| BD - 1 |
Does Idaho conform to the bonus depreciation allowed on my federal
return?
Bonus deprecation is allowed under two federal code sections. Idaho did not adopt the
bonus depreciation provisions found in Internal Revenue Code (IRC) section 168(k).
This includes the 30 percent additional first-year depreciation allowed by the
federal Job Creation and Worker Assistance Act of 2002, and the 50 percent additional
first-year depreciation allowed by the Jobs and Growth Tax Relief Reconciliation Act
of 2003.
Idaho has adopted first-year bonus depreciation for qualified GO Zone property since it
is allowed in IRC section 1400N(d) and ties to IRC section 167(a), not IRC section 168(k).
This was allowed by the Gulf Opportunity Zone Act of 2005.
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| BD - 2 |
Why isn't Idaho conforming to bonus depreciation allowed by IRC
section 168(k)?
Idaho Code section 63-3022O requires that the adjusted basis of depreciable property,
depreciation, and capital gains and losses be computed without the bonus depreciation
provisions that are allowed in IRC section 168(k). Because Idaho Code section 63-3022O
doesn't disallow the bonus depreciation allowed in IRC section 1400N(d) (GO Zone property),
Idaho conforms to this bonus depreciation.
Ref:
Idaho Code Section 63-30220
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| BD - 3 |
Which years are impacted?
The nonconformity applies to tax years beginning on or after Jan. 1, 2001. The nonconformity
continues through the life of the assets for which you claimed the bonus depreciation for
federal income tax purposes. Recapture and basis issues will continue to be different
for Idaho than for the federal government until you sell the assets or they’re fully
depreciated.
Ref:
Idaho Code Section 63-30220
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| BD - 4 |
How do I make this adjustment?
The first year that you claim the bonus depreciation, the Idaho depreciation will be less
than the federal depreciation; in future years, the Idaho depreciation will be more than
the federal depreciation. To make the computation, you should prepare separate federal
Forms 4562 and other applicable schedules for the returns filed with the IRS and Idaho.
Write "Idaho" or "state" on the forms for Idaho. You must enter the difference between
your federal and Idaho depreciation amounts on the applicable "bonus depreciation" line as
an addition or subtraction on your Idaho income tax return.
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| BD - 5 |
Will I permanently lose the depreciation on my
Idaho return?
No. Over the useful life of the property, the same amount of depreciation will be
allowed for Idaho. It will just be taken more evenly rather than weighted more
heavily in the first year.
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| BD - 6 |
I've filed my Idaho returns claiming the bonus
depreciation under IRC section 168(k) provided for in the Job Creation and Worker Assistance
Act of 2002 (the 30 percent additional first-year depreciation), and the Jobs and Growth
Tax Relief Reconciliation Act of 2003 (the 50 percent additional first-year depreciation).
What should I do now?
The 30 percent or 50 percent bonus depreciation amounts allowed under IRC section 168(k)
aren't allowed in computing the Idaho tax. As a result, if you claimed the bonus
depreciation on your federal return(s), you need to adjust your Idaho income tax return(s).
You should amend your Idaho return(s) and adjust your Idaho taxable income for the
difference in the Idaho amounts computed without the bonus depreciation and the federal
amounts computed with the bonus depreciation.
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| BD - 7 |
Where should I put the Idaho
adjustment?
Enter the adjustment for the difference in the Idaho and federal depreciation amounts
and related gains or losses as a "bonus depreciation" addition or subtraction.
For individuals, these lines are on Forms 39R and 39NR.
For a corporation, S corporation, or partnership, these lines are on p. 1 of the
applicable form.
For a fiduciary, these lines are on Schedule B. For the 2001 return, enter the
adjustment on line 4, 5, or 6 and identify it as a bonus depreciation adjustment.
If possible, use a line that was not designated for one of the specifically
named deductions.
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| BD - 8 |
Will the property have a different basis for federal income
tax than for Idaho income tax?
Yes. Property will have a different basis the first year and will continue to be
different until it’s sold or fully depreciated.
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| BD - 9 |
Does this property qualify for the Idaho investment
tax credit?
If it otherwise qualifies, yes. The Idaho investment tax credit is based on the
basis of the property, which is generally cost; therefore, the shift in depreciation
doesn’t change this credit.
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| BD - 10 |
Do I need to compute separate at-risk limitations for Idaho and
for federal?
No, the at-risk, passive loss and basis limitations are the same as for federal income
tax purposes. The Idaho adjustments for the difference in depreciation won’t affect
these computations for Idaho’s income tax.
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| BD - 11 |
Do I have to recalculate my Idaho itemized deductions
to exclude the changes in the Job Creation and Worker Assistance Act?
No. The total itemized deductions are the same as reported to the IRS. The Idaho adjustments
for the difference in depreciation won’t affect these computations for Idaho income tax
purposes.
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| BD - 12 |
Should I compute estimated taxes with regard to the
first-year additional depreciation in IRC section 168(k)?
No. Idaho estimated income tax payments are based on the tax that you owe to Idaho
and should be based on the Idaho law, which doesn’t allow bonus depreciation provisions
under IRC section 168(k).
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