Resident Personal Income Tax Booklet (Arizona Form 140) - 2013 Page 18
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56Arizona Form 140
spouse may take the subtraction, or you may divide it
enter the amount of previously deferred DOI income that
between you, but the total subtraction taken by both of you
you included in your federal adjusted gross income for the
cannot be more than $4,000.
current taxable year to the extent that the amount was
previously added to your Arizona income.
If you contribute more than $2,000 ($4,000 if married)
during the year, your total subtraction is still limited to
P. Original Issue Discount (OID) on Reacquisition
$2,000 ($4,000 if married). For example, Jorge and Kate are
of Business Debt Instrument
married and have two children. During 2013, Jorge and Kate
For federal purposes, when a taxpayer made the special election
contributed $2,500 to a 529 plan for Child 1 and $2,500 to a
to defer DOI income under IRC § 108(i), the taxpayer was not
529 plan for Child 2. Even though Jorge and Kate
allowed to take a deduction with respect to the portion of any
contributed a total of $5,000 during 2013, they may subtract
OID that accrued with respect to that DOI income, during the
only $4,000 on their 2013 return.
income deferral period. In this case, the taxpayer must deduct
You may take a subtraction for a contribution that you made
the aggregate amount of the OID deductions disallowed ratably
during 2013, to a plan that existed before 2013. You may
over a 5 year period, beginning with the period in which the
take a subtraction for a contribution that you made during
income is includible in federal adjusted gross income.
2013, to a plan established in another state. You may take a
Arizona did not adopt the federal provisions requiring a
subtraction for a contribution that you made in 2013, to any
taxpayer to defer the OID deduction in cases where the
529 college savings plan. This could be a plan established
taxpayer federally deferred the DOI income under IRC
for a child, grandchild, niece, nephew, or any other person
§ 108(i). For Arizona purposes, you were required to add the
for whom a plan has been established.
amount of deferred DOI income to Arizona income on the
You cannot take a subtraction for an amount transferred
return filed for the year in which you reacquired the debt
from one college savings plan to a different college savings
instrument. Since Arizona taxed the federally deferred DOI
plan (a rollover).
income for 2009 or 2010 on your 2009 or 2010 Arizona
return, you may subtract the amount of OID that accrued
O. Previously Deferred Discharge of Indebtedness
during the taxable year with respect to that DOI income. On
(DOI) Income Adjustment
line C29, enter the amount of any OID that was deferred and
Generally, when a loan is settled for less than the amount
not allowed to be deducted in computing your federal adjusted
owed, DOI income is realized by the debtor and usually
gross income for 2013 under IRC § 108(i).
must be included in the debtor’s gross income. The amount
Q. Sole Proprietorship Income of an Arizona
of DOI income is generally equal to the amount of loan
forgiveness.
DOI income also occurs when a debtor
Nonprofit Medical Marijuana Dispensary included
repurchases his or her own debt at a discount (a price lower
in Federal Adjusted Gross Income
than the adjusted basis issue price of the debt instrument).
If you are registered as an Arizona sole proprietorship with
In debt repurchase transactions, the amount of DOI income
the Arizona Department of Health Services to operate in this
is generally equal to the difference between the adjusted
state as a nonprofit medical marijuana dispensary, you may
issue price and the price paid for the debt instrument.
subtract the amount of the income from the dispensary that
is included in the computation of your federal adjusted gross
For federal purposes, a taxpayer may have made a special
income. Include the amount of the income on line C29.
election for taxable years 2009 or 2010 to include DOI
income in connection with the reacquisition of a business
If the Arizona nonprofit medical marijuana
NOTE:
debt instrument, ratably over a 5 year period. A taxpayer
dispensary is registered with the Arizona Department of
Health
Services
as
anything
other
than
a
sole
that made this election will generally include this income in
proprietorship, this subtraction does not apply.
federal adjusted gross income beginning with the 2014
taxable year.
A taxpayer would have made the federal
R. Long-Term Care Insurance Premiums
election under IRC § 108(i) as added by the American
Beginning 2013, you may subtract the amount of premium
Recovery and Reinvestment Act of 2009.
costs for long-term care insurance for qualified long-term
Arizona did not adopt the special federal DOI income
care services.
Qualified long-term care services are
deferral provisions for the 2009 or 2010 taxable year. For
necessary
diagnostic,
preventive,
therapeutic,
curing,
Arizona purposes, if you made the federal election to defer
treating, mitigating, rehabilitative services, and maintenance
the inclusion of DOI income under IRC § 108(i), you were
and personal care services
required to add the amount of deferred DOI income to
You may take this subtraction only if you are not claiming
Arizona income for the year for which you made the
itemized deductions for the taxable year.
Include the
election.
If you made the required addition to Arizona
allowable subtraction on line C29.
income on the Arizona return filed for the year in which you
reacquired the debt instrument (2009 or 2010), Arizona will
An individual, who claims itemized deductions, may not
not tax that DOI income twice. In the year in which you
take this subtraction.
include that deferred DOI income in your federal adjusted
S. Long-Term Health Care Savings Accounts
gross income, you may take a subtraction for the amount
Beginning 2013, you may subtract amounts you paid into a
included for that year. Usually this subtraction will apply to
long-term health care savings account established under
taxable years 2014 through 2018. However, if you had to
Arizona law.
An individual may establish a long-term
accelerate the deferral for federal purposes, this subtraction
health care savings account with an account Administrator
may apply to a taxable year prior to
2014.
On line C29,
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