Im­prov­ing state com­pet­i­tive­ness

The Citizens' Voice - - Editorial -

Edi­tor: Bonus de­pre­ci­a­tion came into the spot­light with the Tax Cuts and Jobs Act of 2017. The law ex­panded bonus de­pre­ci­a­tion to 100 per­cent for busi­ness as­sets placed in ser­vice be­tween Sept. 28, 2017, and Dec. 31, 2022, but the Penn­syl­va­nia Depart­ment of Rev­enue is not al­low­ing the de­duc­tion.

Penn­syl­va­nia is the only state that fully dis­al­lows de­pre­ci­a­tion on cer­tain as­sets due to Cor­po­ra­tion Tax Bul­letin 2017-02, which was re­cently is­sued by the depart­ment. There­fore, cor­po­ra­tions in Penn­syl­va­nia will not get to deduct on state taxes the added-back bonus de­pre­ci­a­tion un­til the as­set is sold or oth­er­wise dis­posed.

Penn­syl­va­nia In­sti­tute of Cer­ti­fied Pub­lic Ac­coun­tants (PICPA) mem­bers be­lieve that al­low­ing bonus de­pre­ci­a­tion de­duc­tions for Penn­syl­va­nia busi­nesses is crit­i­cal to the growth and pros­per­ity of the state econ­omy. Cor­po­rate tax­pay­ers will see an in­crease in their tax li­a­bil­i­ties un­til the as­sets are sold, which could put Penn­syl­va­nia cor­po­ra­tions at a com­pet­i­tive dis­ad­van­tage for grow­ing their busi­nesses. And if busi­nesses aren’t grow­ing, it’s likely that the state econ­omy isn’t ei­ther.

Bonus de­pre­ci­a­tion is a method of ac­cel­er­ated de­pre­ci­a­tion that al­lows cor­po­ra­tions to im­me­di­ately deduct an ad­di­tional per­cent­age of the pur­chase price of el­i­gi­ble busi­ness as­sets in the year in which those as­sets are placed in ser­vice (not just when the as­set is sold or oth­er­wise dis­posed). It is of­fered to en­cour­age cor­po­ra­tions to in­vest in ad­di­tional cap­i­tal as­sets.

PICPA sup­ports Sen­ate Bill 1056 — and it sup­ported House Bill 2017, which was ap­proved by a state House vote of 183-4 — which would align fed­eral and state de­pre­ci­a­tion rules. Tell your state rep­re­sen­ta­tive that you sup­port busi­ness-friendly leg­is­la­tion too.

Joseph E. Seib­ert, CPA, PICPA pres­i­dent HARRISBURG

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