Arizona Form 140py - Part-Year Resident Personal Income Tax Art-Year Resident Personal Income Tax - 2011 Page 28
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45Form 140PY
has been allowed pursuant to I.R.C. § 167(a) attributable to
in I.R.C. § 172(b)(1)(h) had not been made in the year of the
income taxable by Arizona to the extent that the amount has
loss. Then figure how much of the carry forward computed
not already reduced Arizona taxable income in the current or
under that method is attributable to income taxed by
prior years. (Note: The practical effect of this is to allow a
Arizona. The amount you may take as a subtraction is the
subtraction for the difference in basis for any asset for which
difference between the Arizona amount and the amount
bonus depreciation has been claimed on the federal return.)
actually taken for federal purposes that you included in your
A part-year resident may subtract only that amount that is
Arizona gross income. On line D35, enter the amount of
attributable to income subject to Arizona tax.
carry forward deduction allowable on your Arizona return
that exceeds the actual amount of net operating loss carry
R. Fiduciary Adjustment
forward deduction that was deducted in arriving at Arizona
If the amount reported on line 3 of your Arizona Form
gross income.
141AZ, Schedule K-1, is a negative number, enter that
U. Previously Deferred Discharge of Indebtedness
portion of Form 141AZ, Schedule K-1, line 3 that is
(DOI) Income Adjustment
allocable to estate or trust income taxable by Arizona as a
Generally, when a loan is settled for less than the amount
subtraction from income. Enter the subtraction on line D35.
owed, DOI income is realized by the debtor and usually
S. Contributions to 529 College Savings Plans
must be included in the debtor’s gross income. The amount
of DOI income is generally equal to the amount of loan
For taxable years 2008 through 2012, you may subtract
forgiveness.
DOI income also occurs when a debtor
amounts you contribute to 529 college savings plans during
the taxable year.
You may subtract the amount you
repurchases his or her own debt at a discount (a price lower
than the adjusted basis issue price of the debt instrument).
contributed during the year, while an Arizona resident, up to
In debt repurchase transactions, the amount of DOI income
a total of $750 ($1,500 for a married couple filing a joint
is generally equal to the difference between the adjusted
return). If you are married filing separate returns, either you
issue price and the price paid for the debt instrument.
or your spouse may take the subtraction, or you may divide
it between you, but the total taken by both of you cannot be
For federal purposes, a taxpayer may have made a special
more than $1,500.
election for taxable years 2009 or 2010 to include DOI
income in connection with the reacquisition of a business
If you contribute more than $750 ($1,500 if married) during
debt instrument, ratably over a 5 year period. A taxpayer
the year, your total subtraction is still limited to $750
that made this election will generally include this income in
($1,500 if you are married). For example, Jorge and Kate
are married and have two children. During 2011, Jorge and
federal adjusted gross income beginning with the 2014
taxable year.
A taxpayer would have made the federal
Kate, contributed $1,500 to a 529 plan for Child 1 and
election under I.R.C. § 108(i) as added by the American
$1,500 to a 529 plan for Child 2. Even though Jorge and
Recovery and Reinvestment Act of 2009.
Kate contributed a total of $3,000 during 2011, they may
subtract only $1,500 on their 2011 return.
Arizona did not adopt the special federal DOI income
deferral provisions for the 2009 or 2010 taxable year. For
You may take a subtraction for a contribution that you made
Arizona purposes, if you made the federal election to defer
during 2011, to a plan that existed before 2011. You may
the inclusion of DOI income under I.R.C. § 108(i), you were
take a subtraction for a contribution that you made during
required to add the amount of deferred DOI income to
2011, to a plan established in another state. You may take a
Arizona gross income on the return filed for the year in
subtraction for a contribution that you made in 2011, to any
529 college savings plan. This could be a plan established
which you reacquired the debt instrument if the debt
reacquisition occurred while you were an Arizona resident,
for a child, grandchild, niece, nephew, or any other person
or if the DOI income was from an Arizona source. If you
for whom a plan has been established.
made the required addition to Arizona income on the
You cannot take a subtraction for an amount transferred
Arizona return filed for the year in which you reacquired the
from one college savings plan to a different college savings
debt instrument (2009 or 2010), Arizona will not tax that
plan (a rollover).
DOI income twice. In the year in which you include that
T. Net Operating Loss Adjustment.
deferred DOI income in your federal adjusted gross income
and likewise, your Arizona gross income, you may take a
NOTE: This subtraction applies to only those individuals
subtraction for the amount included for that year. Usually
who made an election under the special federal net
this subtraction will apply to taxable years 2014 through
operating loss rules for 2008 and 2009. Under the special
2018. However, if you had to accelerate the deferral for
rules for 2008 and 2009, you could have elected to carry the
federal purposes, this subtraction may apply to a taxable year
net operating loss back for 3, 4 or 5 years, instead of the
prior to 2014. On line D35, enter the amount of previously
normal 2 years. This election would have been allowed
deferred DOI income that you included in your Arizona
under I.R.C. § 172(b)(1)(h) as amended by the American
gross income for the current taxable year to the extent that
Recovery and Reinvestment Act of 2009 or the Worker,
the amount was previously added to your Arizona income.
Homeownership, and Business Assistance Act of 2009.
Arizona did not adopt the special federal net operating loss
V. Original Issue Discount (OID) on Reacquisition
rules for losses incurred during 2008 or 2009. For Arizona
of Debt Instrument
purposes, you must deduct an Arizona source net operating
For federal purposes, when a taxpayer made the special election
loss as if the loss was computed under I.R.C. § 172 in effect
to defer DOI income under I.R.C. § 108(i), the taxpayer was not
prior to the enactment of those special rules. If you made an
allowed to take a deduction with respect to the portion of any
election to deduct your 2008 or 2009 federal net operating
OID that accrued with respect to that DOI income, during the
loss under I.R.C. § 172(b)(1)(h), you may have to enter an
income deferral period. In this case, the taxpayer must deduct
amount here. Figure how much of the net operating loss
the aggregate amount of the OID deductions disallowed ratably
carry forward would have been allowed as a deduction on
over a 5 year period, beginning with the period in which the
your 2011 federal income tax return, if the election described
income is includible in federal adjusted gross income.
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