Form Sn 2002(12) - 2002 Legislation Affecting The Connecticut Income Tax (Page 2 of 3) in pdf

bonus depreciation allowance (to the extent deductible

as a partnership for federal income tax purposes) that

in determining their federal adjusted gross income).

owns property for which the bonus depreciation

The effect for Connecticut income tax purposes of this

allowance is deducted for federal income tax purposes

legislation is to disallow permanently the deduction of

and whose taxable year is the calendar year, is not

the additional first-year bonus depreciation, rather than

required for its 2001 taxable year to pass-through the

merely to defer the deduction.

addition modification to each individual who is its

shareholder, partner or member. If a pass-through

If there is a sale or other disposition of the property for

entity owns property for which the bonus depreciation

which additional first-year bonus depreciation was

allowance is deducted for federal income tax purposes

deducted for federal income tax purposes, the gain

in a succeeding taxable year, it is required for its

recognized will be the same for federal and Connecticut

succeeding taxable year to pass-through the addition

income tax purposes. (In computing Connecticut adjusted

modification to each individual who is its shareholder,

gross income, no modification to federal adjusted gross

partner or member, so that the individual is able to add

income is expressly authorized by Conn. Gen. Stat.

the bonus depreciation modification to his or her

§12-701(a)(20) in connection with the gain recognized

federal adjusted gross income in computing his or her

from the sale or other disposition of such property. 2001

Connecticut adjusted gross income for the individual’s

Conn. Pub. Acts 6, §36 (June. Spec. Sess.).)

taxable year.

Reporting the Bonus Depreciation Modification:

Where the Taxable Year is Other Than the

For taxable years beginning on or after January 1,

Calendar Year:

A pass-through entity that owns

2002, a new modification for the addback of the

property for which the bonus depreciation allowance is

additional 30% bonus depreciation will be included on

deducted for federal income tax purposes and whose

the following Connecticut tax forms: Form CT-1040,

taxable year is other than the calendar year is required

Schedule 1; Form CT-1040NR/PY, Schedule 1; Form

for its 2001 taxable year to pass-through the addition

CT-1120SI, Part VI; and Form CT-1065, Schedule D.

modification to each individual who is its shareholder,

Bonus Depreciation Does Not Apply to Taxable

partner or member, so that the individual is able to add

Years of Individuals Prior to the 2002 Taxable Year:

the bonus depreciation modification to his or her

Taxpayers are not permitted or required to file 2001

federal adjusted gross income in computing his or her

amended Connecticut income tax returns to report the

Connecticut adjusted gross income for the individual’s

addition modification for property placed in service

2002 taxable year.

If a pass-through entity owns

after September 10, 2001, and prior to January 1, 2002,

property for which the bonus depreciation allowance is

because the law is applicable only to taxable years of

deducted for federal income tax purposes in a

individuals beginning on or after January 1, 2002.

succeeding taxable year, it is required for its

succeeding taxable year to pass-through the addition

Effect of Bonus Depreciation on Other Entities:

modification to each individual who is its shareholder,

C Corporations:

The treatment of the additional

partner, or member, so that the individual is able to

first-year bonus depreciation allowance for corporation

add the bonus depreciation modification to his or her

business tax purposes differs from the treatment for

federal adjusted gross income in computing his or her

income tax purposes. For more information on the

Connecticut adjusted gross income for the individual’s

treatment of bonus depreciation for corporation

taxable year during which the pass-through entity’s

business tax purposes, see Special Notice 2002(10),

succeeding taxable year ends.

Bonus Depreciation for Connecticut Corporation

Conn. Gen. Stat. §12-701(a)(20)(A), as amended by

Business Tax Purposes.

2002 Conn. Pub. Acts 1, §77 (May 9 Spec. Sess.),

Trusts and Estates:

A trust or estate that owns

applicable to taxable years beginning on or after

property for which the bonus depreciation allowance is

January 1, 2002.

deducted for federal income tax purposes is not

required to add the bonus depreciation allowance to its

Nonresident Lottery Winnings: Nonresidents are

federal taxable income in computing its Connecticut

now subject to Connecticut income tax on their

taxable income. Consequently, Form CT-1041 will

winnings from a wager placed in a lottery conducted

not have an addback modification.

by the Connecticut Lottery Corporation, if the

Pass-through Entities:

proceeds are required to be reported by the

Where the Taxable Year is the Calendar Year: A

Connecticut Lottery Corporation to the Internal

pass-through entity (such as an S corporation,

Revenue Service (reportable Connecticut Lottery

partnership, or limited liability company that is treated

winnings).

The Connecticut Lottery Corporation is

Page 2 of 3

Form Sn 2002(12) - 2002 Legislation Affecting The Connecticut Income Tax Page 2

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