Tax News

CCH (cch.taxgroup.com) reports:

  The Florida Department of Revenue (DOR) has issued Emergency Rule 12CER08-31 along with guidance on the new rule, which, for corporate income tax purposes, governs Florida's decoupling from the bonus depreciation and IRC §179 expensing election enacted by the federal Economic Stimulus Act of 2008 (P.L. 110-185). Under the rule, taxpayers are required to add back any IRC §179 deduction that exceeds $125,000. Taxpayers must also add back an amount equal to the total depreciation claimed under IRC §167 and IRC §168 on the federal return, minus the amount of depreciation deduction that would have been allowable under IRC §167 and IRC §168, as in effect on January 1, 2007, if the taxpayers had not expensed any amounts in excess of $125,000 under IRC §179, or taken bonus depreciation under IRC §168(k). This rule applies to taxpayers who deducted more than $128,000 on their 2008 federal income tax returns under IRC §179 or claimed bonus depreciation on assets placed in service during the 2008 calendar year.

  In tax years beginning after 2008, taxpayers will be required to make an adjustment to their Florida taxable income by an amount equal to the amount of depreciation deduction that would have been allowable under IRC §167 and IRC §168, as in effect on January 1, 2007, if the taxpayers had not expensed any amounts in excess of $125,000 under IRC §179, or taken bonus depreciation under IRC §168(k), minus the amount of depreciation deduction taken under IRC §167 and IRC §168 on their related federal returns.

  Upon the sale or disposition of property for which an addback was required, the Florida gain will be the same as the federal gain. However, Florida taxable income will have to be adjusted by an amount equal to the Florida depreciation taken on the asset, minus the total federal depreciation taken on the asset. The total amount of adjustments claimed for property for all years cannot exceed the total additions for the same property. A schedule reflecting the additions and all subsequent adjustments must be attached to the Florida corporate income tax return.

  The guidance provided by the DOR contains extensive examples.

  Subscribers to CCH Tax Research NetWork can view the complete text of the emergency rule.

  Emergency Rule 12CER08-31, effective December 10, 2008; Tax Information Publication, No. 08C01-10 , Florida Department of Revenue, December 10, 2008, ¶205-283

 
Other References:

  Explanations at ¶10-670