Idaho Administrative Code › Title IDAPA 35 - Tax Commission, State › Rule 35.01.01 - INCOME TAX ADMINISTRATIVE RULES › Section 35.01.01.125 - ADJUSTMENTS TO TAXABLE INCOME - BONUS DEPRECIATION ON PROPERTY ACQUIRED AFTER SEPTEMBER 10, 2001, AND BEFORE DECEMBER 31, 2007, OR AFTER DECEMBER 31, 2009

Current through August 31, 2023
Section
				63-3022O, Idaho Code
01.
In General
. Section
			 63-3022O, Idaho Code, requires
			 that when computing Idaho taxable income, the amount of the adjusted basis of
			 depreciable property, depreciation, and gains and losses from the sale,
			 exchange, or other disposition of depreciable property acquired after September
			 10, 2001, and before December 31, 2007, or acquired after December 31, 2009,
			 must be computed without regard to bonus depreciation allowed by Section
			 168(k), Internal
			 Revenue Code. To meet this requirement, a taxpayer must be consistent in making
			 the Idaho adjustments required for all the taxable years in which federal bonus
			 depreciation is claimed. The adjustments required by this rule do not apply to
			 property acquired after 2007 and before 2010. (4-6-23)
02.
Depreciation
. (4-6-23)
a. If a taxpayer makes the Idaho addition in
			 the first taxable year bonus depreciation was claimed for federal income tax
			 purposes, in the subsequent taxable years the taxpayer is entitled to the Idaho
			 subtractions for the additional depreciation computed for Idaho income tax
			 purposes that exceeds the amount of depreciation claimed for federal income tax
			 purposes. (4-6-23)
b. If a taxpayer
			 fails to make the Idaho addition in the first taxable year bonus depreciation
			 was claimed for federal income tax purposes, the taxpayer is not entitled to
			 claim the Idaho subtractions for additional depreciation in subsequent taxable
			 years. In such instances, claiming an Idaho subtraction for additional
			 depreciation when the first year Idaho addition was not claimed constitutes
			 computing depreciation with regard to Section
			 168(k), Internal
			 Revenue Code, which is specifically prohibited in Section
			 63-3022O(1),
			 Idaho Code. For example, the Idaho addition is required for a taxable year when
			 the bonus depreciation is claimed even though the taxpayer may be limited in
			 claiming a passive loss from a pass-through entity in which the bonus
			 depreciation arose. If the bonus depreciation is not added back in that taxable
			 year, the Idaho subtractions are not allowed in the subsequent taxable years.
			 (4-6-23)
c. The Idaho adjustments
			 are required in all taxable years in which the taxpayer has an Idaho filing
			 requirement or is a member of a combined group of corporations in which at
			 least one member has an Idaho filing requirement. If the taxpayer is not
			 required to file an Idaho income tax return for one (1) or more years in which
			 depreciation may be claimed, the taxpayer may claim the Idaho adjustment in the
			 taxable years in which an Idaho return is filed if all such taxable years are
			 treated consistently. (4-6-23)
d.
			 Example. A corporation transacted business in California and Oregon during
			 taxable year 2003. In 2004, the taxpayer began transacting business in Idaho
			 and was required to file an Idaho corporation income tax return for that year.
			 On the federal return filed for 2003, the taxpayer claimed bonus depreciation
			 for assets placed in service that year. Because the taxpayer was not required
			 to file an Idaho corporation income tax return for 2003, there was no Idaho
			 bonus depreciation addition required of the taxpayer. In 2004, the second year
			 of deprecation for the assets placed in service in 2003, the taxpayer was
			 required for Idaho income tax purposes to compute depreciation on the assets as
			 if bonus depreciation had not been claimed. The difference in the amount of
			 Idaho depreciation and the depreciation claimed for federal income tax purposes
			 for 2004 would be allowed to the taxpayer as an Idaho subtraction since the
			 taxpayer was required to file an Idaho corporation income tax return for that
			 year. Assuming the taxpayer files an Idaho corporation income tax return for
			 the remaining years when depreciation on the assets is allowed, the taxpayer
			 will be allowed the Idaho subtraction in those years for the difference in the
			 Idaho and federal depreciation amounts. If the corporation transacted business
			 in Idaho during 2003 only, the return filed for that year should reflect the
			 Idaho addition for the difference in the amount of Idaho depreciation and the
			 depreciation claimed for federal income tax purposes, even though the
			 subtractions will not apply in subsequent years. (4-6-23)