In general, a Section $179$ deduction may not exceed total taxable business income.

This year, ABC Partnership claimed a Section $179$ deduction for $$20,000$ of new equipment. Total taxable business income at the partnership level was $$130,000.$

Gracie is a general partner in ABC Partnership. Her share of the Section $179$ deduction according to her Schedule K$-1($Form $1065)$ is $$8,000.$ However, due to losses from other businesses, total taxable business income on Gracie's individual return is zero.

How does Gracie treat her share of the Section $179$ deduction from ABC Partnership?

Gracie:

May deduct the full $$8,000$ on her individual return.

May increase her outside basis by the amount of the disallowed deduction.

Must carry the $$8,000$ deduction forward to the next year.

Must inform ABC Partnership of her ineligibility and request that the partnership amend its tax return.