Form It-711 - Partnership Income Tax General Instructions

NEW INFORMATION

FEDERAL TAX CHANGES

The Governor signed House Bill 292 into law. Consequently, for

•5 year carryback of NOLs incurred in the Kansas disaster area after

taxable years beginning on or after January 1, 2015, except as

May 3, 2007, I.R.C. Section 1400N(k).

discussed below, Georgia has adopted the provisions of all federal

•5 year carryback of certain disaster losses, I.R.C. Sections 172(b)

acts (as they relate to the computation of Federal Adjusted Gross

(1)(J) and 172(j).

Income (AGI) for individuals or federal taxable income for non-

•The election to deduct public utility property losses attributable to

individuals) that were enacted on or before January 1, 2015. For

May 4, 2007 Kansas storms and tornadoes in the fifth tax year before

2015, for Georgia purposes,

the I.R.C. Section 179 deduction is

the year of the loss, I.R.C. Section 1400N(o).

currently limited to $25,000 and the related phase out is $200,000.

•Special rules relating to a financial institution being able to use

Georgia has not adopted the Section 179 deduction for certain real

ordinary gain or loss treatment for the sale or exchange of certain

property.

preferred stock after Dec. 31, 2007, I.R.C. Section 1221.

•Temporary tax relief provisions relating to the Midwestern disaster

Exceptions

area, I.R.C. Sections 1400N(f) and 1400N(k).

Georgia has not adopted I.R.C. Section 168(k) (the 30%, 50% and

100% bonus depreciation rules) except for I.R.C. Section 168(k)(2)

Depreciation Differences. Depreciation differences due to the

(A)(i) (the definition of qualified property), I.R.C. Section 168(k)(2)

Federal acts mentioned above should be treated as follows (If the

(D)(i) (exceptions to the definition of qualified property), and I.R.C.

taxpayer has depreciation differences from more than one Federal

Section 168(k)(2)(E) (special rules for qualified property) and Georgia

act, it is not necessary to make a separate adjustment for each act):

has not adopted I.R.C. Section 199 (federal deduction for income

A. Depreciation must be computed one way for Federal purposes

attributable to domestic production activities).

and another way for Georgia purposes. To compute depreciation for

Georgia has also not adopted the following:

Federal purposes, taxpayers should use the current year IRS Form

•The exclusion of $2,400 of unemployment income for 2009, I.R.C.

4562 and attach it to the Georgia return. This should be entered on

Section 85(c).

the other addition line of the return.

•Additional itemized deduction for the sales tax on the purchase

B. Depreciation must also be computed for Georgia purposes. Tax-

of a new vehicle in 2009, I.R.C. Sections 164(a)(6) and 164(b)(6).

payers should use Georgia Form 4562 to compute depreciation for

Please note: Georgia also does not allow the increased standard

Georgia purposes and attach it to the Georgia return. This should

deduction for sales tax on the purchase of a new vehicle in 2009

be entered on the other subtraction line of the return.

because Georgia has its own standard deduction.

•The election to increase the normal two year net operating loss

Federal deduction for income attributable to domestic pro-

carryback to 3, 4, or 5 years for tax years 2008 and 2009, I.R.C.

duction activities (IRC Section 199). This adjustment should be

Sections 172(b)(1)(H) and 810(b)(4).

entered on the addition line of the applicable return. An adjustment

•The transition rule that would allow a taxpayer to revoke a prior

to the Georgia partnership or S Corporation return is not required

election to forego the net operating loss carryback period.

if the partnership or S Corporation is not allowed the Section 199

•Deferral of debt income from reacquisitions of business debt at a

deduction directly, but instead passes through the information,

discount in 2009 and 2010 which is federally deferred for up to five

needed to compute the deduction, to the partners or shareholders.

years, then included ratably over five years, I.R.C. Section 108(i).

•Modified rules for high yield original issue discount obligations,

Other Differences.

Other differences should be placed on the

I.R.C. Sections 163(e)(5)(F) and 163(i)(1).

other addition or subtraction line of the applicable return. Attach a

•New York Liberty Zone Benefits, I.R.C. Section 1400L.

statement to the return explaining these differences.

•50% first year depreciation for post 8/28/2006 Gulf Opportunity

Additionally, the provisions listed above may have an indirect effect

Zone property, I.R.C. Section 1400N(d)(1).

on the calculation of Georgia taxable income.

•50% bonus depreciation for most tangible property and computer

Adjustments for the items listed below should be added or subtracted

software bought after May 4, 2007 and placed in service in the

on your Georgia income tax form.

Kansas Disaster Area, I.R.C. Section 1400N(d)(1).

1. When property is sold for which the bonus depreciation was

•50% bonus depreciation for “qualified reuse and recycling property”,

claimed, there will be a difference in the gain or loss on the sale of

I.R.C. Section 168(m).

the property.

•50% bonus depreciation in connection with disasters federally

2. The depreciation adjustment may be different if the taxpayer is

declared after 2007, I.R.C. Section 168(n).

subject to the passive loss rules and is not able to claim the additional

•Increased ($8,000) first-year depreciation limit for passenger au-

depreciation on the Federal return.

tomobiles if the passenger automobile is “qualified property,” I.R.C.

3. Other Federal items that are computed based on Federal Adjusted

Section 168(k).

Gross Income or Federal Taxable Income will have to be recomputed

•15 year straight-line cost recovery period for certain improvements

if the provisions of the Federal Acts are claimed.

to retail space, I.R.C. Sections 168(e)(3)(E)(ix), 168(e)(8), and

168(b)(3)(I).

Furthermore, in 2003 the IRS started requiring separate reporting,

•Modified rules relating to the 15 year straight-line cost recovery for

to shareholders of S Corporations and partners of partnerships, for

qualified restaurant property (allowing buildings to now be included),

the gain from asset sales for which an I.R.C. Section 179 deduction

I.R.C. Section 168(e)(7).

was claimed. Georgia follows the separate reporting treatment of the

•5 year depreciation life for most new farming machinery and equip-

gain and the Section 179 deduction. Accordingly, the gain should

ment, I.R.C. Section 168(e)(3)(B)(vii).

not be reported directly on the S Corporation or partnership return,

•Special rules relating to Gulf Opportunity Zone public utility casualty

but the gain, along with any Georgia adjustment to the gain (due to

losses, I.R.C. Section 1400N(j).

the Federal acts), should be reported separately to the shareholders

•5 year carryback of NOLs attributable to Gulf Opportunity Zone

or partners.

losses, I.R.C. Section 1400N(k).

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Form It-711 - Partnership Income Tax General Instructions - 2015 Page 2

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