(1)
Assets acquired after September
10, 2001, but before May 6, 2003. For tax periods ending after
September 10, 2001, but beginning before May 6, 2003, the additional first-year
depreciation allowance ("bonus depreciation") of 30 percent authorized in
Section
168(k) of the Internal
Revenue Code, as enacted by Public Law No. 107-147, Section 101, does not apply
for Iowa individual income tax. Taxpayers who claim the bonus depreciation on
their federal income tax return must add the total amount of depreciation
claimed on assets acquired after September 10, 2001, but before May 6, 2003,
and subtract the amount of depreciation taken on such property using the
modified accelerated cost recovery system (MACRS) depreciation method
applicable under Section
168 of the Internal
Revenue Code without regard to Section 168(k).
If any such property was sold or disposed of during the tax
year, the applicable depreciation catch-up adjustment must be made to adjust
the basis of the property for Iowa tax purposes. The gain or loss reported on
the sale or disposition of these assets for federal tax purposes must be
adjusted for Iowa tax purposes to account for the adjusted basis of
assets.
The adjustment for both depreciation and the gain or loss on
the sale of qualifying assets acquired after September 10, 2001, but before May
6, 2003, can be calculated on Form IA 4562A.
See 701-subrule 502.22(1) for examples illustrating how this
subrule is applied.
(2)
Assets acquired after May 5, 2003, but before January 1, 2005.
For tax periods beginning after May 5, 2003, but beginning before January 1,
2005, the bonus depreciation of 50 percent authorized in Section
168(k) of the Internal
Revenue Code, as amended by Public Law No. 108 -27, Section 201, may be taken
for Iowa individual income tax. If the taxpayer elects to take the 50 percent
bonus depreciation, the depreciation deduction allowed on the Iowa individual
income tax return is the same as the depreciation deduction allowed on the
federal income tax return for assets acquired after May 5, 2003, but before
January 1, 2005.
a. If the taxpayer elects to
take the 50 percent bonus depreciation and had filed an Iowa return prior to
February 24, 2005, which reflected the disallowance of 50 percent bonus
depreciation, the taxpayer may choose between two options to reflect this
change. Taxpayer may either file an amended return for the applicable tax year
to reflect the 50 percent bonus depreciation provision, or taxpayer may reflect
the change for 50 percent bonus depreciation on the next Iowa return filed
subsequent to February 23, 2005. Taxpayer must choose only one of these two
options. Regardless of the option chosen, taxpayer must complete and attach a
revised Form IA 4562A to either the amended return or the return filed
subsequent to February 23, 2005.
EXAMPLE 1: Taxpayer filed a 2003 Iowa individual income tax
return on April 15, 2004, which reflected an adjustment of $50,000 for the
difference between federal depreciation and Iowa depreciation relating to the
disallowance of 50 percent bonus depreciation. Taxpayer now elects to take the
50 percent bonus depreciation for Iowa tax purposes. Taxpayer may either amend
the 2003 Iowa return to reflect a $50,000 reduction in Iowa taxable income, or
taxpayer may take the additional deduction of $50,000 on taxpayer's 2004 Iowa
return that is filed after February 23, 2005.
EXAMPLE 2: Assume the same facts as given in Example 1, and
taxpayer filed a 2004 Iowa return prior to February 24, 2005. Taxpayer did not
take an additional $50,000 deduction on the 2004 Iowa return. Taxpayer may
either amend the 2003 Iowa return to reflect a $50,000 reduction in Iowa
taxable income, or taxpayer may take the additional deduction of $50,000 on
taxpayer's 2005 Iowa return.
b. If the taxpayer elects not to take the 50
percent bonus depreciation, taxpayer must add the total amount of depreciation
claimed on assets acquired after May 5, 2003, but before January 1, 2005, and
subtract the amount of depreciation taken on such property using the modified
accelerated cost recovery system (MACRS) depreciation method applicable under
Section
168 of the Internal Revenue Code without
regard to Section 168(k). If any such property was sold or disposed of during
the tax year, the applicable depreciation catch-up adjustment must be made to
adjust the basis of the property for Iowa tax purposes. The gain or loss
reported on the sale or disposition of these assets for federal tax purposes
must be adjusted for Iowa tax purposes to account for the adjusted basis of
assets. The adjustment for both depreciation and the gain or loss on the sale
of qualifying assets acquired after May 5, 2003, but before January 1, 2005,
can be calculated on Form IA 4562A.
