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Level 2
February 20, 2024
Question

Oklahoma Bonus Depreciation Adjustment generated OTC Notice

  • February 20, 2024
  • 2 replies
  • 13 views

ProConnect makes an adjustment (subtraction) on form 511-A for the bonus depreciation adjustment related to Oklahoma allowing 100% bonus depreciation.  This subtraction was placed on line 15 of 511-A with code "99" and also says "See Statement 1".  Statement 1 indicates "Bonus Depreciation Adjustment" and the amount required to take 100% depreciation for the 2023 tax year.  

This presentation from ProConnect generated a notice from the Oklahoma Tax Commission requesting 1) a "detailed explanation citing the Oklahoma Statute validating the miscellaneous subtraction on 511 schedule A"; and 2) "documentation supporting the amount claimed on the 511-A miscellaneous subtraction".

I am concerned about receiving hundreds of notices this year if the program presentation remains the same.  Some coordination with OTC about how they want it presented to avoid these notices is needed.\

Any other comments or ideas are welcome.

Thank you,

Jason Williams, CPA

 

 

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2 replies

Level 2
February 21, 2024

My client just received a notice as well. I have the same question. It won't let me do a cross-reference on the bonus depreciation line. Please advise. 

Level 2
February 23, 2024

Same here we are up to 5 notices

Level 2
February 23, 2024

I spoke with Mr. Saunders at OTC.  Seems all they want is a specific reference to the Oklahoma Statute when the code "99" is used as well as how the amount was determined.  I explained the tax program had generated a statement that said "Bonus Depreciation Adjustment" and the amount.  He looked at the return in question and said no statement was received in the e-file they received.  So that may have helped had they gotten it.  He suggested attaching a .pdf file with the explanation.  The statute is Okla Stat Title 68 Section 2358.6A.  They want the reference to the statute and an explanation that federal depreciation was "x" dollars, and Ok depreciation is "y" dollars, with the difference being the amount on schedule A.  Not liking the idea of having to generate a .pdf for every client with this issue, I then asked him if it was mandatory to take the 100% depreciation and he said no.  I further asked him if we could take 80% same as on the federal so there is no federal to state difference and he stated that was perfectly acceptable.  This is my plan on all returns going forward to avoid not only this issue, but to also avoid any federal to state difference on any potential recapture if an asset is sold before it is fully depreciated on the Federal return.  Hope this is helpful.

Level 2
January 6, 2025

We have just received a notice that denied the adjustment, even after providing all the information and relevant state code.  The OTC is stating that bonus depreciation must be elected.  The OTC is off reservation.