Philadelphia Will Follow Pennsylvania on Bonus Depreciation
May 11, 2018
The City of Philadelphia has aligned its position with the Commonwealth of Pennsylvania’s Corporation Tax Bulletin 2017-02 — Disallowance and Recovery of 100 Percent Depreciation Under IRC Section 168(k).
The federal Tax Cuts and Jobs Act of 2017 expanded bonus depreciation to 100 percent for assets placed in service between Sept. 28, 2017, and Dec. 31, 2022. On Dec. 22, 2017, the Pennsylvania Department of Revenue (DOR) issued Corporation Tax Bulletin 2017-02 regarding the disallowance and recovery of 100-percent depreciation under Internal Revenue Code (IRC) Section 168(k).
Philadelphia will adhere to the policy of DOR’s Corporation Tax Bulletin 2017-02 for the purposes of calculating the City’s Business Income & Receipts Tax (BIRT) and Net Profits Tax (NPT). As a result, the City requires the amount of a 100-percent deduction under IRC 168(k) to be added back to taxable income and provides no additional mechanism for cost recovery with respect to the qualified property.