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New York State Tax Return And Depreciation Question
I have made it to my state taxes now and ran into something I am not sure about. I depreciated items on my federal return, I live in New york and have gotten to line 23 on form IT-201 Other under New York additions. When I went to the instructions and read what other could consist of I came acrossed
IRC section 168(k) property depreciation
With the exception of resurgence zone property and New York
liberty zone property described in IRC section 1400L(b)(2), New
York State does not follow the federal depreciation rules for IRC
section 168(k) property placed in service inside or outside New
York State on or after June 1, 2003. If you claimed a depreciation
deduction for such property, and if no exception for resurgence
zone or New York liberty zone property applies, then complete
Part 1 of Form IT-398, New York State Depreciation Schedule for
IRC Section 168(k) Property, to determine the amount to include.
Attach Form IT-398 to your return.
Is this considered the depreciation I am entering on form 4562. I went to form IT-398 also and read the instructions to see if something there will rule what I am deducting out I found:
For tax years beginning after December 31, 2002, New York State (NYS)
does not allow the federal 30%/50% special depreciation deduction for
Internal Revenue Code (IRC) section 168(k) property (except for resurgence
zone property and New York liberty zone property described in IRC
section 1400L(b)(2)), placed in service inside or outside NYS after May 31,
2003. Instead, you are allowed a NYS depreciation deduction determined
under IRC section 167, as that section would have applied to the property if
it had been acquired on September 10, 2001. You may take the deduction
for NYS depreciation until the property is disposed of or fully depreciated
Sorry this is so long but if any one could answer this question for me I would greatly appreciate it!
This brings up a more general question. Some states do not recognize the federal 50%/100% bonus depreciation rules. This means you'll have to take the amount you depreciated on your federal tax return and add it to you state income and pay taxes on it. If you are using a tax preparer, he or she should know this.
|depreciation, tom copeland|