Bonus Depreciation has become a hot topic and has seen many changes over the last decade. There are also continuing debates as to how effective it really is. However, we will attempt to clarify the issues of bonus depreciation by covering all the aspects and history. Continuing from the initial post on Bonus Depreciation and the Initial Law, this post will be the first of a series detailing the variables of different eras of bonus depreciation. Included in each post will be a breakdown everything you need to know from the allowable amount to what legislation is behind the respective bonus depreciation. This particular post will discuss everything about the Amended Law for bonus depreciation stemming from the Job and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA).
In May of 2003 President Bush signed into effect the JGTRRA, which essentially accelerated or expanded many of the provisions under the Economic Growth and Tax Relief Reconciliation Act of 2001. As a result of this act, the previous rules of bonus depreciation created in 2003 under the JCWAA of 2002 were amended. Under this act, eligible assets acquired after 05/05/2003 and before 1/1/05 and placed in service before 1/1/05 were able to receive 50% Bonus Depreciation. Taxpayers could also elect to use the 30% instead of the 50% Bonus.
With regards to eligibility, here is a chart with the essential information concerning Federal Guidelines.
For the purpose of state corporate income tax reporting, different states had their own regulations governing bonus depreciation. Some chose to allow the federal guidelines, while others do not. Below is the breakdown.
1. The following states (13) allowed the Federal Bonus Depreciation for state corporate income tax purposes: Alabama, Alaska, Colorado, Delaware, Florida, Kansas, Louisiana, Montana, New Mexico, North Dakota, Oregon, Utah and West Virginia
2. The following states (22) DID NOT allow the Federal Bonus Depreciation for state corporate income tax purposes: Arizona, Arkansas, California, Connecticut, District of Columbia, Georgia, Hawaii, Idaho, Indiana, Kentucky, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, Rhode Island, South Carolina, Tennessee (JCWAA only), Vermont, Virginia, Wisconsin
3. The following states (4) DID NOT impose a state corporate income tax purposes: Nevada, South Dakota, Washington and Wyoming
4. The following states (14) provided their own form of Bonus Depreciation for state corporate income tax purposes: Illinois, Iowa, Maine, Michigan, Minnesota, Missouri, Nebraska, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas
Hopefully this has provided much of the information that you are looking for about amended bonus depreciation deriving from the JGTRRA. For any general questions, or questions concerning specific state legislature, please ask us under our questions page or below in the comments and we will be happy to assist you.
More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.