Section 179 and Depreciation Adjustments for Wisconsin
- What is the maximum section 179 expense deduction allowable for tax years beginning in 2003 or after?
- Since Wisconsin does not allow the deduction for the federal 30% or 50% bonus depreciation, my Wisconsin income is higher than my federal income. I have a section 179 expense deduction carryover that I could not use on my federal return. Can I use this section 179 expense deduction carryover to offset the additional income I am reporting for Wisconsin?
- Since Wisconsin does not allow the deduction for the federal 30% or 50% bonus depreciation, my Wisconsin income is higher than my federal income. Can I recompute my deduction for charitable contributions on my Wisconsin return?
- What are the new expanded section 179 expense deduction provisions for farming?
- What is the maximum section 179 expense deduction allowable for tax years beginning in 2003 or after?
The maximum amount of section 179 expense deduction allowable for Wisconsin purposes is $25,000. However, an exception is provided for farmers. Effective for taxable years beginning in 2008 and 2009, persons actively engaged in farming may claim an increased section 179 expense deduction. See question #4, below.
Generally, under section 179 tax provisions, persons may elect to deduct the cost of certain property used in a trade or business in the year placed in service…instead of claiming depreciation. For federal purposes, for tax years beginning in 2008, the maximum section 179 expense deduction is $250,000. This limit is reduced by the amount by which the cost of section 179 property place in service during the tax year exceeds $800,000.
Wisconsin has not adopted the federal changes to the section 179 expense deduction. The amount that may be expensed is limited to $25,000 and the phase-out threshold is $200,000.
Corporations should provide schedules detailing any differences between the federal and Wisconsin amounts and report the net difference as an adjustment to federal income.
- Since Wisconsin does not allow the deduction for the federal 30% or 50% bonus depreciation, my Wisconsin income is higher than my federal income. I have a section 179 expense deduction carryover that I could not use on my federal return. Can I use this section 179 expense deduction carryover to offset the additional income I am reporting for Wisconsin?
No. The depreciation difference is a modification to federal taxable income required by section 71.26(3)(y), Wis. Stats. Wisconsin law does not provide a modification to recompute your section 179 expense deduction in this situation. Therefore, your Wisconsin section 179 expense deduction is limited to the amount allowable in computing your federal taxable income.
- Since Wisconsin does not allow the deduction for the federal 30% or 50% bonus depreciation, my Wisconsin income is higher than my federal income. Can I recompute my deduction for charitable contributions on my Wisconsin return?
No. The depreciation difference is a modification to federal taxable income required by section 71.26(3)(y), Wis. Stats. Wisconsin law does not provide a modification to recompute your deduction for charitable contributions in this situation. Therefore, your Wisconsin deduction for charitable contributions is limited to the amount allowable in computing your federal taxable income.
- What are the new expanded section 179 expense deduction provisions for farming?
Effective for taxable years beginning in 2008 and 2009, persons who are actively engaged in farming may claim a section 179 expense deduction of up to $115,000. The phase-out threshold is $460,000.
These amounts will be indexed for inflation for tax years beginning in 2009.
Corporations should provide schedules detailing any differences between the federal and Wisconsin amounts and report the net difference as an adjustment to federal income.
FOR MORE INFORMATION PLEASE CONTACT:
WISCONSIN DEPARTMENT OF REVENUE
Corporation Franchise/Income Tax Assistance
P.O. Box 8906
Madison, WI 53708-8906
Phone: (608) 266-2772
Fax: (608) 267-0834
E-Mail Additional Questions
Last updated January 22, 2009