401k Earned income Section 179 Recapture
Hello,
I have a somewhat interesting situation and I am struggling to find any insight to this.
When determining the maximum 401k contribution for a partnership LLC you must decrease Box 14a (self-employment earnings) by section 179 deduction (along with SE deduction, etc.). This makes sense. My question is regarding recapture. If earnings are reduced by Section 179 are earnings increased by Section 179 recapture (Box 20)?
Situation right now is Section 179 deduction is greater than Self employment income for the year which makes 401k salary deferral $0. I figured that Section 179 recapture would offset the deduction for this calculation but it doesn’t appear that way. Not a huge deal to change the Section 179 to bonus depreciation but thought I would ask about this considering I haven’t seen any comments on this specific situation.
