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I have a first year S Corporation with net income (before Sec 179 depreciation) of $13,761. My total Sec 179 depreciation is $87,103. Due to income limitations, $73,343 is a Sec 179 carry forward. With the $87,104 Sec 179 I have a negative AAA. There are no shareholder distributions.

Do I report the Accumulated Depreciation on the Balance Sheet as $87,104 and an adjustment to M-2 Other Reductions of $73,343 for the carry forward? Can I have a negative AAA in this circumstance? K-1 shows the $13,761 as ordinary income Line 1 and Line 11 $13,761 Section 179 deduction
Schedule M2 balancing to Schedule L form 1120S

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