Form Nyc 399Z – Fill Out and Use This PDF

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ForCALENDARYEAR________orFISCALYEARbeginning_________________________ andending_________________________

mentore)

OR

SS

SCHEDULE B

Disposition adjustment

Attach rider if necessary

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00622191

GENERAL INFORMATION

The NewYork CityAdministrative Code, as amended pursuant to the authority granted under Part G of Chapter 93 of the Laws of 2002, limits the depreciation deduction for "qualified prop- erty," other than "qualified Resurgence Zone property," to the deduction that would have been allowed for such property under IRC §167 had the property been acquired by the tax- payer on September 10, 2001, and therefore, not been eligible for the enhanced deductions allowed by the IRC §168(k). "Qualified Resurgence Zone property" is "qualified property" used substantially in the Resurgence Zone in connection with the active conduct of a trade or business where the original use began with the taxpayer in the Resurgence Zone after Sep- tember 10, 2001. The Resurgence Zone (defined in sections 11-507(22), 11-602.8(m) and 11-641(p) of theAdministrative Code) generally encompasses the area in Manhattan between Canal Street and Houston Street. The Administrative Code also requires appropriate adjustments to the amount of any

gain or loss included in entire net income or unincorporated business entire net income upon the disposition of any property for which the federal and New York City depreciation deduc- tions differ.

NOTE

Deductions for "qualified Resurgence Zone property," are not affected by the above decoupling provisions other than for cer- tain sport utility vehicles. The additional first-year expense deductions under IRC §179 also are not affected other than for certain sport utility vehicles. See below.

NOTE

Any exceptions to the decoupling provisions provided in the Administrative Code for Qualified New York Liberty Zone property or Qualified New York Liberty Zone leasehold im- provements as defined in IRC §1400L have expired.

Economic StimulusAct of 2008 and

Other Federal Legislation Effecting Depre-

ciation.

Section 102 of the Economic Stimulus Act of 2008, Pub.L. No. 110-185, 122 Stat. 613 (Feb. 13, 2008) amended IRC section 168(k). As amended, section 168(k)(1)(A) provided a 50- percent additional first year depreciation de- duction for certain new property acquired by the taxpayer after December 31, 2007, and be- fore January 1, 2009 (in the case of certain property, before January 1, 2010), so long as no written binding contract for the acquisition of the property existed prior to January 1, 2008. Since then, the bonus depreciation provisions have been extended with certain modifications by subsequent federal legislation.

In 2015, Section 143 of the Protecting Ameri- cans from Tax Hikes Act of 2015, Pub. L. No. 114-113, Div Q (December 18, 2015) (“2015 PATH Act”) extended bonus depreciation so that it was available for property acquired and placed in service during 2015-2019; bonus de- preciation was extended through 2020 for cer- tain property with a longer production period. Under the 2015 PATH Act, the bonus depreci- ation is 50% for property placed in service dur- ing 2015-2017, 40% for property placed in service during 2018, and 30% for property placed in service during 2019.

Most recently, section 13201(b) of theTax Cuts and Jobs Act of 2017 (“TCJA”) extended the bonus depreciation deduction to cover property placedinservicebeforeJanuary1,2027(except for aircraft and log-production period property had to be placed into service before January 1, 2028.) Pursuant to section 13201(a) of the TCJA, for property placed in service after Sep- tember 27, 2017, the bonus depreciation rate was raised to 100% with the phase-down to begin in 2023. The taxpayer can elect to apply a 50% depreciation rate for property placed in service in the taxpayer’s first tax year ending after September 27, 2017. The phase-down of the bonus depreciation enacted under the 2015 PATH is still applicable for property acquired before September 28, 2017. Thus, for property acquired before September 28, 2017 and placed in service in service in 2018, the bonus depre- ciation is 40% and 30% for property placed in service in 2019 with no bonus depreciation for property placed in service after 2019.

Under the TCJA, the first year depreciation limit increase of $8,000 for passenger automo- biles under §280(F)(a)(1)(A) is extended to in- clude automobiles placed in service on or before December 31, 2026. Prior to that, in order to qualify for the $8,000 increase in bonus depreciation, the passenger automobile would have had to been placed into service on or before December 31, 2019. This extension of the placed in service deadline only applies

to automobiles acquired on or after September 28, 2017. However, if the passenger automo- biles was acquired before September 28, 2018, the first year additional depreciation is phased down to $6,400 in the case of an automobile placed in service during 2018 and to $4,800 in the case of automobile placed in service during 2019.

However, as discussed above the Administra- tive Code limits the depreciation for “qualified property” other than “Qualified Resurgence Zone property” to the deduction that would have been allowed for such property had the property been acquired by the taxpayer on Sep- tember 10, 2001, and therefore, except for Qualified Resurgence Zone property, as de- fined in the Administrative Code, the City has decoupled from the federal bonus depreciation provision. The Administrative Code also re- quires appropriate adjustments to the amount of any gain or loss included in entire net in- come or unincorporated business entire net in- come upon the disposition of any property for which the federal and New York City depreci- ation deductions differ.

