Arizona Form 140 - Resident Personal Income Tax Return

Form 140

DOI income is generally equal to the amount of loan

S. Early Withdrawal of Arizona, County, City, or

forgiveness.

DOI income also occurs when a debtor

School Retirement System Contributions

repurchases his or her own debt at a discount (a price lower

If you meet all of the following, you must enter an amount here.

than the adjusted basis issue price of the debt instrument).

1. You left your job with the State of Arizona or an

In debt repurchase transactions, the amount of DOI income

is generally equal to the difference between the adjusted

Arizona county, city, or school district for reasons other

issue price and the price paid for the debt instrument.

than retirement.

2. When you left, you took out the contributions you had

For federal purposes, a taxpayer may have made a special

election for taxable years 2009 or 2010 to include DOI

made to the retirement system while employed.

income in connection with the reacquisition of a business

3. You deducted these contributions on your Arizona

debt instrument, ratably over a 5 year period. A taxpayer

income tax returns that you filed for prior years.

that made this election will generally include this income in

4. You did not include these contributions in your federal

federal adjusted gross income beginning with the 2014

adjusted gross income this year.

taxable year.

A taxpayer would have made the federal

If you meet all these tests, you must report as income those

election under I.R.C. § 108(i) as added by the American

Recovery and Reinvestment Act of 2009.

contributions previously deducted on your prior years'

Arizona tax returns.

Arizona did not adopt the special federal DOI income

deferral provisions for the 2009 or 2010 taxable year. For

For details, see Arizona Department of Revenue Income Tax

Arizona purposes, if you made the federal election to defer

Ruling ITR 93-7.

the inclusion of DOI income under I.R.C. § 108(i), you must

T. Other Adjustments

make an entry here. On line B11, enter the amount of DOI

income that you deferred and excluded from the

Other special adjustments may be necessary. You may need

computation of your 2010 federal adjusted gross income

to make an addition for depreciation or amortization. You

under I.R.C. § 108(i). Even though you must include that

may also need to make an addition if you claimed certain tax

DOI income on your 2010 Arizona return, Arizona will not

credits. Call one of the numbers listed on the back cover if

tax that income again in the future years when you include

any of the following apply.

the income in your federal adjusted gross income. If you



You are a qualified defense contractor that elected to

make an entry here, also see the instructions for “Other

amortize under Arizona Revised Statutes section 43-1024.

Subtractions from Income” even though this subtraction will



You sold or disposed of property that was held for the

not apply until the year in which you include the income in

production of income and your basis was computed

your federal adjusted gross income.

under the Arizona Income Tax Act of 1954.



You claimed the environmental technology facility credit.

R. Original Issue Discount (OID) on Reacquisition



You claimed the pollution control credit.

of Debt Instrument



You claimed the recycling equipment credit.



For federal purposes, when a taxpayer made the special

You

claimed

the

agricultural

pollution

control

election to defer DOI income under I.R.C. § 108(i) (see letter

equipment credit.



“Q” above), the taxpayer was not allowed to take a deduction

You elected to amortize the basis of a pollution control

with respect to the portion of any OID that accrued with respect

device or the cost of a child care facility under Arizona

to that DOI income, during the income deferral period. In this

law in effect before 1990. You are still deducting

case, the taxpayer had to deduct the aggregate amount of the

amortization or depreciation for that device or facility

OID deductions disallowed ratably over a 5 year period,

on your federal income tax return.

beginning with the period in which the income was includible

Line B12 - Total Additions

in federal adjusted gross income.

Arizona did not adopt the federal provisions requiring a

Add lines B6 through B11. Enter the total on line B12 and

taxpayer to defer the OID deduction in cases where the

on the front of your return on line 13.

taxpayer federally deferred the DOI income. For Arizona

Subtractions From Income

purposes, you had to report the DOI income from a debt

reacquisition in the year in which you reacquired the debt,

You may only subtract those items for which statutory authority

and you were allowed to subtract any OID related to that

exists. Without such authority you cannot take a subtraction.

DOI income in the year the OID accrued.

(See the

If you have any questions concerning subtractions from

instructions for “Other Subtractions from Income.”) If your

income, call one of the numbers listed on the back cover.

federal adjusted gross income includes a deduction for any

NOTE: You may not subtract any amount that is allocable

accrued OID that you have already subtracted for Arizona

to income excluded from your Arizona taxable income.

purposes, you must make an addition to Arizona income for

the amount of deferred OID deducted on your federal return.

Line C13 - Exemption: Age 65 or Over

Generally, this addition will not apply until taxable year

Multiply the number in box 8 on the front of your return by

2014 through 2018.

However, if you were required to

$2,100 and enter the result.

accelerate reporting of the DOI income for federal purposes

and were allowed to deduct accrued OID attributable to that

Line C14 - Exemption: Blind

income on a return filed for a year prior to 2014, this

addition may apply to an earlier year. On line B11, enter the

Multiply the number in box 9 on the front of your return by

amount of any previously deferred OID that you deducted in

$1,500 and enter the result.

computing your 2010 federal adjusted gross income, to the

Line C15 - Exemption: Dependents

extent that the amount was previously subtracted from

Multiply the number in box 10 on the front of your return by

Arizona gross income.

$2,300 and enter the result.

Arizona Form 140 - Resident Personal Income Tax Return - 2010 Page 10

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