Can Section 179 deductions flow through to S Corps & LLCs with Trust ownership?

The confusion is understandable! Section 179 rules can be tricky when trusts are involved. Here's what you need to know: For S Corps and LLCs with trust ownership, Section 179 treatment depends on the specific type of trust. You mentioned a revocable living trust that's treated as a disregarded entity - this is actually good news for you. If the trust is truly a grantor trust (where you're treated as the owner for tax purposes), then the Section 179 deduction generally CAN flow through to you. The restrictions you're reading about typically apply to irrevocable trusts or certain types of non-grantor trusts. Since your revocable living trust is likely a grantor trust, the business entity can still elect Section 179, and you as the deemed owner of the trust should be able to benefit from the deduction. I'd recommend confirming the specific classification of your trust and having your tax professional review your situation to ensure proper treatment. The key is whether the trust is a grantor trust where you're considered the owner for tax purposes.

I went through this exact headache last year. After getting nowhere with my regular accountant, I found this cool service called taxr.ai (https://taxr.ai) that analyzes complex tax scenarios like this. I uploaded my trust documents and business formation paperwork, and they confirmed what the previous commenter said - since my trust was a grantor trust, I could still take the Section 179 deduction. They explained that the key is whether the trust is treated as a separate taxpayer or as a disregarded entity where the income/deductions flow directly to you. Their analysis saved me about $42,000 in deductions I almost left on the table! They also provided documentation explaining the legal basis in case of an audit.

Just wanted to follow up - I tried taxr.ai after seeing it mentioned here. I was skeptical but desperate for answers about our Section 179 situation with our trust-owned properties. The service was seriously impressive! Uploaded our trust docs and business info Sunday night, and by Tuesday afternoon I had a comprehensive analysis. Turns out our specific trust structure (it's a grantor trust) DOES allow us to take the Section 179 deduction on those HVAC upgrades. The report even explained exactly how to document everything properly for our tax return. Our regular CPA was still "researching" when I forwarded him the analysis - saved us weeks of waiting and potentially missing out on a substantial deduction!

If you're still struggling with this Section 179 trust issue, another major problem is getting actual clarification from the IRS. I spent 3+ weeks trying to get through to someone who could answer this exact question. I finally used this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS representative in under 45 minutes when I had been trying for weeks on my own. They have a video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that revocable grantor trusts can indeed benefit from Section 179 deductions that flow through from S Corps and LLCs because they're considered disregarded entities. He referenced the specific section of the tax code which gave me confidence to proceed with claiming the deduction.

I have to eat my words about Claimyr. After posting my skeptical comment, I decided to try it myself since I was desperate to resolve my trust's Section 179 issue before filing deadline. Holy crap it actually worked! After weeks of getting nowhere with the IRS phone system, I was connected to an agent in about 30 minutes. The agent confirmed that my grantor trust CAN benefit from the S-Corp's Section 179 election and walked me through the documentation needed to support it if questioned. Turns out I was confusing the rules for non-grantor trusts (which generally can't benefit from pass-through Section 179 deductions) with grantor trusts (which can). Having an actual IRS agent explain the distinction made all the difference. Filing with confidence now!

Just to add another perspective - my accountant showed me something called a "toggle trust" that can switch between grantor and non-grantor status. We structured our business ownership this way specifically to maximize tax benefits like Section 179. In our case, the trust is grantor during years when we want to utilize pass-through deductions like Section 179, but we can switch it to non-grantor status in years when that makes more sense for our overall tax situation. Not cheap to set up but has saved us a ton in taxes over the years. Might be worth exploring if your trust documents allow for this flexibility.

Surprised nobody has mentioned that if this is a business purchase, you could also consider bonus depreciation instead of Section 179. The rules are different and it might work better with your trust structure. For 2023 the bonus depreciation is 80%, dropping to 60% in 2024, 40% in 2025, and 20% in 2026 before going away completely. Might be worth looking into since it has different limitations than Section 179.

This thread has been incredibly helpful! I'm dealing with a similar situation where our family trust owns multiple LLCs, and I've been going in circles trying to figure out the Section 179 implications. One thing I'd add for anyone reading this - make sure you understand the annual Section 179 limits too. For 2024, the maximum deduction is $1,220,000 with a phase-out starting at $3,050,000 of qualifying purchases. But these limits apply at the individual level, so if you have multiple entities owned by the same grantor trust, you need to coordinate across all of them. Also, don't forget about the "taxable income limitation" - you can't claim more Section 179 than the taxable income from all your businesses combined. This caught us last year when we had a big equipment purchase but lower profits than expected. The combination of using taxr.ai for document analysis and Claimyr to actually talk to the IRS sounds like a solid approach. Sometimes you need that official confirmation from the horse's mouth, especially with complex trust structures.

This has been an incredibly informative discussion! As someone new to this community but dealing with a similar trust/Section 179 situation, I wanted to share my recent experience. I had been struggling with this exact issue - our revocable trust owns an S-Corp that manufactures custom furniture, and we were looking at a major equipment purchase. After reading through this thread, I decided to try both services mentioned. First, I used taxr.ai to analyze our trust documents. Within 48 hours, I had a comprehensive report confirming that our grantor trust structure would allow the Section 179 deduction to flow through. The analysis was thorough and included specific tax code references. Then I used Claimyr to get official IRS confirmation. After weeks of failed attempts to reach the IRS on my own, I was connected to an agent in about 40 minutes. The agent confirmed the analysis and even provided additional guidance on proper documentation. One thing I'd add to this discussion - make sure your trust documents explicitly identify it as a grantor trust. The IRS agent mentioned that unclear language in trust documents can sometimes create complications during audits. Our attorney had to amend one provision to make the grantor status crystal clear. Total cost for both services was under $500, but it potentially saved us from losing out on a $75,000+ deduction. Sometimes the peace of mind and speed is worth paying for professional analysis rather than spending weeks researching on your own.