New Hampshire Response to Bonus Depreciation

CCH, 4/19/02:

The 30% "bonus" depreciation and the additional IRC Sec. 179 expense allowance for New York Liberty Zone property contained in the recent federal Job Creation and Worker Assistance Act of 2002 (P.L. 107-147) is not allowed for New Hampshire business profits (income) tax purposes.
                                 
 Although, for federal income tax purposes, businesses may deduct 30% of the cost of capital assets placed in service between September 10, 2001, and September 11, 2004, unless the New  Hampshire legislature passes legislation to adopt these federal provisions, state taxpayers must file their  2001 tax returns using the provisions of the IRC in effect on December 31, 2000, using one of the  following options: (1) file now and add back the difference between the depreciation and the IRC Sec. 179 expense allowed under the pre- March 2002 IRC and the depreciation and expense claimed on the 2001  federal return; (2) file an extension for the New Hampshire return using the instructions and forms that will be available on the Department of Revenue Administration's website; (3) download a copy of the updated 2001 Business Tax Return with the adjustment schedule and instructions from the Department's website prior to reporting gross business profits; or (4) if the 2001 return has already been filed using the 30% bonus depreciation or the additional IRC Sec. 179 expense, file an amended return following the first or third options listed above.

BNA, 4/25/02:

New Hampshire: New Federal Depreciation Bonus Expense Not Applicable to State Returns, Agency Says

BOSTON--The New Hampshire Department of Revenue Administration April 15 reminded businesses that the state has not changed its tax laws to conform to the new 30 percent special depreciation bonus expense included in the recent federal economic stimulus package (Pub. L. No. 107-147).

In a technical information release (TIR 2002-002) intended for those who placed capital assets in service during 2001 and have not elected out of the federal provisions, the agency said that unless the Legislature passes an act to conform to the federal provisions state tax law will continue to adhere to the federal code in effect on Dec. 31, 2000.

Businesses that used the federal changes on their federal tax return must recalculate their New Hampshire gross business profits, DRA said. They will have to adjust the taxable income reported on their federal return before reporting their gross business profits on the New Hampshire business tax return.

The adjustment will require removal of the federal depreciation and Internal Revenue Code Section 179 expense authorized under the Job Creation and Worker Assistance Act of 2002 and allowance of the depreciation and Section 179 expense as provided under the code in effect Dec. 31, 2000.

Options for Taxpayers
DRA said it will post on its World Wide Web site additional instructions and a form for converting the current federal taxable income to the federal taxable income under the federal code in effect through Dec. 31, 2000. It said taxpayers have several options for filing their 2001 returns: File the 2001 business tax return now by adding back the difference between the depreciation and Section 179 expense allowed under the old code and the depreciation and Section 179 expense claimed on the 2001 federal return, attaching a schedule to support the calculation.

File an extension of time to file the 2001 New Hampshire return and complete the return within the period of extension using the instructions and forms soon to be posted on the Web site.

Download a copy of the updated 2001 Business Tax Return with the adjustment schedule and instructions prior to reporting gross business profits on the New Hampshire return.

If a return using the new federal depreciation or additional Section 179 expense already has been filed, file an amended return. The agency is unaware of any pending legislation that would adopt the federal provisions, according to a DRA auditor, but if such a measure is enacted, the agency will issue a new TIR with advice for filing amended returns for 2001.
The TIR is available on the DRA Web site at http://www.nh.gov/revenue/laws/documents/2002-002.doc.