TITLE 63

REVENUE AND TAXATION

CHAPTER 30

INCOME TAX

63-3022O.  Adjustment — Property acquired after September 10, 2001 — Small business expenses — Limitations on assessments and refunds. For taxable years commencing on and after January 1, 2001, in computing Idaho taxable income:

(1)(a)  The adjusted basis of depreciable property, depreciation, and gains and losses from sale, exchange, or other disposition of depreciable property acquired after September 10, 2001, and before December 31, 2007, shall be computed without regard to the bonus depreciation available under subsection (k) of section 168 of the Internal Revenue Code and the adjusted basis of depreciable property, depreciation, and gains and losses from sale, exchange, or other disposition of depreciable property acquired after December 31, 2009, shall be computed without regard to subsection (k) of section 168 of the Internal Revenue Code, provided that to the extent a taxpayer cannot use the additional depreciation claimed under subsection (k) of section 168 of the Internal Revenue Code in the current year for federal income tax purposes because of loss limitations imposed by sections 465, 469, 704(d), and 1366(d) of the Internal Revenue Code, then such additional depreciation shall not be added back to federal taxable income in order to determine Idaho taxable income in the current year, and the current and subsequent year bonus depreciation adjustments shall be suspended and the add-back and subtractions shall be applied as provided in this subsection.

(b)  In subsequent taxable years, the additional depreciation that was not added back to federal taxable income in the year it originated as provided in this subsection shall be added back when a prior loss that has been suspended under section 465, 469, 704(d), or 1366(d) of the Internal Revenue Code is deducted for federal income tax purposes in the following manner:

(i)   Bonus depreciation deducted for federal income tax purposes shall be added back to Idaho taxable income as the losses suspended under sections 465, 469, 704(d), and 1366(d) of the Internal Revenue Code are utilized, after the utilization of all losses other than those attributable to bonus depreciation;

(ii)  The amount of the bonus depreciation add-back shall be the full amount of the add-back less the cumulative allowable depreciation amounts for Idaho purposes. If, because of the limitations of sections 465, 469, 704(d), and 1366(d) of the Internal Revenue Code, there is a partial net add-back, then the net add-back amount for future periods will be adjusted to reflect the amount that was actually added back;

(iii) After the add-back or net add-back has been fully added back to Idaho taxable income, the taxpayer may take the remaining deductions over the life of the asset regardless of the limitations under sections 465, 469, 704(d), and 1366(d) of the Internal Revenue Code;

(iv)  In the event of a disposition of a pass-through entity’s ownership interest, adjustments shall be made to the tax basis of the owner’s interest of the pass-through entity to ensure there is no double deduction of expense or double inclusion of income. The basis referred to in this subparagraph is the basis to the new owner in his ownership interest or the basis to the owner who disposed of this ownership interest, as applicable; and

(v)   In the event of a disposition of a pass-through entity’s assets for which bonus depreciation was elected before the add-back was fully realized, adjustments shall be made to ensure there is no double deduction of expense or double inclusion of income.

(c)  For determining the Idaho adjusted income for part-year residents or nonresidents:

(i)   When a loss under section 465, 469, 704(d), or 1366(d) of the Internal Revenue Code is deducted for federal purposes and is sourced to Idaho, the additional depreciation that was not added back in the year it originated as provided in paragraph (a) of this subsection shall be added back in subsequent years based on the apportionment factor in the year the bonus depreciation originated; and

(ii)  When a loss under section 465, 469, 704(d), or 1366(d) of the Internal Revenue Code is not sourced to Idaho, the add-back of additional depreciation shall be made in the current taxable year, notwithstanding the provisions of paragraph (a) of this subsection.

(2)  The loss limitations imposed by sections 465, 469, 704(d), and 1366(d) of the Internal Revenue Code shall be calculated without regard to depreciation claimed for federal tax purposes pursuant to subsection (k) of section 168 of the Internal Revenue Code.

(3)  Each partner, shareholder, member, or beneficiary shall include in Idaho taxable income his share of the adjustments required by this section in computing Idaho taxable income of any pass-through entity.

(4)  In recognition of the fact that a taxpayer affected by this section may have a different tax basis in his pass-through entity interest and a different carryover of loss limitations and amount at risk for Idaho tax purposes than for federal tax purposes, each partner, shareholder, member, or beneficiary of any pass-through entity that claims the additional depreciation pursuant to subsection (k) of section 168 of the Internal Revenue Code shall keep records of the Idaho tax basis of his interest in the pass-through entity, the amount at risk, and the balance of his carryover of Idaho loss limitations in order to confirm that the partner, shareholder, member, or beneficiary, or any successor of his interest by purchase or other means, does not receive directly or indirectly any Idaho income tax benefit from the additional depreciation available under subsection (k) of section 168 of the Internal Revenue Code.

(5)  Notwithstanding the provisions of sections 63-3068 and 63-3072, Idaho Code, the period of limitations for issuing a notice of deficiency determination or filing a claim for refund for any year for which an adjustment is required by this section shall not expire before three (3) years from the later of: (a) the due date of the return for the last taxable year an adjustment was required by this section; or (b) the date the return was filed for the last taxable year an adjustment was required by this section. Upon the expiration of the period of limitations as provided in subsections (a) and (m) of section 63-3068, Idaho Code, and subsections (b) and (h) of section 63-3072, Idaho Code, only those specific items of basis, deductions, gains, or losses that are computed without regard to subsection (k) of section 168 of the Internal Revenue Code, as required by this section, shall be subject to adjustment, as well as the effect of such adjustments on Idaho credits, net operating loss deductions, and capital loss carryovers.

History:

[63-3022O, added 2003, ch. 350, sec. 2, p. 938; am. 2004, ch. 20, sec. 2, p. 23; am. 2007, ch. 11, sec. 1, p. 20; am. 2008, ch. 319, sec. 2, p. 882; am. 2011, ch. 1, sec. 2, p. 3; am. 2012, ch. 14, sec. 2, p. 28; am. 2012, ch. 59, sec. 1, p. 158; am. 2014, ch. 341, sec. 1, p. 859; am. 2018, ch. 7, sec. 1, p. 12; am. 2021, ch. 211, sec. 1, p. 580; am. 2022, ch. 186, sec. 1, p. 615.]