CCH Axcess Tax

Kentucky Depreciation

Kentucky's income tax law, for depreciation and Section 179 expenses, are calculated based on the Internal Revenue Code (IRC) in effect on December 31, 2001. Therefore, the following acts and related provisions do NOT apply to Kentucky returns:

Victims of Terrorism Tax Relief Act of 2001 signed January 23, 2002
Jobs Creation and Worker Assistance Act of 2002 signed March 9, 2002, referred to as JCWA
The Trade Act of 2002 signed August 6, 2002
Jobs and Growth Tax Relief Reconciliation Act of 2003 signed May 29, 2003, referred to as JGTRRA
Gulf Opportunity Zone Act of 2005

State if Different depreciation entries are required to calculate Kentucky depreciation for the following situations:

the JCWA 30% special depreciation allowance was used on the federal return in prior years
the JGTRRA 50% special depreciation allowance is used on the federal return in prior years or this year
Section 179 expense for qualifying property exceeds $25,000 on the federal return this year
more than $200,000 of new qualifying property for Section 179 was placed in service this year
off-the-shelf computer software was used for Section 179 on the federal return this year
the luxury car limits, based on 100% business use, exceed $3,060
when processing a multi-state return,
there is a Section 179 expense deduction carryover difference for Kentucky
there was an ITC basis reduction taken for federal purposes
the increased Section 179 expense deduction on qualified GO Zone property acquired after August 27, 2005

Kentucky Category, Income Worksheet, Additions to Ordinary Income Section, federal trade or business depreciation field overrides federal trade or business depreciation. Kentucky Category, Income/Deductions Worksheet, Subtractions from Ordinary Income Section, Kentucky trade or business depreciation field overrides Kentucky trade or business depreciation.

Any federal/state difference will cause a state version of Form 4562, along with detail depreciation schedules, to print with the Kentucky return with the following exceptions:

When 'KY' is not entered on the state depreciation detail worksheets
Kentucky Category, General Worksheet, Option Section, Print Kentucky versions of federal forms - override has an entry of 'No'

You can suppress the printing of the detailed depreciation schedules when you check the field "Suppress detailed depreciation schedules' on the Option Section of the General Worksheet under the Kentucky Category. You can suppress the printing of the state version of Form 4562 and the detailed depreciation schedules with an entry of 'No' in the Print Kentucky versions of federal forms - override on the Option Section of the General Worksheet under the Kentucky Category.