Florida depreciation for business returns

[Troy the Tax Whisperer]

Anybody familiar how to input a fixed asset into ProConnect for Florida for 2023?  We are expecting the calc to add back Federal bonus and subtract 1/7th of it over the next 7 years, but the software is calculating a flat 50% bonus depreciation.  (ProConnect support assures me it is not an error this late into the season).  Thanks!!

[George4Tacks]

Go to the Depreciation input and find the input for Current Year Bonus and input a -1 (negative one) in the State if different column. 

You may also want to input the depreciation method for State if different code 91and life as 7. 

[Troy the Tax Whisperer]

Thank you George4Tacks, I really appreciate your response.  The solution you suggest gets us pretty close to the correct depreciation, but it is not exact, and will be off considerably in future years since it should be using MACRS which isn't spread evenly.  ProConnect Support also suggested some manual workarounds, but we aren't happy with this since they would need to be manually input for the next six years.  Ideally we are looking for ProConnect to be able to identify the new asset placed in service, recognize the Florida return, and automatically calculate this year and future years, just as it does with the other states.

[George4Tacks]

What depreciation method did you use for Federal? If it was 87 for MACRS 7 year straight line, then don't do anything in State if Different for method or years. 

The -1 is a zero everywhere in ProConnect. Use that to make the state bonus a zero.

[Troy the Tax Whisperer]

Thanks George4Tacks.  However most of the assets are 5 year class life.  I'm going to get back on the phone with ProConnect support...

[Troy the Tax Whisperer]

Update: it turns out the form is calculating correctly, in this case F-1065.  (Federal bonus added back at Part I line A.3 and 1/7th bonus subtracted at Part I line B).  However, the Florida depreciation schedule is reflecting the error and calculating with 50% bonus.  I'm going to remove the schedule from the client's copy and be done with it. 

@ProConnectHelp if you could look into fixing this error it would be greatly appreciated!!  Please reach out if you need more detail.

[George4Tacks]

I input 1 new 5 year asset for $5,000 on 4/13/2023

It created these depreciation schedules

Fed

Florida

5 year straight line, 1/2 year convention for the date I chose for purchase.

I do not see any problems with the presentation. 

[Troy the Tax Whisperer]

Hi George4Tacks, I really appreciate your efforts in trying to solve this!!

For the benefit of @ProConnectHelp I'll restate the facts:

Tax year 2023 Florida depreciation decouples from Federal- not simply disallowing Federal bonus, but spreading it out over 7 years, beginning with 2023.  Here is a site for the Florida reference- see Bonus Depreciation.  https://floridarevenue.com/taxes/tips/Documents/TIP_23C01-04.pdf

Info for the test example.  Fixed asset $5000, placed in service 04/13/2023, 5 yr class live, Half Year convention.  (ProConnect method input #53 5yr MACRS).

Federal depreciation 4200 (4000 bonus + 200 MACRS)

Florida depreciation- on the F-1065 it reflects 4000 addition (bonus), and 571 subtraction (1/7th bonus)- this is correct.

However, the Florida Depreciation Schedule reflects 2500 bonus + 500 MACRS total depreciation (it totals 3000 depreciation expense but is not combined on the schedule)- this is incorrect.

On this example, I am expecting the Florida Depreciation Schedule to reflect no bonus, and current depreciation expense of 771 (Fed depreciation 4200 - 4000 bonus + 571 1/7th bonus)

[George4Tacks]

Thanks for the detailed explanation. I hope someone from programming can reach out to you. Maybe @IntuitGabi can have someone reach out to you. I see your problem and I do not see a work around other than doing it your self each year. The deduction is normal depreciation based upon the method used PLUS 1/7 of the bonus depreciation disallowed in the year of purchase. This 1/7 then become an equal amount of depreciation for each of the next 6 years. 

A possible solution is to make two assets. One federal and a second one FL only. That does not seem to be an acceptable solution. 

I am old enough that I watched Laugh In. I am remined of Arte Johnson  "Very interesting, but stupid."