Form It-398 - New York State Depreciation Schedule For Irc Section 168(K) Property - 2012 Page 2
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2IT-398 (2012) (back)
Instructions
If you are married and file a joint federal return but are required to file
General instructions
separate NYS returns, complete only one Form IT-398 showing the
For tax years beginning after December 31, 2002, New York State (NYS)
amounts from your joint federal return. Submit a schedule with each
does not allow the federal 30%/50% special depreciation deduction for
return showing each spouse’s separate amounts, as if separate federal
Internal Revenue Code (IRC) section 168(k) property (except for resurgence
returns were filed, and explain any differences.
zone property and New York liberty zone property described in IRC
section 1400L(b)(2)), placed in service inside or outside NYS after May 31,
Specific instructions
2003. Instead, you are allowed a NYS depreciation deduction determined
See the instructions for your tax return for the Privacy notification or if
under IRC section 167, as that section would have applied to the property if
you need help contacting the Tax Department.
it had been acquired on September 10, 2001. You may take the deduction
for NYS depreciation until the property is disposed of or fully depreciated.
Enter your name and identifying number (your social security number or
employer identification number) in the spaces provided on the front of this
If you claimed ACRS depreciation on your federal return for property
placed in service beginning after May 31, 2003 (except for resurgence
form. Mark an X in the box that indicates which NYS income tax return
you are filing and submit this form with that return.
zone property and New York liberty zone property described in
IRC section 1400L(b)(2)), complete Part 1.
Part 1 – Depreciation
Use this form to compute your NYS adjustments for NYS depreciation
Depreciation is the annual deduction allowed to recover the cost or other
and federal depreciation deductions.
basis of business or investment property having a useful life substantially
beyond the tax year. However, land is never depreciable. Depreciation
As described in IRC section 168(k)(2), resurgence zone property is
starts when you first use the property in your business or for the
defined as qualified property if all of the following apply:
production of income. It ends when you take the property out of service,
• substantially all use of the property is in the resurgence zone; and
deduct all your depreciable cost or other basis, or no longer use the
• the use is in the active conduct of a trade or business by the taxpayer
property in your business or for the production of income. (See Part 2 for
in the resurgence zone; and
the deduction to be taken in the year you dispose of the property.)
• the original use by the taxpayer commences after December 31, 2002.
Column C – Enter the depreciable basis of the assets you place in
The resurgence zone is defined as the area of New York County
service in the same year. Depreciable basis is the cost or other basis
bounded on the south by a line running from the intersection of the
reduced by the part of the basis you elected to amortize or expense
Hudson River with the Holland Tunnel, running east to Canal Street, then
under IRC section 179, and any federal investment credit subtracted
running along the centerline of Canal Street to the intersection of Bowery
when computing the federal unadjusted basis of the asset.
and Canal Street. It then runs in a southeasterly direction diagonally
Column D – The applicable convention determines the portion of the
across the Manhattan Bridge Plaza to the Manhattan Bridge, along the
tax year for which the depreciation is allowable during a year property is
centerline of the Manhattan Bridge to the point where the centerline
either disposed of or placed in service. Enter in column D the convention
would intersect with the east bank of the East River. It is bounded on the
you used from federal Form 4562, column E.
north by a line running from the intersection of the Hudson River with the
Holland Tunnel, running north along West Avenue to the intersection of
Column E – Indicate the depreciation method selected for the
Clarkson Street. It then runs east along the centerline of Clarkson Street
computation of the NYS allowable depreciation deduction. Any
to the intersection of Washington Avenue, then running south along the
consistent depreciation method that would have been allowed under
centerline of Washington Avenue to the intersection of West Houston
IRC section 167, as that section would have applied to the property
Street. It continues east along the centerline of West Houston Street,
if it had been acquired on September 10, 2001, without regard to
then at the intersection of Avenue of the Americas, continues east along
section 168(k), is acceptable.
the centerline of East Houston Street to the east bank of the East River.
Column F – Enter your NYS depreciation deduction in column F, based
If you have an interest in a passive activity, the modifications required
on the method you elected in column E.
under Tax Law sections 612(b)(8) and (c)(16) for federal depreciation
Column G – Enter the depreciation deduction you took on your federal
and NYS depreciation must be made for the full amounts allowable
return.
as a federal depreciation deduction (100%), even though the activity
may be subject to federal loss deduction limitations. It is only under
Part 2 – Year-of-disposition adjustment
IRC section 469 (Passive Activity Losses and Credits Limited) that there
If you dispose of IRC section 168(k) property (except for resurgence
is a limitation on passive loss deductions.
zone property and New York liberty zone property described in IRC
In the case of a partnership using IRC section 168 to determine
section 1400L(b)(2)) that you placed in service inside or outside NYS
depreciation, the individual partners should make the adjustments
after May 31, 2003, you must adjust your NYS income by the difference
to income on their personal income tax returns. The adjustments for
between the total NYS depreciation deduction and the total federal
partners are their distributive share of NYS depreciation and federal
depreciation deduction claimed on that property.
depreciation, determined by the partnership as of the end of the
Column C – Enter the method used to dispose of the property.
partnership year ending within the partner’s tax year. Form IT-398 should
Disposition includes, but is not limited to, sale, exchange, transfer, and
be completed only by the partnership, and not by each individual partner.
obsolescence.
This treatment is the same for a beneficiary of an estate or trust that is
on a fiscal-year basis.
Column D – Enter the total NYS depreciation deduction you claimed on
the property you disposed of.
If you are a shareholder of an electing New York State S corporation,
the S corporation should provide your proportionate share of the
Column E – Enter the total federal depreciation deduction you claimed
on your federal return for the disposition of your property.
S corporation’s depreciation deduction.
If you are a nonresident or part-year resident, you must complete
Form IT-398 as if you were a NYS resident for the entire year. Transfer
the amounts from Part 1 and Part 2 to Form IT-203, Nonresident and
Part-Year Resident Income Tax Return. For more information on the
addition and subtraction modifications for federal and NYS depreciation,
see Form IT-203-I, Instructions for Form IT-203.
398002120094
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