United States

Pennsylvania: Department of Revenue Issues Guidance Disallowing 100 percent Bonus Depreciation

Jan 08, 2018
From KPMG TaxWatch

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On December 22, 2017, the Pennsylvania Department of Revenue issued guidance, Corporate Tax Bulletin 2017-02, providing that it will not allow 100 percent bonus depreciation under IRC section 168(k) for assets placed in service after September 27, 2017. Recall, the recently-signed federal tax reform bill increases the 50 percent bonus depreciation regime under Code section 168(k) to 100 percent expensing for qualified assets placed in service after September 27, 2017 and before December 31, 2022. Added back bonus depreciation will only be deductible in the year of disposition. In sum, under the Bulletin, until there is either a law change or another policy change, with respect to assets placed in service after September 27, 2017, where a corporate taxpayer claims 100 percent bonus depreciation, the corporation is required to add back the 100 percent bonus depreciation for corporate net income tax purposes and will not get any additional depreciation deduction on those assets until the entity either sells or otherwise disposes of those assets. It is expected the Legislature will act to revise this position. Please contact Howard Sklaroff at 267-256-2891 with questions.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.