Brad is a shareholder and full-time employee of an S corporation. During 2016, he earns a $50,000

Question:

Brad is a shareholder and full-time employee of an S corporation. During 2016, he earns a $50,000 salary from the S corporation and is allocated $12,000 as his share of its net operating loss. In addition, Brad owns a limited partnership interest from which he earns $12,000 during 2016. Kanika, Brad's wife, operates a small business as a sole proprietorship. During 2016, she spends $65,000 on equipment for use in her business, which has a taxable income of $17,000 before the Section 179 deduction.

a. What is Brad and Kanika's maximum Section 179 deduction for 2016?

b. Assume that Brad is allocated $12,000 in Section 179 expense from the S corporation for 2017 and Kanika spends an additional $14,000 on equipment for use in her business. Also, assume that their taxable active business income is $35,000 for 2017. What is Brad and Kanika's maximum Section 179 deduction for 2017?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...