Is This Right?

[WImom]

I received this from my tax person after I checked on my bonus items that weren't listed on line 14. I thought from the seminar we had to have them on line 14 to count so I wanted to check first:

THis is what the tax preparer said:
The items that you think should be getting bonus depreciation are being expensed under Section 179. This means, essentially, the same treatment, i.e. full cost (applying business use %) being deducted, but whereas Wisconsin doesn't recognize bonus depreciation it does recognize Section 179. Therefore, there is no Federal-State difference for those assets.

[TomCopeland]

bonus depreciation

I received this from my tax person after I checked on my bonus items that weren't listed on line 14. I thought from the seminar we had to have them on line 14 to count so I wanted to check first:

THis is what the tax preparer said:
The items that you think should be getting bonus depreciation are being expensed under Section 179. This means, essentially, the same treatment, i.e. full cost (applying business use %) being deducted, but whereas Wisconsin doesn't recognize bonus depreciation it does recognize Section 179. Therefore, there is no Federal-State difference for those assets.

Your tax preparer is smart. Wisconsin doesn't recognize the 100% bonus rule, which means if you did use it, you would have to add back the amount you deducted as income on your Wisconsin tax return. Therefore, you state taxes would be higher. Since Wisconsin does recognize the Section 179 rule, you won't lose any Wisconsin taxes when this is chosen. The only drawback to using the Section 179 rule is that you will have to pay some of it back if you start using the item less than 50% over the next few years.

[WImom]

Thanks! That makes sense now. I didn't get what they were saying.