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State Depreciation Adjustments: Handling Conformity Issues

Tracking Depreciation, Section 179, and Bonus Depreciation Differences

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Monday, December 9, 2024

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This webinar will review state methods of depreciating and expensing assets. Our panel of state and local tax veterans will identify which states comply with federal provisions, including bonus depreciation and Section 179 expensing guidelines, outline which states do not and the alternative methods they employ, and provide suggestions for tracking these valuable discrepancies.

Description

Calculating and tracking depreciation differences for multistate businesses is an arduous but necessary task. States' treatment of depreciation, Section 179, and bonus depreciation vary significantly. These differences can amount to significant state tax savings when an asset is sold.

The Tax Act of 2017 offered 100 percent bonus depreciation from Sept. 27, 2017 to Dec. 31, 2022. This 100 percent rate has been reduced annually; the current rate is 60 percent (2024) and will be phased out totally in 2027. Thankfully, many states adopted the new rules; however, several significant states, including California, New York, and Texas, did not conform.

TCJA increased the Section 179 expensing deduction to $1 million and indexed the election for inflation. Similar to bonus depreciation, some states follow the federal guidelines while others do not. Some states apply a general limitation of $25,000 (i.e., D.C., Hawaii, Indiana), others require addbacks in differing percentages (i.e., Illinois, Minnesota, North Carolina), and still others did not adopt the Section 179 provisions or have their unique methods for calculating the allowed Section 179 deduction (i.e., Florida, Maine, Minnesota). Not maintaining comprehensive data on the depreciation taken by states can prove costly.

Listen as our panel of SALT experts points out significant state treatment of depreciation and offers advice for capturing state depreciation for state and local tax professionals.

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Outline

  1. State depreciation differences: introduction
  2. Types of state adjustments
  3. State depreciation differences
  4. Bonus depreciation
  5. Section 179
  6. Tracking states' depreciation variances
  7. Examples

Benefits

The panel will cover these and other critical issues:

  • Common methods states use for bonus depreciation
  • Best methods for tracking depreciation by state for multistate businesses
  • Examples of state addbacks and adjustments in specific states

Faculty

Rendziperis, George
George W. Rendziperis, JD
Director
Baker Tilly US

Mr. Rendziperis is a director with Baker Tilly’s state and local tax (SALT) practice. He has more than 15...  |  Read More

Wood, Mark
Mark Wood
Managing Director, State and Local Tax practice
Andersen Tax

Mr. Wood is a Managing Director in the State and Local Tax practice. He has over 26 years of experience advising...  |  Read More

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