This unexpected behavior was originally identified in Individual taxes, in late November and quickly addressed in a program update available November 29, 2023.
Later it was discovered that this same behavior was experienced in Corporate returns, and was then addressed in a program update for both Corporate and S Corporate returns available January 17, 2024.
This behavior was specific to any depreciation asset that contained prior Special Depreciation Allowance (SDA) for federal and -1 for state in 2022 (sample below).
When transferring the client to 2023 using the Transfer/Create new return, the Prior special depreciation allowance for the Federal (10,000 in the image above) is transferred to 2023. However, the -1 for state is not transferred.
Next Step - Client Files Transferred Prior to Program Updates:
You may want to either:
- Re-proforma any clients impacted by this behavior from 2022 to 2023.
- This action will create a new 2023 return. If substantial work has already been done in 23, you may want to perform the following.
- Manually adjust the 2023 depreciation input by entering a ‘-1’ in the state if different column for the Prior special depreciation allowance field.
Additional Information:
States that do not conform to Federal SDA which are more likely to include the ‘-1’ transferred item:
Arkansas Illinois New Jersey
Arizona Indiana New York
California Kentucky Pennsylvania
Connecticut Massachusetts Rhode Island
District of Columbia Maryland South Carolina
Florida Maine Texas
Georgia Michigan Virginia
Hawaii Mississippi Vermont
Idaho New Hampshire Wisconsin
You can subscribe to this community post to receive email notifications when any new items are added by using the gear icon located in the upper right corner of the screen.
