Q&A with the Pennsylvania Department of Revenue

How will the Department require taxpayers to handle the depreciation schedule adjustment for Pennsylvania income tax purposes?

Sep 30, 2013

Through the implementation of the Tangible Property Regulations as required by the Internal Revenue Service, changes to the federal depreciation schedules will be made to conform to the new regulations by the end of the 2014 tax reporting year. Any adjustment to the depreciation schedules for the taxpayer related to this change will be reflected as either a positive or negative 481 adjustment on the taxpayer’s federal income tax return. How will the Department require taxpayers to handle this adjustment for Pennsylvania income tax purposes for C-Corporations, S-Corporations, Partnership, Individuals and Trust or Estates? 


For Corporation taxes, PA taxable income begins with federal taxable income with adjustments made for items specified in statute. Currently, there is no statutory authority to adjust taxable income for this item. In short, we follow the federal statutes and regulations. Please refer to Corporation Tax Bulletin 2011-01 for information on Sec. 481 adjustments and Bonus Depreciation.  

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These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.