Bonus Depreciation

Depreciation is a federal income tax deduction that lets a taxpayer recover the cost of capital expenditures over time. It’s a yearly allowance for the wear and tear, deterioration, or obsolescence of the property. Bonus depreciation is an additional amount of deductible depreciation that may be taken in the year in which the qualifying property is put into service. Idaho has allowed taxpayers to claim federal bonus depreciation in some years, but not in others, as outlined below.

Forms/publications

  • Federal Form 4562, Depreciation and Amortization

For property acquired before 2008 or after 2009

If you claimed bonus depreciation for federal purposes, here’s what you need to know when filling out your Idaho tax return:

  • Complete and include a separate federal Form 4562 or detailed computation for Idaho depreciation purposes as if you hadn’t claimed the special depreciation allowance.
  • Use the Idaho depreciation amounts to compute the Idaho adjusted basis and any gains or losses from the sale or exchange of the property.
  • Enter the differences between the Idaho and federal depreciation amounts, and gains and losses from sales or other exchanges of the property on the applicable bonus depreciation line.

For property acquired during 2008 and 2009

Idaho conforms to the federal bonus depreciation provisions. The amounts you use for federal purposes will also be used for Idaho. You don’t need any other forms or computations for Idaho.

Laws and rules

  • Income Tax Law Section 63-3022O: Adjustment — Property acquired after September 10, 2001 — Small business expenses — Limitations on assessments and refunds.
  • Income Tax Administrative Rule 105, Adjustments to Taxable Income — Additions Required of All Taxpayers
  • Income Tax Administrative Rule 120, Adjustments to Taxable Income — Subtractions Available to All Taxpayers
  • Income Tax Administrative Rule 125, Adjustments to Taxable Income — Adjustments to Taxable Income — Bonus Depreciation on Property Acquired After September 10, 2001, and Before December 31, 2007, or After December 31, 2009.
  • Income Tax Administrative Rule 254, Nonresident and Part-Year Resident Individuals — Subtractions Allowed in Computing Idaho Adjusted Income.