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On April 9, 2008,
the Governor signed House Bill 926. For taxable years beginning on or after January
1, 2008, except as discussed below, Georgia has now adopted the provisions of all
federal acts (as they relate to the computation of Federal taxable income) that
were enacted on or before January 1,
2008.
For tax years beginning
on or after January 1, 2008,
Georgia
has adopted the increased I.R.C. Section 179 deduction
($128,000 in 2008) and the related phase out
($510,000 in 2008) that was enacted as part of the Small
Business and Work Opportunity Act of 2007.
Georgia currently has not adopted the changes included in the Economic Stimulus
Act of 2008 that was signed into Federal law on February 13, 2008, which includes
increased Section 179 expensing amounts nor any of the other federal tax acts passed
during 2008.
Georgia has not adopted
I.R.C. Section 168(k) (the 30% and 50% bonus depreciation rules) except for I.R.C.
Section 168(k)(2)(A)(i) (the definition of qualified property), I.R.C. Section 168(k)(2)(D)(i)
(exceptions to the definition of qualified property), and I.R.C. Section 168(k)(2)(E)
(special rules for qualified property).
Georgia
has also not adopted
I.R.C. Section 199 (deduction for income attributable to domestic production activities),
I.R.C. Section 1400L (New York Liberty Zone Benefits), I.R.C. Section 1400N(d)(1)
(post 8/28/2006 Gulf Opportunity Zone (GOZ) property), I.R.C. Section 1400N(j) (GOZ
public utility casualty losses), and I.R.C. Section 1400N(k) (NOLs attributable
to GOZ losses).
Federal deduction
for income attributable to domestic production activities (IRC Section 199). This adjustment should
be entered on the addition line of the applicable return. An adjustment to the Georgia
partnership or S Corporation return is not required if the partnership or S Corporation
is not allowed the Section 199 deduction directly, but instead passes through the
information, needed to compute the deduction, to the partners or shareholders.>
Depreciation
Differences.
Depreciation differences due to the Federal acts mentioned above should be handled
as follows: (If the taxpayer has depreciation differences from more than one Federal
act, it is not necessary to make a separate adjustment for each act.)
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Depreciation must
be computed one way for Federal purposes and another way for
Georgia
purposes. To compute depreciation for Federal purposes, taxpayers should use the
2008 IRS Form 4562 and attach it to the
Georgia
return.
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Depreciation must
also be computed for
Georgia
purposes. Taxpayers should use Georgia Form 4562 to compute depreciation for
Georgia
purposes and attach it to the
Georgia
return. For further information, please see the
Georgia
form instructions which specify the line numbers where the adjustments should be
made.
All flowthrough entities
(partnerships, S Corporations, limited liability companies, limited liability partnerships,
fiduciaries) that own property in Georgia, do business in Georgia, receive income
from Georgia sources, or that have Georgia resident owners/beneficiaries should
notify them of the required adjustments. Depreciation differences may also be reported
to you by these types of entities.
Additionally, the
provisions listed above may have an indirect effect on the calculation of
Georgia
taxable income. Adjustments for the items listed below should be added or subtracted
on your
Georgia
income tax form.
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When property is
sold, for which the bonus depreciation was claimed, there will be a difference in
the gain or loss on the sale of the property.
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The depreciation
adjustment may be different if the taxpayer is subject to the passive loss rules
and is not able to claim the additional depreciation on the Federal return.
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Other Federal items
that are computed based on Federal Adjusted Gross Income or Federal Taxable Income
will have to be recomputed if the provisions of the Federal Acts are claimed. Some
examples are itemized deductions, student loan interest deduction, self-employed
health insurance deductions, contributions, etc.
Furthermore, in 2003
the IRS started requiring separate reporting, to shareholders of S Corporations
and partners of partnerships, for the gain from asset sales for which an I.R.C.
Section 179 deduction was claimed.
Georgia
follows the separate reporting treatment of the gain and the Section 179 deduction.
Accordingly, the gain should not be reported directly on the S Corporation or partnership
return, but the gain, along with any Georgia adjustment to the gain (due to the
Federal acts), should be reported separately to the shareholders or partners.
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