MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

This 100% Write-Off Can Backfire in an S-Corp

13 Dec 2025 · 1 min

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Mark Kohler explains why a 100% bonus depreciation deduction can backfire in an S-corp when equipment is financed. If you buy $100,000 of equipment with a $99,000 loan and $1,000 cash, your basis is only $1,000, so the full depreciation deduction gets disallowed and creates unexpected taxable income.

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You go, I'm going hard, I'm going 100% bonus, I'm going to write off the whole hundred grand. Okay? Did you pay cash for this? Because if you did, that's cool. You have basis. I put in 100 grand. In the business, I wrote off 100 grand. I bought equipment, I write off 100 grand. But if you put down $1,000 and get a loan for 99,000 and say I'm going to write off the whole hundred, in an S corporation you don't have basis but in a basic sole proprietorship or LLC you would. But if you've made an S election and you get a loan for $99,000 and you try to write that off, you can't because you have no basis, Deb, not basis like you would normally have in an LLC with a rental property. So you go to do that 100% bonus. You've now taken a deduction an exceeding basis. You're taxed on that.