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Bonus Depreciation in Non-Conforming State
I have a short term rental that I did a cost segregation on and am taking accelerated bonus depreciation. I live in OR but my rental is in AZ. My issue is AZ is a non-conforming (does not recognize the bonus). If I take the bonus depreciation AZ it basically saying the entire bonus depreciation is an income addback and then they calculate the AZ depreciation as a subtraction. Then i have to pay tax on the difference. Does this sound right? Is there an easy way to fix this?
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#1 Tax, SDIRAs & Cost Segregation Contributor
- Tax Accountant / Enrolled Agent
- Houston, TX
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#1 Tax, SDIRAs & Cost Segregation Contributor
- Tax Accountant / Enrolled Agent
- Houston, TX
No way to "fix it" other than vote in AZ and get the law changed.
You don't pay taxes on it directly, but you do indirectly. You must recalculate AZ depreciation using a slower method acceptable by AZ law.