Instructions For Form D-400 - North Carolina Individual Income Tax

Line Instructions for Filing Form D-400

Page 13

beginning with the tax return for taxable year 2014.

•

If you are a shareholder in an S Corporation

Line 35 - Adjustment for

that paid built-in gains tax for federal income tax

Bonus Depreciation

purposes, you must add to federal adjusted gross

Line 37 - Adjustment for

income your share of the built-in gains tax that

Tuition and Fees Deduction

the S Corporation paid.

On January 2, 2013, President Obama signed

into law the American Taxpayer Relief Act of

•

You must add to federal adjusted gross

North Carolina did not conform to the extension

2012 (ATRA). This Act extended the 50% bonus

income any amount that was contributed to North

of the federal provision allowing the tuition and

depreciation through 2013. North Carolina did

Carolina’s National College Savings Program

not adopt the bonus depreciation provisions

fees deduction. An addition to federal adjusted

(NC 529 Plan) and deducted in a prior year that

under IRC sections168 (k) and 168(n) of this Act.

gross income is required for the amount of the

was later withdrawn and used for purposes other

taxpayer’s deduction for qualified tuition and

Therefore, if you deducted the bonus depreciation

than the qualified higher education expenses of

related expenses under section 222 of the Code

under IRC sections 168(k) or 168(n) on your 2013

the designated beneficiary unless the withdrawal

federal return, you must add to federal adjusted

that was claimed on federal Form 1040, Line 34

was due to the death or permanent disability of

or Form 1040A, Line 19.

gross income 85% of the amount deducted. This

the designated beneficiary.

adjustment does not result in a difference in basis

Note: There is no longer an allowable deduction

•

If you qualified and elected to report your child’s

of the affected assets for State and federal income

available on Line 51 of Form D-400 for taxpayers

unearned income on your federal return, you

tax purposes.

who elected to claim the American Opportunity,

included only the child’s unearned income in excess

Hope, or Lifetime Learning credit under section

Note: Any amount of the bonus depreciation

of $1,900 in your federal adjusted gross income.

25A of the Code in lieu of the deduction for qualified

added to federal adjusted gross income on your

The difference in the child’s standard deduction of

tuition and related expenses on the federal return.

2013 State return may be deducted in five equal

$500 and the amount of his income not included in

installments over your first five taxable years

your federal adjusted gross income must be added

beginning with the tax return for taxable year 2014.

to your federal adjusted gross income in figuring

Line 38 - Other Additions

your North Carolina taxable income.

to Federal Adjusted Gross

Note: In the event of an actual or deemed

transfer of an asset occurring on or after January

Example

Income

1, 2013, wherein the tax basis of the asset

Susan, age 10, received $2,000 in interest income

in 2013. She had no other income. Her parents

carries over from the transferor to the transferee

•

North Carolina did not conform to the extension

for federal income tax purposes, the transferee

include $100 ($2,000-$1,900) of her income in their

of the federal provision that allowed an exclusion

must add any remaining deductions allowed to

federal adjusted gross income. In figuring their State

from gross income for the discharge of qualified

taxable income, Susan’s parents must add $1,400

the basis of the transferred asset and depreciate

principal residence indebtedness under section

to federal adjusted gross income in figuring their

the adjusted basis over any remaining life of the

108 of the Code. If you made this election, an

North Carolina taxable income.

asset. The transferor is not allowed any future

addition to federal adjusted gross income is

bonus depreciation deductions. In addition, in the

Susan’s unearned income ................$2,000

required for the amount excluded from gross

event of an actual or deemed transfer occurring

Amount included in parents’

income on your federal return.

federal income .......................................100

prior January 1, 2013, the law permits an election

Amount not included in

to adjust the basis of the asset on the transferee’s

•

North Carolina did not conform to the extension

parents’ federal income ....................$1,900

2013 return. The election is only available if the

Susan’s standard deduction ..................500

of the federal provision which allowed an exclusion

transferor has not taken the bonus depreciation on

Addition to federal adjusted

from gross income for a qualified charitable

gross income on parents’ return .......$1,400

a prior return and provided the transferor certifies

distribution from an individual retirement plan by a

in writing to the transferee that the transferor

person who has attained age 70 1/2 under section

will not take any remaining bonus depreciation

408(d)(8) of the Code. Therefore, an addition to

Deductions From Federal

deductions. (For more information on bonus

federal adjusted gross income is required for the

Adjusted Gross Income

depreciation, see N.C. Gen. Stat. §§105-134.6A(e)

amount excluded from gross income on your

and (f), as well as the Department’s website.)

(Lines 40 - 52)

federal return.

•

North Carolina does not allow the domestic

Line 36 - Adjustment for

Line 40 - State Income Tax

production activities deduction. Therefore, if you

Section 179 Expense

claimed the deduction on Line 35 of federal Form

Refund

1040, the amount claimed must be added to federal

Deduction

adjusted gross income on Line 38, Form D-400.

Enter the amount of any state or local income

•

If you elected to exclude a lump-sum

The federal American Taxpayer Relief Act of

tax refund included on Line 10 of your federal

distribution from a retirement plan from your

2012 (ATRA) extended through 2013 the dollar

return, Form 1040.

limitation for expensing section 179 property

regular federal income tax computation and

computed the tax separately, the amount of the

to $500,000, and the investment limitation to

Line 41 - Interest From United

lump-sum distribution must be added to federal

$2,000,000. North Carolina did not conform to

adjusted gross income.

States Obligations

these amounts. If you deducted section 179

expense on your federal return, an addition is

•

If you carry over a net operating loss from

required equal to 85% of the difference between

Enter the amount of interest received from

another year to the 2013 return, an addition is

the amount claimed on your federal return for

notes, bonds, and other obligations of the United

required for the amount of net operating loss

section 179 expenses and the $25,000 dollar

States (such as U.S. savings bonds, treasury

carried to the 2013 year that is not absorbed and

limitation and $125,000 investment limitation

notes and bills, etc.) or United States possessions.

will be carried forward to subsequent years.

adopted by the North Carolina General Assembly.

The definition of section 179 property has the

Example: You incur a net operating loss of

same meaning as under section 179 of the Code

Line 42 - Taxable Portion of

$75,000 in 2012. You carry the net operating

as of January 2, 2013. This adjustment does not

loss to the 2013 federal return and deduct the

Social Security and Railroad

result in a difference in basis of the affected assets

entire loss in arriving at federal adjusted gross

Retirement Benefits

for State and federal income tax purposes.

income. Only $50,000 of the loss is absorbed and

Note: Any amount of section 179 expense

$25,000 is carried forward to subsequent years.

deduction added to federal taxable income on

To determine North Carolina taxable income, you

Social security and railroad retirement benefits

your 2013 State return may be deducted in five

must make an addition to federal adjusted gross

are not subject to State income tax. Enter any

equal installments over your first five taxable years

income of $25,000.

Title 2 social security benefits received under the

Instructions For Form D-400 - North Carolina Individual Income Tax - 2013 Page 13

Related Articles

Related forms

Related Categories