SEC 179 AND SE TAX

[KEYWEST_RICKS]

The program is not doing what i think it should but usually that means that i am wrong. Partnership has $4000 of ordinary income and is taking a $4000 section 179 deduction. i think that on the k-1 it should show OI of 4000, Sec 179 of 4000, and SE income of 4000.

then on the individual return i think that after you input that in the k-1 entry page that the Sch E should net out to zero and that the income on the SE should also net out to zero.

my problem is that my SE is still showing $4000 of income subject to SE tax. when hop to the schedule for that number there is a line for the 179 reduction but the line is blank. Is the program not doing it correctly or.... believe it or not... am i off base here.

shouldnt the income subject to SE be zero in this case?

thanks for your time.

Jeff

[kcjenkins]

Yes, it should be netted, IF all the other factors allow it. Remember, for one thing, that one reason that the §179 is reported separately is because the §179 qualifications are applied at the individual level. It could be that the client has other §179 claimed that makes that on the K-1 not usable this year. Also, if the K-1 is not marked for an active individual, the §179 will not flow to the SE. But I doubt if that is the issue. Still, some box may not be checked, that is usually the reason whenever some amount is not 'flowing' as it should. You might try clicking on the 'blank' line that should have the amount, to see if there is a worksheet behind it that needs to be checked.