Virginia will continue to deconform to Federal taxation laws for the following:
- bonus depreciation allowed for certain assets under IRC §§ 168(k), 168(l), 168(m), 1400L, and 1400N
- five-year carryback of federal net operating loss deductions generated in taxable year 2008 or 2009
- federal income tax deductions for applicable high yield discount obligations under IRC § 163(e)(5)(F)
- federal income tax treatment of cancellation of debt income realized in connection with certain business debts
You must add back the difference in regular depreciation and special depreciation if you depreciated assets on your Federal return and the depreciation affected your Federal Adjusted Gross Income.
For example, if you depreciated an asset that you purchased during the tax year for your Schedule C business and opted to use the special 50% depreciation method, the deduction is greater than what is currently allowed in Virginia. You must re-figure the depreciation amount using the regular method of depreciation and add back the difference in the deduction on your Virginia tax return.
For additional information on how to report see Tax Bulletin 17-1 which provides taxpayers with directions on how to reconcile this legislation with their 2016 Virginia income tax returns.
|Asset purchase price||$5,000.00|
|Asset purchase date||1/15/2016|
|Depreciation method||5 year MACRS|
|Federal regular depreciation deduction||$1,000.00 (20% of $5,000|
|Federal depreciation using bonus option||$3,000.00 (50% of $5,000 + 20% of balance)|
|Virginia adjustment difference to add||$2,000.00 ($3,000 - $1,000)|
For additional information please see Form 760 instructions