District of Columbia Response to Bonus Depreciation

BNA, 9/11/02

District Decouples From Federal Changes On Estate Tax in Order to Preserve Revenue

The District of Columbia enacted emergency legislation (Act 14-448) July 23 to preserve its estate tax by decoupling from the federal estate tax phaseout imposed by the Economic Growth and Tax Relief Reconciliation Act (Pub. L. No. 107-16).

The District of Columbia has estimated that the federal changes would result in $25 million lost revenue for fiscal year 2003, and increasing losses thereafter, according to the Inheritance and Estate Tax Emergency Declaration Resolution of 2002 (Resolution 14-524).

To preserve the estate tax revenue stream, Act 14-448 decouples the district's estate tax laws from federal law.

The district will continue to collect estate taxes and apply the federal credit based on the Internal Revenue Code in effect Jan. 1, 2001.

The emergency legislation took effect July 23 and remains effective for up to 90 days.

Text of the legislation is available at http://dccouncil.dc.gov/images/00001/20020718111406.pdf.

Commerce Clearinghouse, 5/1/02

For District of Columbia corporate income and personal income tax purposes, an Emergency Act decouples the District from a provision in the federal Job Creation and Worker Assistance Act (P.L.  107-147) (JCWAA) that allows businesses to claim an additional income tax deduction for depreciation.  

Under the federal legislation, in addition to the normal depreciation deduction, businesses may claim a  30% "bonus" depreciation deduction from the cost of qualified property acquired between September 10,  2001, and September 11, 2004. The Emergency Act prohibits District taxpayers from deducting the bonus depreciation when computing their District corporate income or personal income tax. (D.C.A. 14-341,  Laws 2002, effective April 24, 2002, for a 90-day period expiring on July 23, 2002.)