Bonus depreciation is a tax deduction that allows businesses to recover the cost of certain property more quickly. Oklahoma's depreciation rules can differ from the federal rules. As a result, if you claimed depreciation on your federal return or elected Oklahoma bonus depreciation for qualifying property, you may need to make an adjustment on your Oklahoma return.
Depending on your situation, the adjustment may be reported as either:
- Additions to Income, or
- Subtractions from Income
These adjustments help ensure you receive the correct Oklahoma depreciation deduction and do not claim the same deduction twice.
Bonus Depreciation Add-back
Enter an amount in Oklahoma Bonus Depreciation Add-back if:
- You elected Oklahoma's immediate and full expensing (100% Oklahoma bonus depreciation) for qualified property, and
- You also claimed depreciation or bonus depreciation for the same property on your federal tax return.
In this situation, Oklahoma requires you to add back the federal depreciation amount so the same deduction is not claimed twice.
Program Navigation
Oklahoma Return > Additions to Income > Oklahoma Bonus Depreciation > Enter any Bonus Depreciation
Step-by-Step Instructions
- Review your federal return and depreciation schedules.
- Determine the amount of federal depreciation or federal bonus depreciation claimed for the property.
- Enter that amount in the Oklahoma Bonus Depreciation field under Additions to Income.
Example
You purchased qualifying business equipment and:
- Claimed $20,000 of federal depreciation, and
- Elected Oklahoma's 100% bonus depreciation deduction.
Enter $20,000 as an Oklahoma Bonus Depreciation Add-back. This prevents the federal and Oklahoma deductions from being duplicated.
Bonus Depreciation Deduction
Enter an amount in Oklahoma Bonus Depreciation Deduction if:
- You elected Oklahoma's 100% bonus depreciation for qualified property or qualified improvement property placed in service during the tax year.
This deduction allows Oklahoma taxpayers to expense the qualified property in the year it is placed in service, even when Oklahoma treatment differs from the federal return.
Program Navigation
Oklahoma Return > Subtractions from Income > Enter the Oklahoma Bonus Depreciation
Step-by-Step Instructions
- Review your depreciation records for any qualified business property placed in service during the year.
- Calculate the Oklahoma bonus depreciation deduction amount for the qualifying property.
- Enter the deduction amount in Oklahoma Bonus Depreciation under Subtractions from Income.
Example
You purchased qualifying business equipment for $15,000 and elected Oklahoma's 100% bonus depreciation treatment.
- Enter $15,000 in Subtractions from Income > Oklahoma Bonus Depreciation.
Frequently Asked Questions
What property qualifies?
Generally, the adjustment applies to qualified property or qualified improvement property covered by Internal Revenue Code Section 168.
Do I Need to Enter the Same Property in Both Additions and Subtractions?
Maybe. Depending on how the property was reported on your federal return and whether you elected Oklahoma bonus depreciation, you may need to enter amounts in both the Additions to Income and Subtractions from Income sections of your Oklahoma return.
In general, the Addition to Income adjusts for the federal depreciation deduction claimed for the property.The Subtraction from Income allows the Oklahoma bonus depreciation deduction for the same property.
These adjustments work together to apply Oklahoma's depreciation rules and prevent the same deduction from being claimed twice.
Example:
You purchase qualifying business equipment and claim depreciation on your federal return. If you also elect Oklahoma bonus depreciation, you may need to enter the federal depreciation amount in Additions to Income > Oklahoma Bonus Depreciation, and enter the Oklahoma bonus depreciation amount in Subtractions from Income > Oklahoma Bonus Depreciation.
If you're unsure whether both entries are required, review your depreciation records or consult the information used to prepare your federal return.
Do I always need both an add-back and a deduction?
No. Your situation determines which entry is required. Some taxpayers may only have a deduction, while others may need both an add-back and a deduction to correctly reflect Oklahoma's special depreciation rules.
Where can I find the amount to enter?
The information is typically available from:
- Your federal depreciation schedules,
- Form 4562,
- Business asset records, or
- Tax documents provided by your accountant or business software.
Tip
If you're unsure of the correct amount, refer to the depreciation information used on your federal return. The Oklahoma adjustment is designed to ensure Oklahoma's bonus depreciation deduction is claimed correctly and not duplicated with federal depreciation deductions.