Frequently Asked Questions

The Ohio Department of Taxation has compiled a list of frequently asked questions covering many different categories.

To view the questions, click on the "Select Category" bar and then click on the category you are interested in.  A list of questions will appear pertaining to that category. Then click on the question you are inquiring about and the answer will appear.

How much bonus depreciation am I permitted to deduct?

The amount of the deduction depends solely on the amount of the addback.  Because of this, that the deduction is not transferable or otherwise available to any person who did not actually perform the addback on a prior return.  Pursuant to O.R.C. 5747.01(A)(21)(a), taxpayers who added back:

  • All of their depreciation expense in a given tax year (because of a net operating loss) should deduct 1/6 of the amount added back in the subsequent six years;
  • 2/3 of their depreciation expense in a given tax year (because of a 10% increase in Ohio withholding) should deduct 1/2 of the amount added back in the subsequent two years; or
  • 5/6 of their depreciation expense in a given tax year should deduct 1/5 of the amount added back in the subsequent five years;

Example:  Mark’s depreciation subject to addback is $180,000, and he added back $150,000 (5/6) for tax year 2016.  In tax years 2017 through 2021, Mark can deduct:

  • 1/5 x $150,000 = $30,000

If instead, Mark was eligible to add back, and actually added back, $120,000 (2/3) for tax year 2016, in tax years 2017 through 2021, Mark could deduct:

  • 1/2 x $120,000 = $60,000

Finally, if instead Mark was required to add back, and actually added back, $180,000 for tax year 2016, in tax years 2017 through 2021, Mark could deduct:

  • 1/6 x $180,000 = $30,000

However, there is an exception to this general rule. Per R.C. 5747.01(A)(21)(c), a person eligible for the depreciation deduction as calculated above is NOT permitted to claim the deduction in any tax year that includes a federal net operating loss [NOL],  an NOL carryback, or an NOL carryforward. In these situations, the person must instead carry forward the deduction to the next subsequent tax year that does not report an NOL, and include the deduction on that return.

Example: In tax year 2016, ABC LLC makes the 5/6 addback of $50,000 on its Ohio tax return. In both tax year 2017 and 2018, ABC LLC incurs an NOL. Beginning in tax year 2019, ABC LLC resumes turning a profit.  ABC LLC will calculate its depreciation deduction as follows:

  • Tax Year 2017: No deduction because of NOL. 1/5 deduction carried forward to tax year 2018
  • Tax Year 2018: No deduction because of NOL. 1/5 deduction from both 2017 and the current year carried forward to tax year 2019
  • Tax Year 2019: 3/5 x $ 50,000 = $30,000 (1/5 for tax year 2017, 2018, the current year)
  • Tax Year 2020: 1/5 x $50,000 = $10,000
  • Tax Year 2021: 1/5 x $50,000 = $10,000

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