Nebraska Enhanced Section 179 Expense Addback

For bonus depreciation added-back in tax years 2000 through 2002, twenty percent (20%) of the total amount may be subtracted in the first taxable year beginning or deemed to begin on or after January 1, 2005, and twenty percent in each of the four following taxable years.

For bonus depreciation and enhanced section 179 expense deduction add-back in tax years 2003 through 2005, twenty percent (20%) of the total amount may be subtracted in the first taxable year beginning or deemed to begin on or after January 1, 2006, and twenty percent (20%) in each of the four following taxable years.

Partnerships and S corporations cannot take a deduction for any bonus depreciation or enhanced section 179 expense deduction previously added-back. Any such add-back was required to facilitate the calculation of withholding for nonresident individual partners or shareholders.

A partner or shareholder, which added-back bonus depreciation or enhanced section 179 expense deduction on its Nebraska income tax return, may recover such amount(s) as indicated in the above "Recovery" section. A nonresident individual partner or shareholder who chose to have the partnership or S corporation withhold on his or her Nebraska income and who did not file a Nebraska Individual Income Tax Return for such year(s) may recover the bonus depreciation and enhanced section 179 expense deduction previously added-back by the entity in calculating his or her Nebraska income and withholding. To recover the amount(s) previously added-back, the nonresident individual must file a Nebraska Individual Income Tax Return for each recovery year. The amount recoverable in each tax year is addressed in the above "Recovery" section.

Nebraska's treatment of disposed assets. A taxpayer which sells or otherwise disposes of an asset on which it previously added back bonus depreciation or Section 179 expense should not compute a separate basis for such asset for Nebraska tax purposes. Instead, Nebraska recognizes the federal basis. The bonus depreciation and enhanced Section 179 expense deduction on such assets must be recovered in the same manner and at the same time as the bonus depreciation and enhanced Section 179 expense deduction on all other assets.

Taxpayers who cease to do business in Nebraska. A corporation which goes out of business or ceases to do business in Nebraska may only recover twenty percent (20%) of the bonus depreciation and enhanced Section 179 expense deduction in each recovery year in which the corporation is "active" in this state. Any remaining bonus depreciation or enhanced Section 179 expense deduction cannot be reclaimed. In addition, individual taxpayers who no longer have a filing requirement in this state may only recover bonus depreciation or enhanced Section 179 expense deductions up to and including the last year filed.

Bonus Depreciation and Enhanced Section 179 Expense Deduction for Nebraska Income Tax Purposes | Nebraska Department of Revenue