I want to claim a Federal Section 179 deduction for some assets. Write off the entire amount in the year I bought it. However, with Pennsylvania State Tax Laws, it makes more sense to spread the cost of those assets over 5 years.

So federal would see the assets depreciated immediately. State would see it depreciated over 5 years. Same thing with local. Is it legal to do this?

The reason why I want to do this is because I will get a larger tax return from doing this.


In general, you most definitely can. In some cases you must.

However for each State you'll have to check whether you can choose how to depreciate. Many States require you to take the same depreciation as on the Federal schedule, including Sec. 179, others won't allow Sec. 179 at all.

Specifically to PA, I haven't found any current guidance, but the rules from 2012 put PA in the bucket that requires you to take the same Sec. 179 on the State return as appears on your Federal return.

If you elect to expense Section 179 Property for FIT purposes, you are required to expense the property for PIT purposes.

However PA limit for Sec. 179 is $25K, so if your Federal deduction is larger - you can depreciate the rest.

Check with a PA-licensed CPA or EA for a more reliable opinion, since I'm not a tax adviser. Just googled it.

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