35 Miss. Code R. § 3-05-04-101

Current through May 31, 2024

Section 35-3-05-04-101

The first year thirty-percent (30%) "bonus" depreciation as set forth in the Federal "Job Creation and Worker Assistance Act of 2002", H.R. 3090, does not constitute a reasonable allowance for the exhaustion, wear, and tear and obsolescence of the property in regard to which it is taken. This thirty-percent (30%) "bonus" depreciation is therefore not an allowable deduction for depreciation under Section 27-7-17(1)(f). Mississippi will not follow the Federal guidelines in regard to this "bonus" depreciation since such "bonus" depreciation is contrary to the context and intent of Mississippi Law. If such "bonus" depreciation is used for federal income tax reporting purposes, the tax basis of property will be different for Federal and State until such property is fully depreciated.

1. If such "bonus" depreciation is used for federal income tax reporting, each year an adjustment must be made for reporting depreciation to this State so as to reflect an amount of depreciation that would have otherwise been allowed using Federal depreciation guidelines other than that contained in H.R.3090 "Job Creation and Worker Assistance Act of 2002."

2. If it is determined "bonus" depreciation was taken in any year and the proper State adjustment was not made in that same year, all allowances for depreciation will be denied on all tax returns that are within the statute of limitations until there is a full recovery to this State of excess depreciation deductions. When the Commissioner makes such adjustment, there shall be assessed, in addition to interest, all penalties on any underpayment of income tax to the extent provided by law.

35 Miss. Code. R. § 3-05-04-101