Maine enacts tax conformity legislation

Maine enacted legislation that updates Maine’s corporate income and personal income tax federal Internal Revenue Code (Code) conformity date to December 31, 2015 (the current conformity date is December 31, 2014) for tax years beginning in 2015. The change applies to tax years beginning on or after January 1, 2015. In addition, the legislation deals with other conformity issues concerning bonus depreciation, the Maine capital investment credit, and the deduction for tuition and related expenses.

Bonus depreciation. The add-back required for the net increase in depreciation attributable to the bonus depreciation deduction claimed by the taxpayer under Code §168(k), whether or not a capital investment credit is claimed, is extended to the tax years beginning in 2015 and thereafter (the same add-back currently applies to tax years beginning in 2013 and 2014).

Capital investment credit. The Maine capital investment (bonus depreciation) credit, which currently is allowed for taxpayers that claim a bonus depreciation deduction under Code §168(k) for most property placed in service in Maine during the 2011 to 2014 tax years, is extended to tax years beginning in 2015 and thereafter, with some changes to the credit amount. For corporations, the credit is equal to 9% of the net increase in depreciation claimed by the taxpayer under the Code §168(k) with respect to property placed in service in Maine during the tax year. For individuals, the credit is 8% of such amount for tax years beginning in 2015 and 7% for tax years beginning in 2016 and thereafter. For the 2013 and 2014 tax years, the credit was equal to 9% of the net increase in depreciation deduction reported as an addition to income for the taxable year.

Deduction for tuition and related expenses. The legislation conforms Maine law to the federal deduction for qualified tuition and related expenses under Code §222 by repealing the addition modification for that federal deduction. This change applies to tax years beginning on or after January 1, 2016. (L.D. 1583 (S.P. 633), Laws 2016, effective March 10, 2016, applicable as noted.)

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