Fillable Form K-120ex - Kansas Expensing Deduction Schedule

INSTRUCTIONS FOR SCHEDULE K-120EX

GENERAL INFORMATION

the IRC, as amended. That amount will be multiplied by the applicable factor,

determined by using, the table provided in K.S.A. 79-32,143a(f), based on

The expensing deduction and recapture under K.S.A. 79-32,143a is

the method of depreciation selected pursuant to section 168(b)(1), (2), or

available to income tax filers who elect to take an expensing deduction for

(3) or (g) of the IRC, as amended, and the applicable recover period for

taxable years commencing after December 31, 2011. This deduction is not

such property as defined under section 168(c) or (g) of the IRC, as amended.

available for privilege tax filers. The deduction must be made by the due

date of the original return, including any extension of time to file, and may

A taxpayer using the 200% declining balance method with

be made only for the taxable year in which the eligible property is placed in

a recover period of 5 years and the basis for depreciation

service in Kansas.

is $10,000. The taxpayer has no bonus depreciation to

The election is made by filing your tax return (by paper or through an

subtract out so the net basis is $10,000. Refer to the table

electronic means) with Schedule K-120EX (Kansas Expensing Deduction)

on the next page. At the column headed IRC 168 Recover Period (year),

and claiming the deduction. If you file a paper return, you must enclose

go down to 5 years and use .116 under the 200DB column to multiply by

federal Form(s) 4562 with each K-120EX and any additional schedule

the net basis of $10,000. The expensing deduction for this item is $1,160

necessary to enable KDOR (Kansas Department of Revenue) to reconcile

to use as a subtraction from Kansas income. For corporate purposes this

the federal Form 4562 amounts to the expensing claimed on your K-120EX.

is subtracted from income after apportionment on line 17 of Form K-120 or

K-121; and for individual income purposes this would be a subtraction

PROPERTY THAT MAY BE USED TO CLAIM THE EXPENSING

modification on Schedule S, Part A.

DEDUCTION. For taxable years beginning after December 31, 2011, you

may elect to take an expensing deduction from Kansas net income

EXPENSING DEDUCTION RECAPTURE. If the property was sold,

apportioned or allocated to this state for the cost of the following property

disposed of, or moved out of Kansas within the “recover period” (5 years in

placed in service in this state during the taxable year:

the above example), the expensing deduction previously determined shall

be subject to recapture and treated as Kansas taxable income allocated to

1) Tangible property eligible for depreciation under the modified accelerated

cost recover system in section 168 of the IRC (Internal Revenue Code),

Kansas. The amount of recapture is the Kansas expensing deduction

as amended, but not including residential rental property, nonresidential

previously determined multiplied by a fraction, the numerator of which is

real property, any railroad grading or tunnel bore or any other property

the number of years remaining in the recover period for such property as

with an applicable recover period in excess of 25 years as defined

defined under Section 168(c) or (g) of the IRC, after such property is sold

under section 168(c) or (g) of the IRC, as amended; and,

or removed from the state including the year of disposition and the

denominator is the total number of years in the total recover period.

2) Computer software as defined in section 197(e)(3)(B) of the IRC, as

For instance, in the example above, assume the taxpayer purchased

amended, and as described in section 197(e)(3)(A)(i) of the IRC, as

property and claimed the expensing deduction on the 2013 return. In the

amended, to which section 167 of the IRC, as amended, applies.

year ending 2015 return, the taxpayer sold the property. The expensing

SITUS OF PROPERTY. The situs will be the physical location of such

deduction previously determined was $1,160. The original recover period

property located in Kansas. If the property is mobile, the situs will be the

was five years. They sold the property in 2015 so there are three years

physical location of the business operations from which the property is

remaining in the recover period. Three years remaining divided by five

used or based. Software shall be apportioned to Kansas based on the

years total recovery equals 60%. Sixty percent (60%) multiplied by $1,160

fraction, the numerator of which is the number of taxpayer's users located

equals $696 which is to be added back to Kansas on K-120EX, PART A,

in Kansas of licenses for such computer software used in the active

line 2. If the recover period has expired, there is no recapture.

