Q: When we are doing cash flows do we add the Section 179 Deduction back to the cash flow?
A: Do not add back the Section 179 Deduction for the pass-through entities – a Subchapter S corporation, a partnership, or an LLC. The Section 179 Deduction is not included on the tax return income statement for those entities. Other depreciation expense is included, but not the Section 179 Deduction. If you add back the 179 Deduction, you would improperly inflate "cash flow" by the amount of the Section 179 Deduction.
However, the Section 179 Deduction is included with depreciation expense on the tax return income statement for a Subchapter C corporation and a sole proprietorship. Therefore, add it back in estimating traditional "cash flow".
Q: If an owner owns 50 % of a company, is the Section 179 Deduction split equally between owners?
A: Yes. In general, the split is along ownership or partnership relative shares of ownership.
Course overview: The Section 179 Deduction