(3)
Assets acquired after December
31, 2007, but before January 1, 2010. For tax periods beginning after
December 31, 2007, but beginning before January 1, 2010, the bonus depreciation
of 50 percent authorized in Section
168(k) of the Internal
Revenue Code, as amended by Public Law No. 110 -185, Section 103, and
Public Law
111-5,
Section
1201, does not apply for Iowa individual
income tax. Taxpayers who claim the bonus depreciation on their federal income
tax return must add the total amount of depreciation claimed on assets acquired
after December 31, 2007, but before January 1, 2010, and subtract the amount of
depreciation taken on such property using the modified accelerated cost
recovery system (MACRS) depreciation method applicable under Section
168 of the Internal Revenue Code without
regard to Section 168(k).
If any such property was sold or disposed of during the tax
year, the applicable depreciation catch-up adjustment must be made to adjust
the basis of the property for Iowa tax purposes. The gain or loss reported on
the sale or disposition of these assets for federal tax purposes must be
adjusted for Iowa tax purposes to account for the adjusted basis of
assets.
The adjustment for both depreciation and the gain or loss on
the sale of qualifying assets acquired after December 31, 2007, but before
January 1, 2010, can be calculated on Form IA 4562A.
See rule
701-502.22 (422) for examples
illustrating how this rule is applied.
(4)
Qualified disaster assistance
property. For property placed in service after December 31, 2007, with
respect to federal declared disasters occurring before January 1, 2010, the
bonus depreciation of 50 percent authorized in Section
168(n) of the Internal
Revenue Code for qualified disaster assistance property, as amended by
Public
Law 110-343,
Section
710, does not apply for Iowa individual
income tax. Taxpayers who claim the bonus depreciation on their federal income
tax return must add the total amount of depreciation claimed on qualified
disaster assistance property and subtract the amount of depreciation taken on
such property using the modified accelerated cost recovery system (MACRS)
depreciation method applicable under Section
168 of the Internal Revenue Code without
regard to Section 168(n).
If any such property was sold or disposed of during the tax
year, the applicable depreciation catch-up adjustment must be made to adjust
the basis of the property for Iowa tax purposes. The gain or loss reported on
the sale or disposition of this property for federal tax purposes must be
adjusted for Iowa tax purposes to account for the adjusted basis of such
property.
The adjustment for both depreciation and the gain or loss on
the sale of qualifying disaster assistance property can be calculated on Form
IA 4562A.
(5)
Assets acquired after December 31, 2009, but before January 1,
2014. For tax periods beginning after December 31, 2009, but beginning
before January 1, 2014, the bonus depreciation authorized in Section
168(k) of the Internal
Revenue Code, as amended by Public Law No. 111 -240, Section 2022, Public Law
No. 111 -312, Section 401, and Public Law No. 112 -240, Section 331, does not
apply for Iowa individual income tax. Taxpayers who claim the bonus
depreciation on their federal income tax return must add the total amount of
depreciation claimed on assets acquired after December 31, 2009, but before
January 1, 2014, and subtract the amount of depreciation taken on such property
using the modified accelerated cost recovery system (MACRS) depreciation method
applicable under Section
168 of the Internal
Revenue Code without regard to Section 168(k).
If any such property was sold or disposed of during the tax
year, the applicable depreciation catch-up adjustment must be made to adjust
the basis of the property for Iowa tax purposes. The gain or loss reported on
the sale or disposition of these assets for federal tax purposes must be
adjusted for Iowa tax purposes to account for the adjusted basis of
assets.
The adjustment for both depreciation and the gain or loss on
the sale of qualifying assets acquired after December 31, 2009, but before
January 1, 2014, can be calculated on Form IA 4562A.
See 701-subrule 502.22(3) for examples illustrating how this
subrule is applied.
This rule is intended to implement Iowa Code section
422.7 as amended by 2013 Iowa
Acts, Senate File 106.
