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IOWA POSTS EXPLANATION OF EXASPERATING DEPRECIATION STANCE

November 04, 2004

The Iowa Department of Revenue has put a Q&A-format discussion of the new Iowa bonus depreciation and Section 179 rules on their website. It has a good explanation of how they (wrongly, in our view) apply the law coupling federal and Iowa depreciation rules for new property placed in service after May 5, 2003.

Unfortunately, they have failed to permit taxpayers to make the change on 2004 returns. This means many taxpayers will lose the benefit of the depreciation changes because they will not be able to justify the cost of filing amended 2003 returns.

Many taxpayers are waiting to see if the legislature will help when they return in January. Some legislators are sympathetic to taxpayers on this issue. Still, it is uncertain whether the legislature will act. With the Iowa Senate apparently split evenly between Democrats and Republicans, it's not clear whether they will be able to agree on when to eat lunch, let alone any legislation.

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