THANK YOU, PLEASE EXLAIN IF POSSIBLE

Q1

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

This year, XYZ Partnership claimed a Section 179 deduction for $10,000 of new equipment. Total taxable business income at the partnership level was $150,000.

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

How does Alicia treat her share of the Section 179 deduction from XYZ Partnership?

Alicia:

May deduct the full $1,000 on her individual return.

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

Must carry the $1,000 deduction forward to the next year.

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

Q2:

For 2022, which of the following correctly describes the function of Schedule M-2 on Form 1065?

Schedule M-2:

Tracks the partners' outside bases.

Tracks the partners' tax-basis capital accounts.

Reconciles the book and tax-basis capital accounts. (Dont trust at all)

Reconciles net income per books, with net income according to the tax return.