Special Provisions for Certain Sport Utility

Vehicles for Tax Periods Beginning on or

AfterJanuary 1, 2004

Under Section 280F of the Internal Revenue Code, the federal depreciation deduction under sections 167 and 168 of the Internal Revenue Code and the expense in lieu of depreciation deduction under section 179 of the Internal Revenue Code for certain passenger automo- biles are generally limited to the amounts pro- vided in section 280F(a)(1) of the Internal Revenue Code. Congress passed legislation that limits the amount deductible for certain sport utility vehicles. That legislation does not affect the modifications required for City tax purposes described below. For tax years begin- ning on or after January 1, 2004, in determining ENI of taxpayers, other than eligible farmers (for purposes of the New York State farmers' school tax credit), the amount allowed as a de- duction for NewYork City purposes (for either depreciation or expense in lieu of depreciation) with respect to a sport utility vehicle (SUV) that is NOT a passenger automobile for pur- poses of section 280F(d)(5) of the Internal Rev- enue Code is limited to the amount that would be allowed under section 280F(a)(1) of the In- ternal Revenue Code if the vehicle were a pas- senger automobile as defined in section 280F(d)(5). For all SUVs subject to these spe- cial provisions, the amount allowed as a de- duction is calculated as of the date the SUV was actually placed in service and not as of September 10, 2001. (The date that is applica- ble to qualified property, other than qualified Resurgence Zone property and New York Lib- erty Zone property, under the general post- 9/11/01 decoupling provisions).

On the disposition of an SUV subject to this limitation, the amount of any gain or loss in- cluded in ENI must be adjusted to reflect the limited deductions allowed for City purposes under this provision. See Finance Memoran- dum 21-1, “Application of IRC §280F Limits to Sport Utility Vehicles”.

Coordination of Federal depreciation and City decoupling provisions with respect to SUVs

As discussed above, the Economic Stimulus Act of 2008 amended IRC section 168(k) to provide bonus depreciation for certain property acquired in 2008. The Act also amended §168(k)(2)(F)(i) to increase the first year de- preciation allowed under §280F(a)(1)(A) by $8,000 for passenger automobiles to which the 50-percent additional first year depreciation de- duction applies. Subsequent federal legislation also extended and expanded the first year bonus depreciation provisions as described above. Consequently, the years in which the first year depreciation for passenger automo- biles under §280F(a)(1)(A) is increased by $8,000 have also been extended. However, the Economic Stimulus Act and the subsequent federal legislation described above will only af- fect the applicable City SUV limits with re- spect to the recovery of costs of Qualified Resurgence Zone property under the Unincor- porated BusinessTax (UBT) and the BankTax. Pursuant to the generally applicable decoupling provisions discussed on pages 2 and 3 of this form, bonus depreciation under IRC 168(k) is only available for Qualified Resurgence Zone property. For GCT and the Business Corpora- tion Tax purposes, SUVs cannot qualify as Qualified Resurgence Zone property. See Ad- ministrative Code §§ 11-602(8)(k), 11- 652(8)(k), 11-602(8)(o) and 11-652(8)(o). Therefore, under the GCT and the Business Corporation Tax no bonus depreciation is per- mitted for SUVs. For UBT and Bank Tax pur- poses, with respect to SUV’s placed into service after December 31, 2007 and before January 1, 2027, bonus depreciation is avail- able only for SUVs that are “Qualified Resur- gence Zone property.” See Finance Memorandum 21-1 for more information.

WHO MUSTUSETHIS FORM

A corporation or unincorporated business that files or is included in a

●NYC-3A, NYC-3L or NYC-4S General Business Corporations

●NYC-202, NYC-202EIN or NYC-204 Un- incorporated Businesses

●NYC-1 Banking Corporations

●NYC-2, NYC-2Aor NYC-2S Business Cor- porations

must use Form NYC-399Z if:

1)it claims for federal purposes a deprecia- tion deduction for "qualified property" pursuant to the Economic StimulusAct of 2008, or subsequent federal legislation including the 2015 PATH Act or TCJA other than “Qualified Resurgence Zone property.”

2)it is not an eligible farmer (for purposes of the NewYork State farmers' school tax credit) and it claims for federal purposes a depreciation deduction or an expense deduction in lieu of depreciation deduc- tion under section 179 of the Internal Revenue Code for an SUV that is NOT a passenger automobile for purposes of sec- tion 280F(d)(5) of the Internal Revenue Code (regardless of whether the SUV is “qualified property” under IRC §168(k).

NOTE

Corporations and unincorporated businesses meeting the criteria set forth in #1 or #2 above are not permitted to file on Form NYC-4S EZ (General CorporationTax) or Form NYC-202S (Unincorporated Business Tax).

SPECIFIC INSTRUCTIONS

SCHEDULE A1

The purpose of this schedule is to compute the allowableNewYorkCitydepreciationdeduction. This form has been designed to be used with the federal depreciation schedule, Form 4562 (Rev. March2002orlater). Acopyofthefederalform must accompany this Form NYC-399Z. Tax- payers with SUVs subject to the special provi- sionsuseScheduleA2andnotScheduleA1. Do notcompleteScheduleA1unlessyouhaveprop- erty other than an SUV subject to the general post-9/11/01 decoupling provisions.

Column A

Enter a brief description of each item of “qual- ified property,” other than “qualified Resur- gence Zone property,” included in part II or III of federal Form 4562.

Column B

For each item of property listed in column A, indicate the property class type used in com- puting the federal deduction. Use “UPM” for property which is depreciated under the unit of production method provided in IRC §168(f)(1).

ColumnD

The cost or other basis entered in this column must be the same amount used for federal pur- poses prior to any reduction for the special de- preciation allowance for qualified property.