Alaska Administrative Code › Title 15 - Revenue › Chapter 20 - Alaska Net Income Tax › Article 4 - Corporate Net Income Tax; Special Rules for Oil and Gas Corporations › 15 AAC 20.480 - Depreciation expense for oil and gas taxpayers

Current through May 31, 2024
(a) This section
				applies to taxpayers subject to
				AS
				43.20.144.
(b) Except as provided for by
				15 AAC 20.421(b) (3), a taxpayer shall report depreciation
				expense for all unitary corporations using the class life asset depreciation
				range system as applied under Internal Revenue Code section 167 (26 U.S.C.
				167)  as that section read on June 30, 1981,
				applied to the depreciable basis determined under the taxpayer's method of
				reporting federal taxable income for that corporation as if all assets were
				used inside the United States. However, a taxpayer may elect to report
				depreciation expense for foreign assets of domestic corporations using a method
				of reporting depreciation expense under the class life asset depreciation range
				system as applied to foreign assets if that rate of depreciation is slower than
				the rate of depreciation otherwise reportable under this section.
(c) A taxpayer that reports financial
				statement income as federal taxable income of foreign corporations under
				15 AAC 20.300(f)
				may elect to report the depreciation used to determine financial statement
				income for those corporations. A taxpayer that reports earnings and profits as
				federal taxable income of controlled foreign corporations under
				15 AAC 20.300(f)
				may elect to report the depreciation used to determine the earnings and profits
				for those controlled foreign corporations.
(d) Depreciation methods shall be treated as
				methods of accounting. Under this section, the taxpayer shall segregate its
				combined group into domestic corporations, controlled foreign corporations, and
				foreign corporations that are not controlled foreign corporations. A taxpayer
				shall report depreciation for each segregated group of corporations using a
				single overall method allowed under this section for that group: the class life
				asset depreciation range system, the depreciation used to determine financial
				statement income, or the depreciation used to determine earnings and profits. A
				taxpayer may apply the class life asset depreciation range system to determine
				depreciation for any group of corporations. Subject to an election under this
				section, for foreign corporations, including controlled foreign corporations, a
				taxpayer may use the depreciation used to determine financial statement income,
				and for controlled foreign corporations, a taxpayer may use the depreciation
				used to determine earnings and profits.
(e) A taxpayer filing a return under
				AS
				43.20.144 for the first time shall elect on
				its return a depreciation method under this section for controlled foreign
				corporations, and a depreciation method for foreign corporations that are not
				controlled foreign corporations. The taxpayer shall apply the method it elects
				under this subsection as if it had been in place on the date of acquisition of
				each asset.
(f) The members of a
				consolidated group of Alaska taxpayers shall use the same depreciation methods.
				Taxpayers joining in the making of an Alaska consolidated return for the first
				time shall apply the depreciation methods established by a parent taxpayer, if
				any. If there is no parent taxpayer, the consolidated group shall use the
				depreciation methods in place for the taxpayer having the largest presence in
				this state during the initial year of consolidation, as measured by its
				property numerator. A taxpayer entering an existing Alaska consolidated group
				shall conform to the existing group's depreciation methods. A corporation that
				ceases to be subject to
				AS
				43.20.144 and in a subsequent tax year again
				becomes subject to
				AS
				43.20.144 shall apply the depreciation
				methods applicable during the last previous tax period in which it was subject
				to AS
				43.20.144 unless it is required to use the
				depreciation methods established by a pre-existing consolidated group of Alaska
				taxpayers of which it is part when it again becomes subject to
				AS
				43.20.144.
(g) Notwithstanding the provisions of (h) of
				this section barring a taxpayer from changing a depreciation method without the
				prior approval of the department, a taxpayer may change a depreciation method
				in its return for its first tax year beginning on or after January 1, 1998, to
				conform to this section without the prior approval of the department. The
				return reporting the change must include
(1)
				a declaration that the taxpayer is changing its depreciation method to conform
				to this section;
(2) a disclosure
				of the taxpayer's new and old depreciation methods by group or by company if
				all members of a group did not apply the same method; and
(3) a calculation of the adjustment required
				under (h) of this section for each member of the unitary group.