Modifications Related To Bonus Depreciation & Section 179 Expensing Instructions Page 14
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40III
GENERAL INSTRUCTIONS
FOR PROPERTY PLACED IN SERVICE AFTER 2007
FOR FORMS 1040ME AND 1120ME INCOME MODIFICATION LINES
For property placed in service after 2007, the Maine decoupling from bonus depreciation is
different than in prior years. The modifications apply only to property placed in service during
taxable years beginning after 2007. Therefore, property placed in service in 2008 by fiscal year
filers whose taxable year begins in 2007 would not be subject to the Maine decoupling
modifications. For example, if a business operates on a fiscal year of July through June, property
placed in service in March, 2008 is applicable to the taxpayer’s fiscal year beginning in 2007.
Such property is not subject to the Maine decoupling modifications. If, however, property is
placed in service in March, 2008 by a business that operates on a calendar year basis, that
property is subject to the decoupling modifications.
The modifications for section 179 expenses, however, remain the same.
The following
instructions explain the modification calculations for property placed in service, and for taxable
years beginning after 2007. See the examples beginning on page 26 for more information.
Addition modification
The Maine addition modification (add-back) does not change with the new decoupling method.
For property placed in service after 2007, the add-back related to bonus depreciation is the net
difference between depreciation claimed at the federal level and the depreciation that would be
allowed if the 50% bonus depreciation was not claimed. The addition modification related to
section 179 expense is the net difference between the higher federal section 179 expense
deduction amount in excess of $25,000 allowed under federal law and the amount of
depreciation and section 179 expense that would have otherwise been allowed prior to the
enactment of the Job Creation and Worker Assistance Act of 2002.
For property placed in service after 2007, the addition modification is the same as for property
placed in service in 2003 through 2005, but separate depreciation schedules will be necessary to
properly calculate the subtraction modification in subsequent years. Maine does not require any
modifications related to depreciation claimed for property placed in service in 2006 or 2007.
Subtraction modification (recapture)
The addition modification related to bonus depreciation is recaptured in future years through a
series of subtraction modifications based on the difference between depreciation claimed for
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