On December 22, 2017, the Pennsylvania Department of Revenue (“Department”) issued Corporation Tax Bulletin 2017-02, which announced that Pennsylvania will no longer allow the 100% deduction for depreciation of qualified property under IRC § 168(k) for property placed in service after September 27, 2017.  Accordingly, any taxpayers who take advantage of the 100% bonus deduction for federal purposes must, when computing its Pennsylvania corporate net income tax, add the 100% bonus deduction to income.  Additionally, the Bulletin notes that the taxpayer may take an additional deduction when the qualified property is sold or otherwise disposed of during a taxable year to the extent the amount of depreciation claimed has not been fully recovered.

On January 22, 2018, Representative Francis Ryan, realizing that the Department’s approach to bonus depreciation is not necessarily business friendly at a time when Pennsylvania is trying everything possible to attract businesses to invest in Pennsylvania, introduced House Bill 2017.  That bill changes the definition of taxable income to include the deduction for depreciation of qualified property equal to the depreciation on the qualified property for the taxable year and determined in accordance with sections 167 and 168 of the Internal Revenue Code of 1986 (26 U.S.C. §§ 167 and 168) without regard to section 168(k) of the Internal Revenue Code of 1986 (26 U.S.C. § 168(k)).

If you are in favor of House Bill 2017, please contact Representative Francis Ryan and let him know.  We will follow the progress of that bill and update you as necessary.