Ohio corporate taxpayers wishing to elect an IRC conformity date other than March 30, 2018, should follow recently updated guidance, which includes detailed instructions for making the election prior to filing a tax return. This new guidance reverses a previous version that allowed taxpayers to include the conformity election with their filed returns.
Taxpayers who followed the previous guidance on or before Oct. 16, 2018, are not affected by the updated guidance; all other taxpayers must conform to the updated guidance. However, taxpayers who filed returns prior to June 25, 2018 (the date the original guidance was issued) and who intended to conform to the most recent version of the IRC must submit their requests as soon as possible.
Although most business entities in Ohio are subject to the Commercial Activity Tax (as measured by gross, not net, income and therefore generally unaffected by many federal reform provisions) taxpayers, particularly individual taxpayers, that still look to federal taxable income for purposes of calculating their state taxable income should take notice.
Ohio passed its conformity bill back in March, in response to Pub. L. No. 115-97, which specifically decouples from federal bonus depreciation and expensing provisions, and instead requires taxpayers add back five-sixths of the federal bonus depreciation claimed for that taxable year and deduct one-fifth of the disallowed amount over the five succeeding years.
Ohio generally conforms to the federal tax treatment of net operating losses (NOLs), however NOL carrybacks or carryforwards are not permitted to the extent the corresponding carryback or carryforward resulted from a depreciation deduction under the federal bonus depreciation and expensing provisions. Also important to note is that the 20 percent 199A deduction available for certain PTE owners at the federal level won’t affect a taxpayer’s Ohio income tax liability because the deduction does not apply to federal adjusted gross income.
For more information on the impact of Pub. L. No. 115-97, examine Bloomberg Tax’s Tax Reform Roadmap, showing detailed comparisons between pre-reform law and impending changes, with pertinent cites attached.
Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: Why would Ohio taxpayers be better off electing an earlier conformity date? What provisions of federal tax reform will negatively impact Ohio taxpayers?
Get a free trial to Bloomberg Tax: State, a comprehensive research service that provides deep analysis and time-saving practice tools to help practitioners make well-informed decisions.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)