DATE ISSUED: March 17, 2009
In 2008, Florida decoupled from the changes made by the Economic Stimulus Act of 2008 to the Section 179 expense amounts and the bonus depreciation provisions contained in Section 168(k) of the Internal Revenue Code. Sections 220.13(1)(a)14., and 15., Florida Statutes, required corporate taxpayers to add back the 50% bonus depreciation and Section 179 expense in excess of $25,000 allowed by the Economic Stimulus Act of 2008. These provisions have been repealed by Chapter 2009-018, Laws of Florida.
The 2009 Florida Legislature has created new Section 220.13(1)(e), Florida Statutes. Section 220.13(1)(e)1., Florida Statutes, requires corporate taxpayers to add back bonus depreciation for assets placed in service during the 2008 calendar year. However, starting in 2008, it provides for a corresponding subtraction for seven tax years equal to one-seventh of the amount required to be added back.Section 220.13(1)(e)2., Florida Statutes, was newly created, and requires corporate taxpayers claiming a deduction under Section 179 of the Internal Revenue Code to add back those amounts to the extent they exceed $128,000. The addition for Section 179 expense only applies to tax years that begin in 2008. A corresponding subtraction is provided for seven tax years starting with tax years beginning on or after January 1, 2008 equal to one-seventh of the amount required to be added back.
Taxpayer A, with a tax year end of December 31, 2008, purchases five-year assets on July 1, 2008 for $750,000. Taxpayer A expenses $250,000 of these assets under Section 179 of the Internal Revenue Code on its federal return. Assume that Taxpayer A is allowed, and claims 50% bonus depreciation in the amount of $250,000 and straight line depreciation in the amount of $50,000. Taxpayer A’s basis in the assets is $200,000 ($750,000 minus $250,000 Section 179 expense, $250,000 bonus depreciation, and $50,000 straight line depreciation).
Under Section 220.13(1)(e)2., Florida Statutes, Taxpayer A must add back Section 179 expense to the extent it exceeds $128,000 ($250,000 minus $128,000 equals $122,000), but receives a corresponding subtraction in 2008 of one-seventh of the amount added back ($122,000 divided by 7 equals $17,428.57). Therefore, Taxpayer A would have a positive adjustment for Section 179 expense for the 2008 calendar year of $104,571.43. ($122,000-17,428.57 equals $104,571.43). The $122,000 would be included on Schedule I, Line14 of the Florida Corporate Income Tax Return (F-1120), and the $17,428.57 would be included on Schedule II, Line 9 of the return. In each of the next six tax years, Taxpayer A would claim a subtraction in the amount of $17,428.57, which matches the amount required to be added back.
Under Section 220.13(1)(e)1., Florida Statutes, Taxpayer A also must add back all of the 50% bonus depreciation it claimed on assets placed in service during the 2008 calendar year. In this example, Taxpayer A claimed $250,000 in bonus depreciation, so it would add back this amount. However, Taxpayer A is allowed a corresponding subtraction equal to one-seventh of the $250,000 required to be added back, or $35,714.29. The $250,000 would be included on Schedule I, Line 15 of the F-1120, and the $35,714.29 would be included on Schedule II, Line 9 of the return. Therefore, Taxpayer A would have a positive adjustment for the 2008 tax year in the amount of $214,285.71 for bonus depreciation, and would subtract $35,714.29 in each of the six subsequent tax years.
References: Chapter 2009 — 018 Laws of Florida
This document is intended to alert you to the requirements contained in Florida laws and administrative rules. It does not by its own effect create rights or require compliance.
For forms and other information, visit our Internet site at www.myflorida.com/dor or call Taxpayer Services, 8:00 a.m. to 7:00 p.m., ET, Monday through Friday, excluding holidays, at 800-352-3671.
For a detailed written response to your questions, write the Florida Department of Revenue, Taxpayer Services, Mail Stop 3-2000, 5050 West Tennessee Street, Tallahassee, FL 32399-0112.