Taxpayer Services Division
Federal Tax Changes And How They Affect 2003 Returns

Job Creation and Worker Assistance Act of 2002. Georgia has adopted the provisions of this act (as they relate to the computation of Federal adjusted gross income and Federal taxable income) for taxable years beginning on or after January 1, 2003, except I.R.C. Section 168(k) (30% bonus depreciation) and Section 1400L (tax benefits for the New York Liberty Zone) are treated as if they are not in effect. The change in the net operating loss carry-back period to five years included in this act only applied to taxable years ending in 2001 and 2002; therefore, it is not applicable to taxable years beginning on or after January 1, 2003. For tax years beginning before January 1, 2003, Georgia did not adopt the five year carry-back and continued to use the two year carry-back (with special rules for farmers and casualty losses) as provided under the old Federal law.

Jobs and Growth Tax Relief Reconciliation Act of 2003. Georgia has not adopted any of the provisions of this act. Some of the changes in this act include the increase of special first-year bonus depreciation to 50%, increase in Section 179 depreciation to $100,000, and a delay in making corporate estimated tax payments for September. As is stated above, Georgia has not adopted any of these provisions.

Depreciation Differences. Depreciation differences due to the 2002 and 2003 Federal acts mentioned above should be handled in the following manner. If the taxpayer has depreciation differences that are attributable to both the 2002 and 2003 Federal acts, it is not necessary to make a separate adjustment for each act.

A. Depreciation must be computed one way for Federal purposes and another way for Georgia purposes. To compute depreciation for Federal purposes, taxpayers should use the 2003 IRS Form 4562 and attach it to the Georgia return.

B. Depreciation must also be computed for Georgia purposes. Taxpayers should use the 2003 Georgia Form 4562 to compute depreciation for Georgia purposes and attach it to the Georgia return. The 2003 Georgia Form 4562 and the related instructions can be obtained by clicking here or from any Revenue Office.

All flow through entities (partnerships, S Corporations, limited liability companies, limited liability partnerships, and fiduciaries) that own property, do business in Georgia, or that have Georgia resident owners/beneficiaries should notify them of the required adjustments. Depreciation differences may also be reported to you by these types of entities. Adjustments from these entities should be added or subtracted to arrive at Georgia income on the lines mentioned in the “Specific Form Instructions” section below.

Additionally, the provisions listed above may have an indirect effect on the calculation of Georgia taxable income. Adjustments from the items listed below should be added or subtracted to arrive at Georgia income on the lines mentioned in the “Specific Form Instructions” section:

  1. When property is sold, for which the bonus depreciation was claimed, there will be a difference in the gain or loss on the sale of the property.
  2. The depreciation adjustment may be different if the taxpayer is subject to the passive loss rules and is not able to claim the additional depreciation on the Federal return.
  3. Other Federal items that are computed based on Federal Adjusted Gross Income or Federal Taxable Income will have to be recomputed if the provisions of the Federal Acts are claimed. Some examples are itemized deductions, student loan interest deduction, self employed health insurance deductions, etc.
Specific Form Instructions

Form 500, Individual Income Tax Return, Form 500 (fill in and print on line), and Form IT-511, Individual Income Tax Booklet – The amount computed on the IRS Form 4562 should be added back on page 3, schedule 1, line 3. The amount computed on the Georgia Form 4562 should be subtracted on page 3, schedule 1, line 9. For each line, please write in the words “2002 JCWA/2003 JGTRRA Depreciation Adjustment”.

Form 501, Fiduciary Income Tax Return - The amount computed on the IRS Form 4562 should be added back on page 2, schedule 3, on the fourth line of the additions section. The amount computed on the Georgia Form 4562 should be subtracted on page 2, schedule 3, on the third line of the subtractions section. For each line, please write in the words “2002 JCWA/2003 JGTRRA Depreciation Adjustment”.

Form 600, Corporation Tax Return and Form IT-611, Corporation Income Tax Booklet – The amount computed on the IRS Form 4562 should be added back on page 2, schedule 4, line 5. The amount computed on the Georgia Form 4562 should be subtracted on page 2, schedule 5, line 2. For each line, please write in the words “2002 JCWA/2003 JGTRRA Depreciation Adjustment”.

Form 600S, S Corporation Return and Form IT-611S, S Corporation Income Tax Booklet – The amount computed on the IRS Form 4562 should be added back on page 2, schedule 5, line 4 (see below). The amount computed on the Georgia Form 4562 should be subtracted on page 2, schedule 6, line 2. For each line, please write in the words “2002 JCWA/2003 JGTRRA Depreciation Adjustment”.

Form 700, Partnership Income Tax Return – The amount computed on the IRS Form 4562 should be added back on page 2, schedule 4, line 4. The amount computed on the Georgia Form 4562 should be subtracted on page 3, schedule 5, line 2 (see below). For each line, please write in the words “2002 JCWA/2003 JGTRRA Depreciation Adjustment”.

On the Partnership Form 700, Schedule 7 and the S-Corporation Form 600S, Schedule 8 section 179 is not listed. It is not listed since it may be subject to further limitation at the partner/shareholder level. Accordingly, when making the addition of Federal depreciation and the subtraction of Georgia depreciation on these schedules, Section 179 should not be included. These Section 179 adjustments should be reported to the partner/shareholder separately on the K-1.  

 

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