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

This year, Maize Partnership claimed a Section $179$ deduction for $$40,000$ of new equipment. Total taxable business income at the partnership level was $$160,000.$

Tessie is a general partner in Maize Partnership. Her share of the Section $179$ deduction according to her Schedule K$-1($Form $1065)$ is $$9,500.$ However, due to losses from other businesses, total taxable business income on Tessie's individual return is zero.

How does Tessie treat her share of the Section $179$ deduction from Maize Partnership?

Tessie:

$$May deduct the full $$9,500$ on her individual return.

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

$$Must carry the $$9,500$ deduction forward to the next year.

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