Arizona Form 140py - Part-Year Resident Personal Income Tax Return

Arizona Form 140PY

and likewise, your Arizona gross income, you may take a

T. Net Operating Loss Adjustment

subtraction for the amount included for that year. Usually

NOTE: This subtraction applies to only those individuals

this subtraction will apply to taxable years 2014 through

who made an election under the special federal net

2018. However, if you had to accelerate the deferral for

operating loss rules for 2008 and 2009. Under the special

federal purposes, this subtraction may apply to a taxable year

rules for 2008 and 2009, you could have elected to carry the

prior to 2014. On line D35, enter the amount of previously

net operating loss back for 3, 4 or 5 years, instead of the

deferred DOI income that you included in your Arizona

normal 2 years. This election would have been allowed

gross income for the current taxable year to the extent that

under IRC § 172(b)(1)(H) as amended by the American

the amount was previously added to your Arizona income.

Recovery and Reinvestment Act of 2009 or the Worker,

V. Original Issue Discount (OID) on Reacquisition

Homeownership, and Business Assistance Act of 2009.

of Debt Instrument

Arizona did not adopt the special federal net operating loss

For federal purposes, when a taxpayer made the special election

rules for losses incurred during 2008 or 2009. For Arizona

to defer DOI income under IRC § 108(i), the taxpayer was not

purposes, you must deduct an Arizona source net operating

allowed to take a deduction with respect to the portion of any

loss as if the loss was computed under IRC § 172 in effect

OID that accrued with respect to that DOI income, during the

prior to the enactment of those special rules. If you made an

income deferral period. In this case, the taxpayer must deduct

election to deduct your 2008 or 2009 federal net operating

the aggregate amount of the OID deductions disallowed ratably

loss under IRC § 172(b)(1)(H), you may have to enter an

over a 5 year period, beginning with the period in which the

amount here. Figure how much of the net operating loss

income is includible in federal adjusted gross income.

carry forward would have been allowed as a deduction on

your 2013 federal income tax return, if the election described in

Arizona did not adopt the federal provisions requiring a

IRC § 172(b)(1)(H) had not been made in the year of the

taxpayer to defer the OID deduction in cases where the taxpayer

loss. Then figure how much of the carry forward computed

federally deferred the DOI income under IRC § 108(i). For

under that method is attributable to income taxed by

Arizona purposes, you were required to add the amount of

Arizona. The amount you may take as a subtraction is the

deferred DOI income to Arizona gross income on the return

difference between the Arizona amount and the amount

filed for the year in which you reacquired the debt instrument if

actually taken for federal purposes that you included in your

the debt reacquisition occurred while you were an Arizona

Arizona gross income. On line D35, enter the amount of

resident, or if the DOI income was from an Arizona source. If

carry forward deduction allowable on your Arizona return

Arizona taxed the federally deferred DOI income for 2009 or

that exceeds the actual amount of net operating loss carry

2010 on your 2009 or 2010 Arizona return, you may subtract

forward deduction that was deducted in arriving at Arizona

the amount of OID that accrued during the taxable year with

gross income.

respect to that DOI income. On line D35, enter the amount of

any OID related to that DOI income that was deferred and not

U. Previously Deferred Discharge of Indebtedness

allowed to be deducted in computing your federal adjusted

(DOI) Income Adjustment

gross income for 2013 under IRC § 108(i).

Generally, when a loan is settled for less than the amount

W. Sole Proprietorship Income of an Arizona

owed, DOI income is realized by the debtor and usually

must be included in the debtor’s gross income. The amount

Nonprofit Medical Marijuana Dispensary Included

of DOI income is generally equal to the amount of loan

in Federal Adjusted Gross Income

forgiveness.

DOI income also occurs when a debtor

If you are registered as an Arizona sole proprietorship with

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

the Arizona Department of Health Services to operate in this

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

state as a nonprofit medical marijuana dispensary, you may

In debt repurchase transactions, the amount of DOI income

subtract the amount of the income from the dispensary that

is generally equal to the difference between the adjusted

is included in the computation of your federal adjusted gross

issue price and the price paid for the debt instrument.

income. Include the amount of the income on line D35.

For federal purposes, a taxpayer may have made a special

NOTE:

If the Arizona nonprofit medical marijuana

election for taxable years 2009 or 2010 to include DOI

dispensary is registered with the Arizona Department of

income in connection with the reacquisition of a business

Health

Services

anything

other

than

sole

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

proprietorship, this subtraction does not apply.

that made this election will generally include this income in

federal adjusted gross income beginning with the 2014

X. Long-Term Care Insurance Premiums

taxable year.

A taxpayer would have made the federal

election under IRC § 108(i) as added by the American

Beginning in 2013, you may subtract the amount of

Recovery and Reinvestment Act of 2009.

premium costs for long-term care insurance for qualified

long-term care services. Qualified long-term care services

Arizona did not adopt the special federal DOI income

are necessary diagnostic, preventive, therapeutic, curing,

deferral provisions for the 2009 or 2010 taxable year. For

treating, mitigating, rehabilitative services, and maintenance

Arizona purposes, if you made the federal election to defer

and personal care services.

the inclusion of DOI income under IRC § 108(i), you were

required to add the amount of deferred DOI income to

You may take this subtraction only if you are not claiming

Arizona gross income on the return filed for the year in

itemized deductions for the taxable year.

An individual

which you reacquired the debt instrument if the debt

who claims itemized deductions may not take this

reacquisition occurred while you were an Arizona resident,

subtraction.

or if the DOI income was from an Arizona source. If you

You may only subtract the amount of premiums paid during

made the required addition to Arizona income on the

the period you were an Arizona resident. Do not include the

Arizona return filed for the year in which you reacquired the

costs of any premiums paid during the period you were a

debt instrument (2009 or 2010), Arizona will not tax that

nonresident. Include the allowable subtraction on line D35.

DOI income twice. In the year in which you include that

deferred DOI income in your federal adjusted gross income

Arizona Form 140py - Part-Year Resident Personal Income Tax Return - 2013 Page 15

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