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why does Arizona not allow sec 179 on qualified real property?

Level 1

I'm electing to take sec 179 under rev proc 2019-8 for a commercial HVAC unit. This is considered qualified real property. But, Proseries indicates that AZ does not allow this. Strangely, AZ and TX are the 2 states that Proseries says its not allowed. I am unable to locate an answer through Arizona's website. Can someone give me guidance to an answer? 

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8 Replies 8
Level 15

AZ started conforming to §179 in 2013.

See this conformity FAQ from AZ DoR: https://azdor.gov/legal-research/conformity-irc

Here are the AZ Revised Statutes for income tax if you are interested: https://www.azleg.gov/arsDetail/?title=43

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Still an AllStar
Level 1

Thanks itonewbie, 

I agree with you and have researched both your references. Yet ProSeries state depreciation conformity rules/limitation worksheet indicates that for a qualified real property asset, that after 2017, AZ does not conform to federal. I can’t find that anywhere. Would you say there is an error in the program set as a default? There is an option to change the setting to conformity, but I didn’t just want to change without seeking some kind of substantiation. 

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Level 15

I can't find anything anywhere that says AZ decoupled with any federal changes after 2017.  The FAQ from AZ is also quite clear about that.  Can you post the exact message ProSeries is spitting out so that @Orlando can have his team take a look and clarify?

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Still an AllStar
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Level 1

Hi itonewbie:

There is not a message. It is under the 4562 Depreciation Option worksheet within Proseries. The specific section is "State Defaults for Sec 179 on Computer Software & Qualified Real Property". Under AZ, under the Qualified Real Property line, it states TY2010 - TY2017. I can simply type "permanent" over the TY2017, but I would like to know why the default in the program is saying TY2017 under the end column. As I stated before, TX is the only other default with TY2017 as its end. All other states are listed as "permanent".

Since I cannot find any substantiation to agree with the default settings, I question the accuracy of the AZ setting.

Thank you again for your input.   

 

 

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Level 15

NP, @EjCookie.  Hopefully, @Orlando will stop by soon and offer some insight.

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Still an AllStar
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Employee
Employee

No insight given I don't follow one bit, but I'll pass it along to those who do!

 

For context,  we hire lots of accountants who do understand all that to do the calculation logic.. I'll loop in one of the managers in that space.

Employee
Employee

All - 

Thanks for reporting this issue.  It has been reported to the development team and should be released this week.

 

 

 

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Level 15

Thanks, @SDJayhawk!

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Still an AllStar
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