Multi-State Bonus Depreciation

[sidekickin]

If any of you have read my previous questions, I have farm equipment located in Oklahoma that I receive rental income on.  It was put in service this year.  I am an Ohio resident.  The equipment is classified as a 5-year property for depreciation purposes and it is eligible for bonus depreciation.  The issue is that while Oklahoma fully conforms to IRS bonus depreciation rules, Ohio does not.  Ohio requires addback of the bonus depreciation amounts.  This seems to create a messy tax situation when doing my Ohio and Oklahoma tax returns.  I'm assuming that while I won't have Oklahoma taxable income this first year if I take bonus depreciation, I will then be fully taxed on the Oklahoma income in Ohio since Ohio doesn't conform to bonus depreciation.  Am I correct in assuming this?  If so, would I just be better off not taking bonus depreciation at all and just do straight-line depreciation over 5 years?  Is there anything else to consider with this situation that I might be missing?

[Critter-3 · Accepted solution]

No ... you have the situation well in hand ... the option to take bonus depreciation or not is totally up to you.  Ohio is the crux  in this scenario  so complete the returns using all the options then choose the one that works best for you.