conduct of the taxpayer's business operations, and the denominator of

which is the total number of the taxpayer's users of the licenses for such

SPECIFIC LINE INSTRUCTIONS

computer software used in the active conduct of the taxpayer's business

Using the following instructions, enter the applicable information at the

operations everywhere.

top of Schedule K-120EX. If you are required to complete PART B and/or

UNITARY OPERATION. If you are a corporate taxpayer filing a combined

PART C of Schedule K-120EX, you must do so before completing PART A.

return, you may elect to apply the expense deduction against the Kansas

Sole Proprietor, C-Corp (regular corporation) and Fiduciary:

income of any member of the corporate combined group. This option is

If you are an Individual, Fiduciary, or C-Corp filer you must complete the

only available for the expense deduction, not for any subsequent net

Name of taxpayer and SSN or EIN, then complete PART B and PART C (if

operating loss caused by the expense deduction.

applicable). If you are a Sole-proprietor or Fiduciary filer, you must also

If filing a combined return, each entity within the combined group that

complete the lines 1 through 5 of PART A. C-Corp filers must complete

made a qualifying investment must complete a Schedule K-120EX and

PART A, lines 1 through line 10.

enclose it with the return when filed.

Pass-Through Entity: A pass-through entity is an entity that is not

taxed on their income (partnership/sub-chapter S corporation) but passes

CREDITS THAT MAY NOT BE USED IF CLAIMING THE EXPENSING

their income to another entity that has a tax levied against it. If you are

DEDUCTION. If the election is made to claim an expensing deduction on an

filing a partnership or sub-chapter S corporation return, the pass-through

investment, you may not use that investment in the following tax credits,

entity must enter the Name of taxpayer and their EIN; then complete PART

accelerated depreciation or deductions: K-35 Historic Preservation Credit,

B and PART C (if applicable) and lines 1 through 5 of PART A.

K-38 Swine Facility Improvement Credit, K-53 Research and Development

Pass-through entity's shareholders or partners will complete both lines

Credit, K-59 High Performance Incentive Program Credit, K-62 Alternative-

of Name of taxpayer (shareholder's name on the top line and the pass-

Fuel Tax Credit, K-73 Petroleum Refinery Credit, K-77 Qualifying Pipeline

through entity's name on the second line). Then complete lines 1 through 5

Credit, K-78 Nitrogen Fertilizer Plant Credit, K-79 Cellulosic Alcohol Plant

of PART A for the shareholders’ or partners’ portion and supply the

Credit, K-80 Integrated Coal Gasification Power Plant Credit, K-81

shareholders or partners with the pass-through entity's K-120EX and the

Environmental Compliance Credit, K-82 Storage and Blending Equipment

shareholders or partners K-120EX. The shareholders or partners must

Credit and K-83 Electric Cogeneration Facility Credit.

include a copy of both K-120EX schedules with their tax return when filed.

EXPENSING DEDUCTION THAT EXCEEDS KANSAS NET INCOME. If

PART A – COMPUTATION OF EXPENSING FOR THIS ENTITY

the expensing deduction exceeds net income apportioned or allocated to

this state, such excess will be treated as a Kansas net operating loss by

LINE 1– Enter the total Kansas expensing from PART B, line 11.

the entity that made the original investment.

LINE 2 – Enter the recapture amount from PART C, line 12.

COMPUTATION OF KANSAS EXPENSING AFTER THE ELECTION IS

LINE 3 – Subtract line 2 from line 1. Enter the result on line 3. If line 2 is

MADE. The amount of expensing deduction for such cost shall equal the

greater than line 1, shade the minus (-) sign in the box to the left to

difference between the depreciable cost of such property for federal

indicate a negative number.

income tax purposes and the amount of bonus depreciation being claimed

for such property pursuant to section 168(k) of the IRC, as amended, for

LINE 4 – Partners, shareholders or members: Enter the percentage that

federal income tax purposes in such tax year, but without regard to any

represents your proportionate share in the partnership, S corporation,

expensing deduction being claimed for such property under section 179 of

LLC or LLP. All other taxpayers: Enter 100%.

Form K-120ex - Kansas Expensing Deduction Schedule - 2012 Page 3

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