Section 179 and Depreciation Adjustments for Wisconsin

  1. What is the maximum section 179 expense deduction allowable?
  2. Since Wisconsin does not allow the deduction for the federal 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?
  3. Since Wisconsin does not allow the deduction for the federal bonus depreciation, my Wisconsin income is higher than my federal income. Can I recompute my deduction for charitable contributions on my Wisconsin return?
  4. How has the section 179 expense deduction changed for farming?

  1. What is the maximum section 179 expense deduction allowable?

    For Wisconsin tax purposes, the amount that may be expensed under section 179 is limited to $25,000, and the phase-out threshold is $200,000.

    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 tax purposes, for tax years beginning in 2013, the maximum section 179 expense deduction is generally $500,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,000,000.

    For taxable years beginning prior to January 1, 2014, 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 who claim the section 179 expense deduction in excess of the amount allowable for Wisconsin must make an adjustment on Wisconsin Schedule V to account for the difference in the amount allowable for federal and Wisconsin tax purposes.

    S Corporations who claim the section 179 expense deduction in excess of the amount allowable for Wisconsin must make an adjustment on Wisconsin Schedule 5K, column c, for the difference in the amount of allowable section 179 expense for federal and Wisconsin tax purposes.

    Partnerships who claim the section 179 expense deduction in excess of the amount allowable for Wisconsin must make an adjustment on Wisconsin Schedule 3K, column c, for the difference in the amount of allowable section 179 expense for federal and Wisconsin tax purposes.

  2. Since Wisconsin does not allow the deduction for the federal 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 sec. 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.

  3. Since Wisconsin does not allow the deduction for the federal 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 sec. 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.

  4. How has the section 179 expense deduction changed for farming?

    An exception to the $25,000 limitation was provided for property placed in service during 2008 and 2009 for persons who were actively engaged in farming. However, this exception no longer applies.

    For Wisconsin tax purposes, for taxable years beginning after December 31, 2010, persons who are actively engaged in farming are limited to the section 179 expense deduction of $25,000. The phase-out threshold is $200,000.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Corporation Franchise/Income Tax Assistance
PO Box 8906
Madison, WI 53708-8906
Phone: (608) 266-2772
Fax: (608) 267-0834
Email: DORFranchise@revenue.wi.gov

Page last updated January 23, 2014