1065-US: Using the Form 4562, line 11 business income limitation to determine the section 179 deduction amount (FAQ)

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Question

How does UltraTax CS use the Form 4562, line 11 business income limitation to determine the section 179 deduction amount allowed for the current year?

Answer

UltraTax CS calculates trade or business income by totaling the following amounts.

  • Ordinary business income (loss)
  • Net rental real estate income (loss) in Screens 4835, K1, and Rent, if marked to be included
  • Other net rental income (loss)
  • Guaranteed payments
  • Royalty income
  • Net section 1231 gain (loss)

To determine the amount on line 11, compare the sum of the above amounts with the amount on Form 4562, line 5. The lesser of the two amounts appears on line 11. If the amount on Form 4562, line 11 is less than the amount on line 5, UltraTax CS prints a not required statement that details the calculation of the business income limitation for section 179. You can force the amount of business income for section 179 purposes in the Section 179: Business income limitation (Force) field in Screen OthAsset.

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