- 1 -
|
Revised 8/19 Gross Income Tax Depreciation Adjustment Worksheet GIT-DEP
General Instructions
The Gross Income Tax Act was amended by P.L. 2004, c.65 to include Section New Jersey depreciation adjustments will affect an individual’s, estate’s, or trust’s
5-1.2. This section applies to tax years beginning on or after January 1, 2004, and determination of income reportable in the categories of net profits from business;
decouples the Gross Income Tax Act from some federal changes to depreciation net gains or income from disposition of property; net gains or net income from
and to IRC section 179 for assets placed in service on or after January 1, 2004. rents, royalties, patents, and copyrights; net gains or income derived from es-
tates or trusts; distributive share of partnership income; and net pro rata share of
For Gross Income Tax purposes, S corporation income. Partnerships and S corporations with a New Jersey filing
• The federal 30% Special Depreciation Allowance is allowed if the asset meets requirement will calculate the entity’s adjustments to New Jersey depreciation,
Internal Revenue Code requirements. For example, if a federal 30% deduction federal Section 179 recapture income, and gain or loss from disposition of the
is permissible but is precluded by the federal 179 deduction, the 30% deduc- assets. Each partnership and S corporation is limited to a maximum Section 179
tion is allowed. deduction of $25,000 (see instructions for Liberty Zone Property). The entity will
• The federal 50% Special Depreciation Allowance is not allowed. If in lieu of take the New Jersey adjustment into consideration in calculating the partner’s
the 50% deduction, the 30% deduction is taken federally, the 30% deduction is distributive share and the shareholder’s net pro rata share of income reported on
allowed. their NJK-1 or NJ-K-1.
• The maximum Section 179 deduction is $25,000. The federal reduced dollar
If the partnership or S corporation does not file a New Jersey return, the
limitation for asset cost applies and is calculated using the New Jersey maxi-
partner or shareholder will enter their New Jersey depreciation adjustment on
mum deduction of $25,000. There are no business income limitations. Unused
Worksheet A, publication GIT-9P or Worksheet B or Worksheet B Liquidated,
deductions cannot be carried forward. Instructions for each category of income
publication GIT-9S following the instructions provided in those publications and
are listed below.
using information that must be provided by the entity.
• For Liberty Zone property, the maximum Section 179 deduction is $60,000
(the New Jersey maximum of $25,000 plus the federally allowed increased Partners will report the total distributive share of income from all partnerships, as
amount up to a maximum of $35,000). The Liberty Zone Depreciation Al- calculated by the entities and reported on their NJK-1s or as calculated on Work-
lowance is allowed if the asset meets Internal Revenue Code requirements. sheets A, as distributive share of partnership income on their Form NJ-1040,
Calculation is based on the total New Jersey Section 179 deduction. NJ-1040NR, or NJ-1041. Shareholders will report the total net pro rata share
• Unused depreciation adjustment cannot be carried forward, carried back, or of income from all S corporations, as calculated by the entities and reported on
applied against another category of income. their NJ-K-1s or as calculated on Worksheet B or Worksheet B Liquidated as net
pro rata share of S corporation income on their Form NJ-1040, NJ-1040NR, or
For tax years beginning on or after January 1, 2004, if assets were placed in NJ-1041.
service on or after January 1, 2004, and the federal 50% Special Depreciation
Allowance or Section 179 expense were deducted, then a New Jersey depreci- For determining the New Jersey income reportable in each of the income
ation adjustment is required. A New Jersey adjustment is not required for assets categories of net profits from business and net gains or net income from rents,
placed in service within a tax year beginning prior to January 1, 2004. royalties, patents and copyrights, an individual, estate, or trust’s total Section
179 deduction is limited to a maximum of $25,000 (or New York Liberty Zone
The Gross Income Tax Depreciation Adjustment Worksheet GIT-DEP must be amount federally deducted). One Worksheet GIT-DEP is to be prepared for each
used to calculate the New Jersey Section 179 expense allowable, New Jersey of the categories and the worksheet must include all reportable activity. For
Special Depreciation Allowance, New Jersey depreciable basis, New Jersey example, an individual with three rental properties, one of which was disposed of,
depreciation allowable and New Jersey depreciation adjustment required. For will calculate the New Jersey 179 deduction, New Jersey Special Depreciation
subsequent years, Worksheet GIT-DEP must be used to calculate New Jersey Allowance, New Jersey basis, New Jersey depreciation allowable, adjustment to
depreciation adjustments until the asset is fully depreciated or disposed of, ad- federal Section 179 recapture income, and adjustment to gain or loss on dispo-
justments to federal Section 179 recapture income, and adjustments to the gain sition applicable to assets within all three properties on one Worksheet GIT-DEP.
or loss from disposition of the assets. The resulting adjustments will be applied according to the instructions on Work-
sheet GIT-DEP.
Note: If the initially required New Jersey depreciation adjustment for an asset was
not reported, whether due to a reporting error that was not corrected by the Divi- An individual, estate, or trust should report its income from estates and trusts as
sion of Taxation or because the partnership, S corporation, sole proprietor or the reported on its NJK-1, provided by the estate or trust, or based on its federal K-1
owner of rental property or other income producing depreciable asset did not have after taking into account all New Jersey adjustments.
a New Jersey filing requirement, then the asset’s New Jersey basis and allowable
depreciation will be the same as for federal tax purposes, and a New Jersey de- All Worksheets GIT-DEP should be retained for future reference.
preciation adjustment is neither required nor allowable in subsequent years.
|