NE 99-08-2 All Income Tax 2008-10-06

Does Nebraska require taxpayers to add back the bonus depreciation or enhanced Section 179 expense they claimed under the federal Economic Stimulus Act of 2008?

Short answer: No. Revenue Ruling 99-08-2 concludes that a taxpayer who claimed bonus depreciation or the enhanced Section 179 expense deduction under the federal Economic Stimulus Act of 2008 is NOT required to add back any portion of it for Nebraska income tax purposes. Nebraska income tax starts from federal adjusted gross income (for individuals) or federal taxable income (for corporations and fiduciaries), and Neb. Rev. Stat. § 77-2716 lists the required Nebraska modifications -- none of which adjust for the 2008 stimulus-act bonus depreciation or enhanced Section 179 expense. Because the Nebraska Legislature chose not to 'decouple' from federal law on these items, the federal deduction flows through to the Nebraska return unchanged.

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This page answers the general question as of 2008. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

To fight the 2008 recession, Congress passed the Economic Stimulus Act of 2008, which let businesses claim extra first-year "bonus" depreciation and a larger Section 179 expensing deduction on newly purchased equipment. That accelerated the federal write-off. The question for Nebraska filers was whether the state would "decouple" from these federal breaks -- that is, require you to add part of the deduction back on the Nebraska return, as some states did.

The answer is no. Nebraska starts its income tax from your federal adjusted gross income (individuals) or federal taxable income (corporations and fiduciaries), then applies only the specific modifications listed in Neb. Rev. Stat. § 77-2716. That statute does not contain any adjustment for the 2008 stimulus-act bonus depreciation or enhanced Section 179 expense. The ruling states plainly that the Legislature chose not to decouple from federal law on these items, so the full federal deduction carries through to Nebraska with no add-back.

What this means for you

Businesses and individuals that claimed the 2008 federal deductions

If you took bonus depreciation or the enhanced Section 179 deduction on equipment placed in service under the Economic Stimulus Act of 2008, you do not make any separate Nebraska add-back for it. Your Nebraska starting point (federal AGI or federal taxable income) already reflects the deduction, and § 77-2716 leaves it in place.

Why this differs from some other states

Several states passed their own laws to "decouple" and claw back part of the federal bonus depreciation. Nebraska did not, so no special Nebraska depreciation schedule or add-back line applies to these 2008 items. (Note this ruling addresses the 2008 stimulus act; different federal acts in other years have their own Nebraska treatment -- confirm the rule for the specific year and law you are using.)

Common questions

Q: Do I have to add back any of my 2008 bonus depreciation on my Nebraska return?
A: No. The ruling concludes no portion of the bonus depreciation or enhanced Section 179 expense claimed under the federal Economic Stimulus Act of 2008 must be added back for Nebraska.

Q: Why doesn't Nebraska require an add-back when some states do?
A: Nebraska's income tax is built on federal AGI/FTI adjusted only by the modifications in Neb. Rev. Stat. § 77-2716, and the Legislature chose not to add a modification decoupling from these federal deductions.

Q: Does this apply to both individuals and businesses?
A: Yes. It covers individuals (federal AGI), and corporations and fiduciaries (federal taxable income) alike -- none is required to make the add-back.

Citations and references

Neb. Rev. Stat. § 77-2716 -- lists the modifications to federal AGI and federal taxable income for Nebraska income tax purposes; contains no adjustment requiring an add-back of the federal Economic Stimulus Act of 2008 bonus depreciation or enhanced Section 179 expense.
Federal Economic Stimulus Act of 2008 -- the federal law providing the bonus depreciation and enhanced Section 179 expensing at issue.

Source

Original ruling text

Revenue Ruling 99-08-2
All Nebraska Income Taxes

October 6, 2008

federal economic stimulus act of 2008
Bonus Depreciation and Enhanced Section 179 Expense DeductionS
for nebraska income tax purposes
Issue:
Is a taxpayer that claimed bonus depreciation or enhanced Section 179 expense under the federal
Economic Stimulus Act of 2008 required to modify its Nebraska income to add back a portion of
such bonus depreciation or enhanced Section 179 expense?
Conclusion:
No, a taxpayer is not required to add back any portion of the bonus depreciation or enhanced
Section 179 expense claimed under the federal Economic Stimulus Act of 2008 for Nebraska tax
purposes.
Analysis:
Tax is imposed on an individual’s federal adjusted gross income (AGI) and on a corporation’s
or fiduciary’s federal taxable income (FTI), which may be modified for Nebraska income tax
purposes. Neb. Rev. Stat. §77-2716 requires modifications to AGI and FTI but does not require any
adjustments to AGI or FTI for bonus depreciation or enhanced Section 179 expense claimed under
the federal Economic Stimulus Act of 2008. The Nebraska Legislature chose not to decouple from
federal law relating to adjustments to AGI or FTI for bonus depreciation or enhanced Section 179
expense claimed under the federal Economic Stimulus Act of 2008.
APPROVED:

Douglas A. Ewald
Tax Commissioner
October 6, 2008

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

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