It's unfortunate that I can't take the bonus depreciation due to Ohio's rules. With Ohio not conforming, due to their rules, if I show no taxable income on my federal return, I must add back 100% of the bonus depreciation during the first year the equipment is placed in service. Meaning, I would have no depreciation deduction at all for Ohio during the first year. I would show no taxable income for federal or Oklahoma due to the bonus depreciation, BUT I would be fully taxed in Ohio since I'm not paying anything in Oklahoma taxes to credit my Ohio taxes. Additionally, in the following years, Ohio only allows a 1/6 depreciation allowance each year over 6 years to depreciate the property if I would use bonus depreciation. The equipment is only 5 year property so it would take me longer to depreciate it in Ohio with bonus depreciation than just taking straight-line depreciation for federal, OK, and OH. I wanted the bonus depreciation to free up additional money to purchase new equipment now, but I'm not going to pay Ohio taxes now on current equipment being depreciated to get this additional money. I doesn't make sense to me that bonus depreciation is 100% or nothing. It would make sense to have the option to take any amount of bonus depreciation up to 100% and use regular MACRS straight-line depreciation on the rest.. The bonus depreciation is a great idea in theory, but only if the states involved also conform.
With all that being said, I will probably do straight-line depreciation on the equipment. It is not going to be placed in service until mid-November, but I may not be getting the first lease payment until January. Do I still claim depreciation this year even though I won't receive any payment until January? I am currently not in Oklahoma's tax system at all. Do I still file a return with Oklahoma for 2021 to establish depreciation even though I will have zero Oklahoma sourced income this year?
