Nh-1040 Instructions - Proprietorship Business Profits Tax Return (Page 2 of 4) in pdf

New Hampshire

2015

PROPRIETORSHIP

BUSINESS PROFITS

Department of

NH-1040

TAX RETURN

Revenue Administration

INSTRUCTIONS - continued

LINE 1(h) Report other net business income not reported above attributable to this business organization as adjusted accordingly from Federal Form

1040, Schedule B. (attach schedule).

LINE 1(i) Report other business income attributable to this business organization as adjusted according to Federal Form 1040, Line 21.

LINE 1(j) Subtotal Lines 1(a) through 1(i).

Lines 2(a) through 2(g) are adjustments necessary to increase or decrease gross business profits to reflect the Internal Revenue Code (IRC)

of 1986 in effect on December 31, 2000.

Every business organization which commences business after December 31, 2000, or has been in New Hampshire prior to December 31, 2000 and

has availed their business of federal changes after December 31, 2000, must account for the differences between the IRC in place on December 31,

2000 and the changes made to that Code by Congress from January 1, 2001 to the end date of this tax period except for IRC §179 Deduction. The

adjustments on lines 2(a) through 2(g) reflect the adjustments that are necessary to account for the changes. If a taxpayer seeks to report a necessary

adjustment that has not been delineated in other sections of Line 2, attach an explanation for either line 2(c) or 2(e).

The statutory requirement to follow the December 31, 2000 IRC has significant impact on the tax basis of assets used in businesses operating within

New Hampshire, and also within and without New Hampshire. A separate accounting of the New Hampshire tax basis must be maintained for

depreciation purposes and for determination of the gain or loss in the event of the sale of business assets. The Department website “Businesses” tab

has links to IRS publications for business deductions, depreciation, and basis of assets as determined on December 31, 2000 to aid in the preparation

of the Business Profits Tax return.

LINE 2(a) Add the amount of IRC §179 expense taken on the Federal Return in excess of $25,000 for assets placed in service on or after January 1,

2012, but not more than the federal taxable income for any year a IRC §179 deduction is taken including carryover amounts deducted this taxable

period. If no IRC §179 expense was taken on Lines 1(a) through 1(i), enter zero.

LINE 2(b) Add the amount of bonus depreciation taken on the Federal Return for assets placed in service this year. Bonus depreciation, allowed

federally under IRC §168(k), is not allowed on the NH-BPT return.

LINE 2(c) Add any other deductions taken on the Federal Return that need to be eliminated or adjusted due to revisions to the IRC in effect on

December 31, 2000.

LINE 2(d) Deduct additional depreciation related to IRC §179 and bonus depreciation not allowed for this tax year or for prior tax years. Because

there may be a basis difference due to the federal and state treatment of IRC §179 expense, and bonus depreciation, the regular depreciation

allowed under IRC §167 and IRC §168 may be different than that deducted on the Federal Return; recalculate your allowable depreciation and

deduct the difference on this line.

LINE 2(e) Deduct any other items included on the Federal Return that need to be eliminated or adjusted due to revisions to the IRC in effect on

December 31, 2000. If IRC §179 expense is taken on the Federal Return and not deducted on Lines 1(a) through 1(i) of this Form, you may take the

deduction on this Line up to $25,000.

LINE 2(f) Increase or decrease the net gain or loss on the sale of assets used in the business which have a different state adjusted basis from the tax

adjusted basis reported on the Federal Return. Because there may be a basis difference to the federal and state treatment of IRC §179 expense, and

bonus depreciation, the regular depreciation allowed pursuant to IRC §167 and IRC §168 may be different then that deducted on the Federal Return.

This may create a different adjusted basis to assets used in the business which have not been completely depreciated and thus a different gain or

loss for state reporting than that reported on the Federal Return on the sale of business assets. Recalculate the gain or loss and enter the difference

on this line.

LINE 2(g) The sum of Lines 2(a) through 2(c), minus Lines 2(d) and 2(e), adjusted by Line 2(f); if negative result, use a minus sign.

LINE 3 Subtotal Line 1(j) adjusted by Line 2(g); if negative result, use a minus sign.

LINE 4 Separate entity adjustments to income or expense and attach worksheet. Enter the amounts which arise from the necessity of adjusting Gross

Business Profits to accommodate the New Hampshire requirement of separate entity treatment for business organizations.

Line 5 Gross Business Profits (combine Line 3 and Line 4).

NH-1040 Instructions 2015

Page 2 of 4

Version 1.3 02/2016