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.

I recently performed the bonus depreciation addback. I have since sold the asset that generated the depreciation prior to utilizing the subsequent depreciation deductions. Since I have not received the total benefit of the depreciation for Ohio income tax purposes, can I report the gain net of the remaining depreciation deductions to which I am entitled?

No. Division (A)(20)(b) of O.R.C. 5747.01 specifically states that the bonus depreciation adjustments should not be construed to adjust or modify the adjusted basis in any asset. As such, the gain you report on your Ohio return should match the gain you recognized on your federal return. 

NOTE: The taxpayer is still able to take the deduction for the remaining years, even if the taxpayer no longer owns the underlying asset.

Example: In tax year 2016, ABC LLC takes $60,000 in accelerated depreciation on a $75,000 asset for federal tax purposes. ABC LLC also makes the 5/6 addback of $50,000 on its Ohio tax return. In 2017, ABC LLC sells the depreciated asset for $45,000, generating a gain of $30,000, calculated as:

  • Gain = Sale proceeds – (Original value of asset – Depreciation), or
  • $30,000 = $45,000 – ($75,000 - $60,000)

Even though ABC LLC has not realized $60,000 in depreciation for Ohio income tax purposes, it must still report and pay Ohio income tax on the $30,000 gain. ABC LLC is entitled to take a $10,000 depreciation deduction in tax year 2017, and then an additional $10,000 deduction in tax years 2018 through 2021. ABC LLC should not adjust the gain to a loss of $20,000 (calculated as $45,000 – ($75,000 – ($60,000 + 50,000))) in tax year 2017.

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