Use this adjustment if both of the following apply:

1. Arizona taxed your pension for years before 1979.
2. You reported that pension on your federal return using the percentage exclusion method.

Do not use this adjustment if either of the following apply:

1. You reported your pension income as fully taxable on your federal return.
2. You reported your pension income on your federal return under the "three-year-rule".

Items Previously Deducted for Arizona Purposes

Arizona statutes prohibit a taxpayer from deducting items more than once. However, under the operation of former Arizona law (1989 and prior), you could deduct certain items in greater amounts for Arizona purposes than for federal purposes. Investment interest and passive activity losses were such items. In some cases, you could have deducted such amounts in their entirety on the Arizona return. For federal purposes, the deduction for these items was limited, with the unused portions being carried forward and deducted in future years. Your Arizona return may include these previously deducted items because of the difference between the federal and former Arizona treatment. If your Arizona taxable income includes items previously deducted for Arizona purposes, you must add these amounts.

Claim of Right Adjustment for Amounts Repaid in 2005

You must make an entry here if all of the following apply.

1. During 2005, you were required to repay amounts held under a claim of right.
2. The amount required to be repaid during 2005 was more than $3,000.
3. You took a deduction for the amount repaid on your 2005 federal income tax return.

If the above apply, enter the amount deducted on your federal income tax return here.

Claim of Right Adjustment for Amounts Repaid in Prior Taxable Years

You must make an entry here if all of the following apply.

1. During a year prior to 2005 you were required to repay amounts held under a claim of right.
2. You computed your tax for that prior year under Arizona's claim of right provisions.
3. A net operating loss or capital loss was established due to the repayment made in the prior year.
4. You are entitled to take that net operating loss or capital loss carryover into account when computing your 2005 Arizona taxable income.
5. The amount of the loss carry-over included in your federal income is more than the amount allowed to be taken into account for Arizona purposes.

Enter the of loss carry-over included in your federal adjusted gross income exceeds the amount allowed for the taxable year under Arizona law.

Solar Hot Water Heating Plumbing Stub Out And Electric Vehicle Recharge Outlet Expense

If you take a credit for installing solar hot water heating plumbing stub outs or electric vehicle recharge outlets in a dwelling you constructed, you cannot deduct any expenses for which you claim the credit. If you take this credit, enter the amount of such expenses that you deducted on your federal return.

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