a section 179 expense deduction was previously passed through to any of the corporation's shareholders for that property. Instead, the S Corporation provides the detail for each section 179 asset disposal in the Schedule K-1 statements for Box 17K. The shareholder then reports the disposal on their tax return.

If the section 179 was elected on the property when the S Corporation was a C Corporation, the section 179 for that property was not passed through to the shareholder, and should not be reported in the Schedule K-1 statements for Box 17K.

Enter X in the Section 179 elected when a C Corporation field on the Other tab for the asset in the Asset module to indicate the section 179 for that property was not passed through to the shareholder. The asset disposal will be reported on the S Corporation return and not reported to the shareholder in the Schedule K-1 statements for Box 17K.

Related topic: 1120-US: Disposition of section 179 assets FAQs

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