HI State Tax Question: advice, please. (2015, rental, appliances)

[Maverick1963]

For 2015 federal tax return, I am applying De Minimis Safe Harbor and will put smaller $ like appliances for my rental property in the expense, not in the appreciation. Taxturbo is very clear about this treatment.

https://ttlc.intuit.com/questions/28...arbor-election

Now would anyone know about this De Minimis Safe Harbor in terms of Hawaii tax return? HI does not allow the first year bonus 50% depreciation. So state tax rules must be applied in preparing Form 4562 for HI. I am wondering if those treated as expenses in the federal tax return, as mentioned above, should go to appreciation.

I would appreciate any advice.

Mahalo.

[whtviper1]

I don't know the answer to your specific question, but as a property owner I can tell you it is worth the small price to have a professional do your taxes.

[hotzcatz]

Outa my realm, we give the TurboTax and Quicken data to tax people and they fill in the lines. Generally they find enough deductions that the refund increases enough to pay for their services so it's not even an additional expense.

[ScottStielow]

I have my taxes done by tax people also. I always get enough deductions to get returns for the year.

[Maverick1963]

Thanks for your reply. I am non-resident and have no other income. I have used CPA for some time and found that my tax return is rather simple. So I decided to use TaxAct but DMSH for HI is the only issue I have. I will somehow get the answer. Mahalo.

[hotzcatz]

You can always ask the IRS, they'd know.

[Maverick1963]

hotzcatz, mahalo. I emailed my question to Hawaii Department of Taxation several days ago. I am waiting for their reply.

[Maverick1963]

Regarding depreciation, I found the explanation in N-11 instructions for resident individuals.
It's clear that Form 4562 needs to be prepared, following Hawaii State guidelines.

<Depreciation and Gain Adjustments>
Note: Hawaii did not adopt the federal provisions
for bonus depreciation, increased
IRC section 179 deduction (Hawaii limit is
$25,000), and inclusion of off-the-shelf computer
software as property qualifying for the
IRC section 179 deduction. If the bonus depreciation,
increased IRC section 179 deduction,
or IRC section 179 deduction for off-the-shelf
computer software is claimed for federal tax
purposes, you must: (a) complete a federal
Form 4562 for Hawaii tax purposes, (b) attach
the completed federal Form 4562 to the
Hawaii tax return, (c) make the necessary
adjustments to the Hawaii tax return for the
depreciation difference between federal and
Hawaii on line d of the Hawaii Additions
Worksheet on page 37, and (d) attach to the
Hawaii tax return any worksheet showing the
computation of the adjustments. You must
also keep records of the differences in the asset’s
depreciable basis for federal and Hawaii
tax purposes.

[Maverick1963]

I got a reply from Hawaii Department of Taxation. Hawaii State adopted De Minimis Safe Harbor. If you want to know about this IRS guideline, please go to :
https://www.irs.gov/Businesses/Small...al-Regulations

Following is the reply from the authority.

Hawaii conforms to Internal Revenue Code (IRC) sections 162 and 263. Therefore, Hawaii has adopted the de minimis safe harbor election for 2014 and 2015.

To check if Hawaii conforms to an IRC section, you should first check section 235-2.3(b), HRS, to see if the IRC section is listed.

If it is listed, Hawaii does not conform to the IRC section.
If the IRC section is not listed in section 235-2.3(b), HRS, you should then check sections 235-2.4 and 235-2.45, HRS, since these sections list the IRC sections that Hawaii conforms to, but with modifications.
If the IRC section is not listed in sections 235-2.3(b), 235-2.4, or 235-2.45, HRS, then Hawaii conforms to the IRC section with no modifications.

Hawaii doesn't have instructions relating to the de minimis safe harbor election, so we would generally follow the federal instructions. If the IRS requires a statement to be attached to the tax return, then the same statement (modified for Hawaii income tax purposes) should be attached to the Hawaii tax return.

Technical Section

Please note that the views expressed herein are informal opinions for general discussion purposes, subject to change without notice, and have no binding effect on the Department of Taxation. See Tax Information Release No. 2009-01 for more information.