Connecticut Section 168k Limitations

[Joshua Awodele]

Just found out that Connecticut disallows section 168k & section 179 bonus depreciation. For reference, see: https://portal.ct.gov/-/media/drs/publications/ocg/ocg5bonus...

Is there an exemption to this rule or can bonus depreciation from a cost segregation study be applied via a different IRC code? Or any other tax strategy?

Thank you BP Nation.

[Benjamin Weinhart]

Quote from @Joshua Awodele:

Quote from @Benjamin Weinhart:

No, this is common for states to not follow the federal guidelines when it comes to bonus depreciation, there is no exemption or other work-around. You will have a mismatch between depreciation allowed from the federal & state level for the entire life of the property which can create some added administrative burden for some.

Just in case there is confusion by the way, you are still allowed to take bonus depreciation under your federal return, just not for the state of Connecticut (among some others if others are reading. It's a case-by-case basis)

 Thank you Benjamin. I wonder what the depreciation schedule for Connecticut will look like then. If they'll disallow you claiming a big chunk at once, in what way are you allowed to take depreciation for now and future years?

 I don't work in Connecticut enough to know this answer off-hand but a large majority of states that opt-out of bonus depreciation effectively pretend it doesn't exist. This means you would still get the 200% MACRS on most/all assets that would otherwise be subject to bonus depreciation.

Funnily enough, Ohio is not one of these states for my tax preparer friends who are looking for another reason not to work with Ohio :) (I live/work in Ohio, it's a wacky time). They instead use an alternative method separate from both of the mentioned methods.