Exercise 5.1 Effects of State-Federal Depreciation State Adjustment Table Differences over Time Fill in the state adjustment below. Decimals and special In general, adjustments for state and federal depreciation characters are not accepted. Negative numbers are differences will be timing differences, rather than differences represented by parentheses. in the overall expenses allowed. A lower state deduction in an earlier year will be balanced out by higher deductions in Federal California State later years until the entire cost of the property is recovered Tax Year Depreciation Depreciation Adustment on both the state and federal retums. We'll use California as our example one more time. 2015 $1,800 $600 William Boggs, a resident of California, placed a $3,000, 5- 2016 $480 $960 your asset in service on June 1, 2015. In 2015, he claimed the 50% bonus depreciation on his federal retum and 2017 $288 $576 depreciated the difference. For California, he depreciated the full $3,000. 2018 $173 $346 Let's take a look at what William's federal and California depreciation expenses will look like over the asset's 2019 $173 $346 recovery period. 2020 $86 $172 In the table, the total state and federal depreciation for each year of the asset's recovery period is calculated for you in TOTAL $3,000 $3,000 the appropriate column. In the third column, calculate the amount of the adjustment needed on the state return. If the federal deduction is greater than the state deduction, Check Answers enter the adjustment as a positive number. If the state deduction is greater than the federal deduction, enter the adjustment as a negative number