Louisville BusinessDaily

Is Rental Income considered in the calculation of the business income limitation for Section 179 expense?

Under what conditions would rental income be considered an active trade or business income for determining the business income limitation for section 179 expense? I cannot seem to find any concrete evidence either way on this.

Public Comments

1. It's not.
2. No it isn't, and I'll tell you why. You see, sec 179 is limited to the extent of ORDINARY business income or loss. Now you see, rental income is not considered ordinary business income, and is therefore disqualified from the calculation.
3. http://www.acatcredentials.org/pdf/08SoleProprietorships.pdf Pages 172-175 seem possibly applicable. It seems to me that if the section 179 is for a Schedule C business, that the rental income on a Schedule E has nothing to do with it - unless the Schedule E rental IS the business. If none of this helps, try to 179 the assets in the tax software and see what happens! Hope this helps.
4. what are you trying to do, fully depreciate a piece of real estate in 1 year instead of standard 30+ yrs? You can't do that. from the IRS's website - As you can see - Buildings and structures are denied in two different instances 1. Tangible personal property. 2. Other tangible property (except buildings and their structural components) used as: 1. An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services, 2. A research facility used in connection with any of the activities in (a) above, or 3. A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities. 3. Single purpose agricultural (livestock) or horticultural structures. See chapter 7 of Publication 225 for definitions and information regarding the use requirements that apply to these structures. 4. Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. 5. Off-the-shelf computer software.