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February 25, 2022
Question

TurboTax Business appears to have a bug in the section 179 calculation

  • February 25, 2022
  • 2 replies
  • 0 views

Hi,

 

I have a business that has a net income of $35,000 in rental income.  I looked at the printed return to confirm that i was not missing something.  however whenever I try to use the section 179 deduction option it is telling me that i need to have at least as much net income as the section 179 deduction I am trying to take.  

 

I experimented with adding income to sections other than rent income and when income is in those spots it will allow the deduction.    Why isn't it counting my rent income?  is this a bug or is it by design?   i cannot find anywhere that states rental income doesn't qualify for the 179 deduction.

 

Thanks for any help!

2 replies

Employee
February 25, 2022

The reason is that rental income is passive income.

February 25, 2022

Section 179 is only allowed if the rental activity rises to the level of a "trade or business".

 

TurboTax automatically assumes it does NOT rise the level of a "trade or business".

 

If it does rise to the level of a "trade or business", you need to override Line 11 of Form 4562 to add in the rental income.