S Corporations and Deprecation:

MACRS is an accelerated depreciation systems that is used to stimulate

the economy by providing longer lives for depreciation items.

A $5-$year life, $$25,000$ piece of equipment will be depreciated $$5,000$ in $2024.$

in its first year of depreciation if using the half year convention and did not elect bonus or Section $179.$

Without Section $351,$ any gain realized on the transfer of property to an $S$ corporation

in exchange for stock of the corporation would be recognized.

Distributions from an S Corporation that exceed AAA are always taxable.

Amounts of the Sec. $179$ election in excess of the taxable income limitation can be carried forward.

A $5-$year life, $$25,000$ piece of equipment will be depreciated $$5,000$ in $2024$

in its first year of depreciation if bonus is elected..

John is single with ordinary income of $$50,000$ from a $100\%$ owned $S$ Corporation. His taxable income

is $$40,000.$ His QBID would be $$10,000.$

Under the Mid Quarter Convention, one half of the first year's depreciation is allowed in the year

year in which the property is placed in service, regardless of when the property is put in service.

If a company purchases $45\%$ of their personal property in the last

quarter, they can use the half year convention.

Sam and Sally are married with taxable income of $$200,000$ which includes $$20,000$ of

capital gains. Sally's share of a $50\%$ owned S Corporation's business income is $$100,000.$ Their QBID

would be $$36,000.$

A company purchased a five year piece of property for $$10,000($using half year convention$)$

and would depreciate it $$1,600$ in the second year, if it was sold in it is second year and did not elect bonus.

An $S$ corporation is a pass through entity that generally has double taxation.

Separately stated items of an S Corporation can flow to the owners in a lump sum.

In $2023,$ if a corporation purchases over $$2,890,000$ of personal property, they can

elect to write $$1,160,000$ of additional first year depreciation under Section $179.$

The QBID will always be the lessor of $20\%$ of the business income of an S Corporation

or the taxpayer's taxable income less capital gains and dividends times $20\%.$

For an S Corporation, a husband and wife shareholder are considered two shareholders.

An S Corporation election made within the first $3$ and $\frac{1}{2}$ months of the beginning

of the corporation's tax year is effective from the first day of that tax year.

Both a C and an S Corporation will not recognize a gain on the distribution of

appreciated property.

The pro rata share of tax exempt interest decreases the basis of a shareholder's stock.

A C Corporation can elect to write off $$1,000,000$ of the $$2,000,000$ cost of a building

under Section $179$ in $2023.$