PA: Tax reform response depreciation legislation signed into law

Last year, in response to federal tax reform, the Pennsylvania Department of Revenue issued guidance providing that it would not allow 100 percent bonus depreciation under IRC section 168(k) for assets placed in service after September 27, 2017. Under the notice, a taxpayer would not get any additional depreciation deduction on those assets until the entity either sold or otherwise disposed of those assets.

On June 28, 2018, Governor Tom Wolf signed Senate Bill 1056, which provides that, with respect to qualified property placed in service after September 27, 2017, a corporate taxpayer is required to add back federal bonus depreciation for Corporate Net Income Tax purposes. The corporate taxpayer will then be entitled a depreciation deduction on that property equal to the depreciation on the property for the taxable year as determined in accordance with Internal Revenue Code sections 167 and 168 without the application of Internal Revenue Code section 168(k). The revised law applies for tax years beginning on or after January 1, 2017. The Department of Revenue intends to issue a new depreciation form for 2017 to reflect the law change. Please contact Howard Sklaroff at 267-256-2891 with questions.