Federal Bonus Depreciation Subtraction

If you had an addition for federal bonus depreciation on your Minnesota tax return for 2014 or later, you may subtract 20% of that amount from taxable income on your 2020 return.

Who Qualifies

Both of these must be true:

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

Claim the Subtraction

Complete Schedule M1M, Income Tax Additions and Subtractions. Include Schedule M1M when filing Form M1, Individual Income Tax.

Special Circumstances

Sell or Dispose of Asset During the Five-Year Subtraction Period

You may not take the remainder of the subtraction in the year of sale. Instead, you must continue with the five-year schedule.

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

Own an S Corporation That Converted From a C Corporation

You may claim prorated subtractions of the predecessor’s remaining bonus depreciation subtractions.

For more information on this subtraction:

• See Minnesota Statute 290.0132, subdivision 9
• See Minnesota Treatment of Federal Bonus Depreciation on the state Legislature website