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For tax years 2018, 2019, and 2020 racehorses 2 ½ years old or younger placed in service during the tax year may be classified as 3-year property for federal depreciation purposes. Iowa does not conform to this treatment for tax years 2018 and 2019, and instead treats these horses as 7-year property.
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Iowa treatment for tax year 2018: If a taxpayer amends their 2018 federal income tax return to reclassify a racehorse placed in service during that year as 3-year, rather than 7-year property, the taxpayer need not amend their 2018 Iowa return, because the racehorse should already have been properly classified as 7-year property on the original return. In future years the taxpayer will need to make adjustments on the IA 4562A to account for the differences in allowable depreciation deduction based on the different Iowa and federal class lives for the racehorse. For an originally filed 2018 return, make adjustments similar to those described in the instructions for tax year 2019 below.
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Iowa treatment for tax year 2019: If a taxpayer placed in service a qualifying racehorse and classified it as 3-year property for federal depreciation purposes, the taxpayer must use the IA 4562A to make appropriate adjustments to treat the racehorse as 7-year property for Iowa purposes.
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For tax years 2018, 2019, and 2020 certain motorsports entertainment complex property placed in service during the tax year may be classified as 7-year property for federal depreciation purposes. Iowa does not conform to this treatment for tax years 2018 and 2019, and instead treats this motorsports entertainment complex property as 39-year property.
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Iowa treatment for tax year 2018: If a taxpayer amends their 2018 federal income tax return to reclassify motorsports entertainment complex property placed in service during that year as 7-year, rather than 39-year property, the taxpayer should not amend their 2018 Iowa return, because the property should already have been properly classified as 39-year property on the original return. In future years the taxpayer may need to make adjustments on the IA 4562A to account for the differences in allowable depreciation deduction based on the different Iowa and federal class lives for the motorsports entertainment complex property. For an originally filed 2018 return, make adjustments similar to those described in the instructions for tax year 2019 below.
- Iowa treatment for tax year 2019: If a taxpayer placed in service a qualifying motorsports entertainment complex property and classified it as 7-year property for federal depreciation purposes, the taxpayer must use the IA 4562A to make appropriate adjustments to treat the property as 39-year property for Iowa purposes.
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For tax years 2018, 2019, and 2020 certain property placed in service and predominately used for business purposes unrelated to gaming on an Indian reservation during the tax year may qualify for an accelerated depreciation schedule as provided in IRC section 168(j)(2) for federal purposes. Iowa does not conform to this treatment for tax years 2018 and 2019, and instead such property would be subject to normal class life depreciation schedules for the type of property.
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Iowa treatment for tax year 2018: If a taxpayer amends their 2018 federal income tax return to reclassify Indian reservation business property placed in service during that year to take advantage of the accelerated recovery period allowed under IRC section 168(j)(2), the taxpayer need not amend their 2018 Iowa return, because the property should already have been properly classified on the original return. In future years the taxpayer may need to make adjustments on the IA 4562A to account for the differences in allowable depreciation deduction based on the different Iowa and federal class lives for the Indian reservation business property. For an originally filed 2018 return, make adjustments similar to those described in the instructions for tax year 2019 below.
- Iowa treatment for tax year 2019: If a taxpayer placed in service qualifying Indian reservation business property and took advantage of the accelerated recovery period allowed under IRC section 168(j)(2) for federal depreciation purposes, the taxpayer must use the IA 4562A to make appropriate adjustments to use the regular class life for the property for Iowa purposes.
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This provision extends a special deduction under IRC section 181 for costs related to qualified film, television, and theatrical productions of up to $15 million of the aggregate cost ($20 million for certain areas) of a qualifying film, television, or theatrical production in the year the expenditure was incurred, for productions commencing in 2018, 2019, or 2020. Taxpayers claiming this deduction are not allowed to take other depreciation or amortization deductions for the production. Iowa has not conformed with this provision for tax years 2018 and 2019.
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Iowa treatment for tax year 2018: If a taxpayer amends their 2018 federal income tax return to claim this deduction, the taxpayer should not amend their 2018 Iowa income tax return. For an originally filed 2018 return, make adjustments similar to those described in the instructions for tax year 2019 below.
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Iowa treatment for tax year 2019: If a taxpayer files a 2019 Iowa income tax return that includes this deduction in federal adjusted gross income or federal taxable income, the taxpayer should add back such deduction on the IA 101 Nonconformity Adjustments form, line 12. To the extent that these costs would have been eligible for depreciation or other amortization deductions but for the taxpayer’s election to take advantage of the IRC section 181 deduction, the taxpayer may take such depreciation or amortization deductions in 2019 and later years using the IA 4562A.
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For tax years 2018, 2019, and 2020 certain second generation biofuel plant property placed in service during the tax year may qualify for a special depreciation allowance as provided in IRC section 168(l) for federal purposes. Iowa does not conform to this treatment for tax years 2018 and 2019, and instead such property would be subject to normal depreciation deduction amounts.
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Iowa treatment for tax year 2018: If a taxpayer amends their 2018 federal income tax return to take advantage of the special depreciation allowance for second generation biofuel plant property under IRC section 168(l), the taxpayer need not amend their 2018 Iowa return, because they should already have taken the proper Iowa depreciation deduction for the property on the original return. In future years the taxpayer may need to make adjustments on the IA 4562A to account for the differences in allowable depreciation deduction based on the different Iowa and federal deduction amounts. For an originally filed 2018 return, make adjustments similar to those described in the instructions for tax year 2019 below.
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Iowa treatment for tax year 2019: If a taxpayer placed in service qualifying second generation biofuel plant property and took advantage of the special depreciation allowance under IRC section 168(l) for federal depreciation purposes, the taxpayer must use the IA 4562A to make appropriate adjustments to use the regular depreciation deduction amounts for the property for Iowa purposes.
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