CCH Axcess Tax

Section 179/Bonus

This entry is used to compute current year Section 179 expense, prior year Section 179 expense, prior year carryover, and prior year bonus. The type of entry present is determined by reviewing the entry for "Method." Old law assets will assume this entry is Bonus depreciation and ACRS/MACRS methods will assume this entry is Section 179. Section 179 expense is not allowed on assets with pre-ACRS methods for federal purposes.

The maximum Section 179 dollar limitation per return is $510,000 for the 2019 tax year. To designate an asset as real property an entry is required in the field, "Real Property Section 179 Type."

Note: Current year Section 179 is only computed when an amount is entered for an asset placed in service in the current tax year and a MACRS method is entered.

The Section 179 expense election allows for a write-off of a portion of the cost of the asset in the year of purchase. This amount is a direct reduction to the "Cost/Other Basis." The Section 179 deduction is limited to the maximum allowed per tax return. The amount is then subject to the following additional limitations:

Allowable Section 179 expense is reduced, dollar for dollar, by the cost of tangible personal property (exceeding $2,030,000) placed in service in the current tax year. A diagnostic message is issued when this limitation occurs.
The Section 179 expense is reduced on a listed property asset by the non-business portion.
The allowable Section 179 expense is limited to the aggregate trade or business income from the taxpayer's active trades and/or businesses. The following steps will be taken in the process of computing the allowable Section 179:
1. Determine the aggregate trade or business income without regard to Section 179 expense.
2. Prepare a Summary Form 4562 if there is more than one business activity in the return with depreciable assets.
3. Include passthrough Section 179 from the Passthrough Items From Schedule K-1 worksheet > Deductions section in the Section 179 expense carried to the Summary Form 4562.
4. Determine if the Section 179 expense computed exceeds trade or business income.
5. Reduce current year Section 179 expense by the disallowed amount.
6. Issue a Carryover Sheet indicating the allowable carryover of Section 179 to 2020 (Form 1120 returns), or issue a diagnostic message indicating the allowable carryover of Section 179 expense to 2020 (Form 1065 and Form 1120S returns).

Caution: If the date placed in service is "999999" or the method is a non-MACRS method, then the amount entered for Section 179 is NOT treated as current year Section 179.