Navigate Up
Sign In
Last Updated: 1/10/2018

Federal Bonus Depreciation Subtraction

If you had an addition for federal bonus depreciation on your Minnesota tax return for 2012 or later, you may subtract 20 percent of that amount from taxable income on your 2017 return.

To claim this subtraction, you must meet both of these requirements:

  • You deducted bonus depreciation on your federal tax return in one or more of the five previous years.
  • You added back 80 percent of that deduction on your Minnesota return in the same year.

If you qualify, complete Schedule M1M, Income Tax Additions and Subtractions. Include the schedule when filing your Minnesota tax return (Form M1, Individual Income Tax).

Disposition of Asset

If you sell or dispose of an asset before the five-year subtraction period ends, you can’t take the remainder of the subtraction in the year of sale. Instead, you must continue with the five-year schedule.

Note: Do not adjust your federal gain or loss on the disposition of the asset due to the Minnesota treatment of the bonus depreciation.

Converting from a C corporation to an S corporation

Minnesota allows owners of an S corporation that converted from a C corporation to claim prorated subtractions of the predecessor’s remaining bonus depreciation subtractions.

For more information:

Go to “Minnesota Treatment of Federal Bonus Depreciation” on the state Legislature’s website.

View the statute, M.S. 290.0132, subd. 9.