Skip to main content

Legal

Tax & Accounting

Trade & Supply

Risk & Fraud

News & Media

Books

Developers

Multi-Entity

Schedule M-1 adjustment for section 179 assets

Schedule M-1 reconciles net income (loss) per books to Schedule K, Income (loss). The gain or loss on disposal of assets for which a Section 179 expense was previously taken isn't part of the Schedule K, Income (loss) calculation. The instructions for Form 4797, Page 4, gives guidance for the treatment of dispositions by an S Corporation and Partnerships of Section 179 property. S Corporations and Partnerships that sell or otherwise dispose of property for which a Section 179 expense deduction was previously claimed and passed through to the shareholders don't report these transactions on Form 4797, 4684, 6252, or 8824. Instead, all information of the sale or other disposition needs to be separately reported on Schedule K-1.
Therefore, even when book and tax depreciation are equal, UltraTax CS creates a Schedule M-1 adjustment equal to the amount of the book gain or loss on the disposal of the assets for which a Section 179 expense deduction was previously taken.
If you don't want this Schedule M-1 adjustment to appear:
  1. Enter the amount of the gain or loss reported on the tax return in the
    Ms
     screen (1120S) or the
    M1M2
     screen (1065), located under the
    Balance
     folder in the
    4797 gain/loss - book
     field.
  2. Adjust the
    Net income per books
     as necessary.

error-icon

Triva isn't available right now.

Check out the support page for our phone number and hours

error-close