Individual sole proprietors and other taxpayers must increase federal adjusted gross income by eighty-five percent of any amount of bonus depreciation received under either the Jobs and Growth Tax Relief Reconciliation Act of 2003 for assets placed in service after May 5, 2003 and before January 1, 2005, or the Job Creation and Worker Assistance Act of 2002 for assets placed in service after September 10, 2001, and before September 11, 2004 (sections 168(k) or 1400L of the Internal Revenue Code of 1986, as amended). This would include special allowance for certain aircraft, certain property with a long production period, and qualified New York Liberty Zone property (other than listed property) placed in service during the 2005 tax year and claimed on Federal Form 4562, Part II, line 14 and Part V, line 25.

The amount of bonus depreciation added back for Nebraska purposes can be recovered in later taxable years. Twenty percent of any tax year 2000, 2001, or 2002 bonus depreciation added back may be subtracted in the first taxable year beginning on or after January 1, 2005, and 20 percent in each of the next four taxable years. Twenty percent of the total amount of bonus depreciation added back for tax years 2003 or 2004 may be subtracted in the individual's first taxable year beginning or deemed to begin on or after January 1, 2006, as determined under the Internal Revenue Code of 1986, as amended, and twenty percent in each of the following four taxable years. See line 52 instructions on page 14 if you reported bonus depreciation for the year 2000, 2001, and/or 2002.

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