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CCH Axcess Tax

Depreciation Questions

Q. How should I enter sales of assets in order to get the adjustment needed on Schedule S, Line 12(f)?

A. FS coding is available on federal gain and loss input to compute the excess of accumulated ACRS and MACRS over accumulated New Jersey depreciation on the physical disposal of recovery property. Do not use the FS codes when the automatic sale feature is being used. Refer to the federal instruction guide for depreciation for more information on using the automatic sale feature. For non-automatic sales, you must enter the New Jersey sale information using "S" in the FS Code field, and "NJ" in the state code field. Enter the amount of the New Jersey depreciation in the "Total Depreciation" field. Enter the federal amount of depreciation on the "State Use" field.

Identical FS/State entries should be used to enter sales of assets that are required to be on Worksheet GIT-DEP.

Q. How do I indicate that a property was placed in service and the special bonus depreciation was taken on it for federal purposes?

A. Additional entries are required on federal depreciation sections to indicate that the special bonus depreciation is taken.

New Jersey did not decouple from the federal bonus depreciation for assets placed in service in accounting periods beginning before 2002 for corporate business tax purposes (Schedule A and Schedule S). New Jersey did not decouple until 2004 for gross income tax purposes (Schedule K).

Q. How do I enter information for Worksheet GIT-DEP, Part III?

A. Worksheet GIT-DEP is computed automatically from your entries on the federal depreciation detail input. It is not computed if the depreciation totals are used. The calculation of GIT-DEP is largely dependent on the date placed in service of the asset, and the method code used. You must be using a MACRS code for an asset to be included on the worksheet. If worksheet assets are sold, you may need to use FS and state codes on your gain/loss entries for that asset if the automatic sale feature is not being used.

Q. Why are my entries on the federal and/or state depreciation totals ignored?

A. New Jersey requires a breakdown of MACRS assets based on the accounting period in which they were placed in service. This information is not available from entries made on the federal/state totals depreciation input, so getting a correct breakdown for Schedule S, Part I, would be impossible. If you are using totals depreciation input to enter federal depreciation information, you must override the depreciation for the Schedule S, Part I by using the New Jersey depreciation overrides. These are located on the New Jersey Income/Deductions worksheet, on the Depreciation section.

Q. All my MACRS assets are being treated as post 7/7/93 MACRS assets, even though the dates placed in service that I entered are before this date. Why?

A. In order to correctly sort the MACRS assets into pre- and post-7/7/93, we require that you make a "state if different" entry for any asset placed in service in an accounting period beginning prior to 7/7/93. New Jersey does not allow MACRS depreciation on these assets, so you must enter a pre-ACRS depreciation code (such as "SL", "DDB", "DDBA", etc) in the method column for the "state if different" depreciation. We do not refer to the date placed in service to sort these assets.

Any MACRS asset with an entry on the "state if different" detail will be treated as a pre-7/7/93 asset, and any MACRS asset with no corresponding entry on the "state if different" detail (i.e. federal information only) will be treated as a post-7/7/93 asset.

Entries are not required on "state if different" input to calculate New Jersey depreciation on assets on which the federal special bonus depreciation was taken. These assets are automatically calculated using the applicable MACRS calculation.

Q. Why can't I see my depreciation detail on screen?

A. There isn't enough room to show all this information. Also, there is insufficient space on the New Jersey form to print this information, so we always print this detail in a statement. You may view this statement on screen.

Q. How do you compute the amount showing on Schedule S, Part I, Line 11a?

A. This line is computed from your detail entries on the federal depreciation worksheets and the New Jersey Depreciation section. We add the amounts computed or overridden for lines 4, 5, 6, and 9 to get the amount on Line 11a. Current year special depreciation is carried to Line 11b.

If detail entries are made on the federal depreciation interview forms, we compute the amount on line 11a by adding total pre-7/7/93 MACRS depreciation on which bonus and Section 179 depreciation have been claimed, all ACRS depreciation, and other depreciation assets placed in service after 12/31/80. The listed property amount is computed based on your entries for listed property.

Q. Schedule S, Part II(B) is for the Special Depreciation Allowance, which is currently 50%. Why is the amount in column (D) equal to 60% of the federal basis and not 50%?

A. The amount from column (D) carries to Schedule S part I, line 11b. The instructions for that line state that regular depreciation should be included, so Part II(B) is completed to tie into Schedule S, Part I.

The 60% computation is composed of the 50% bonus, plus 20% first year depreciation on a 5 year asset on the remaining 50% of basis not subject to bonus.

Q. I need to enter information to calculate depreciation for a public utility, but I can't access those boxes. Why not?

A. In order to access public utility depreciation fields on the Depreciation section, you must have "X if gas, electric or gas and electric public utility" field checked. This checkbox will also force Schedule S, Part III to calculate rather than Schedule S, Part I.