We provide here a written summary of answers provided by the Department of Revenue to the committee at periodic question and answer sessions. 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 a specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.
Q&A with the Pennsylvania Department of Revenue
Scenario: A federal bonus depreciation adjustment was partially disallowed for a prior year during an IRS audit of a corporation
A federal bonus depreciation adjustment was partially disallowed for a prior year during an IRS audit of a corporation. The corporation had to add the partially disallowed bonus depreciation back through an IRC sec. 481 adjustment on its 2015 federal return. Should adjustments of the PA bonus modifications resulting from the IRS disallowance also be reflected on the current year RCT-101 or a RCT-128C? How should they be reported so as to not trigger an adjustment on desk review?
This is a change to federal taxable income which is result of an audit. The change would be reported on RCT-128. When filing the Report of Change, you must include an explanation of the change and a reconciliation of the changes reported to the taxable income on the RCT-128 and the income adjusted by the IRS.