USA De Minimis SH implication for HI

[Maverick1963]

I am an owner of a Hawaii condo and will apply De Minimis Safe Harbor to my 2015 federal tax return. Reading a lot of information on web and from IRS, my conclusion is that I can include, e.g., my $500 spending for a window air conditioner in "expense".

I am aware that HI does not allow bonus 50% depreciation in the first year. To prepare Form 4562 for HI, all special depreciation allowance must be subtracted. What about the spending treated as De Minimis Safe Harbor items for Federal tax return? Do they need to be included as depreciation?

I would appreciate your advice.

 

[Maverick1963]

Anyone? Advice, please. In the meantime, I sent email to Hawaii Department of Tax to ask the same question. Once I get any reply, I will post it here.

 

[Maverick1963]

Turbotax FAQ supports the idea of putting DMSH items in "expenses", not in one year 100% depreciation.
https://ttlc.intuit.com/questions/2...te-with-the-new-business-safe-harbor-election

 

[Maverick1963]

I got some explanation from TaxAct but they said that HI does not have guidance for DMSH. I just received a reply from Hawaii Department of Taxation. HI adopts DMSH.

Following is the mail.

Your inquiry was forwarded to the Technical Section for a response.

Hawaii conforms to Internal Revenue Code (IRC) sections 162 and 263. Therefore, Hawaii has adopted the de minimis safe harbor election for 2014 and 2015.

To check if Hawaii conforms to an IRC section, you should first check section 235-2.3(b), HRS, to see if the IRC section is listed.
If it is listed, Hawaii does not conform to the IRC section.
If the IRC section is not listed in section 235-2.3(b), HRS, you should then check sections 235-2.4 and 235-2.45, HRS, since these sections list the IRC sections that Hawaii conforms to, but with modifications.
If the IRC section is not listed in sections 235-2.3(b), 235-2.4, or 235-2.45, HRS, then Hawaii conforms to the IRC section with no modifications.

Hawaii doesn't have instructions relating to the de minimis safe harbor election, so we would generally follow the federal instructions. If the IRS requires a statement to be attached to the tax return, then the same statement (modified for Hawaii income tax purposes) should be attached to the Hawaii tax return.

Technical Section


Please note that the views expressed herein are informal opinions for general discussion purposes, subject to change without notice, and have no binding effect on the Department of Taxation. See Tax Information Release No. 2009-01 for more information.