Wisconsin Response to Bonus Depreciation

CCH, 7/12/02

The Wisconsin legislature has voted not to conform Wisconsin corporate franchise (income) tax and personal income tax laws to the federal bonus depreciation provisions of the federal Job Creation and Worker Assistance Act of 2002 (JCWAA) (P.L. 107-147) that was enacted March 9, 2002. Although Wisconsin law currently permits the federal bonus depreciation provisions to be used for Wisconsin purposes, the legislature's proposed budget reform bill that has been sent to Wisconsin Governor Scott McCallum would change Wisconsin law and prohibit the use for Wisconsin tax purposes of federal depreciation provisions enacted after December 31, 2000.

Under the proposed budget reform bill provisions, taxpayers who claimed the federal bonus depreciation deduction would be required to file an amended Wisconsin return and recompute depreciation for Wisconsin purposes under prior federal law. (News for Tax Professionals, Wisconsin Department of Revenue, July 10, 2002.)

FROM: COMMERCE CLEARINGHOUSE (CCH), 4/2/02

Wisconsin law provides the computation of Wisconsin taxable income for tax year 2001 is generally based on the IRC as enacted as of December 31, 1999, including provisions relating to discharge of S corporation indebtedness. The Wisconsin Department of Revenue has announced that taxpayers must complete Schedule I to reconcile differences between the computation of federal income and the computation of Wisconsin income. The Department further indicated that Wisconsin law currently permits federal depreciation provisions enacted later than December 31, 1999, to be used for Wisconsin purposes, so the 30% "bonus" depreciation provisions of P.L. 107-147 may apply for Wisconsin purposes. The Department cautions that the Budget Repair Bill pending in the Wisconsin Legislature (A.B. 1) would amend state law to prohibit the use of federal depreciation provisions enacted after December 31, 2000 (Press Release, March 19, 2002).