AZ nonresident with rental loss

[Dot]

Client is non resident of AZ but has a rental property there. The rental loss is not allowed on the federal return because income is too high. Should I file the AZ nonresident return? No loss but ATX wants to add back the federal depreciation to the AZ source column. That results in tax owed to AZ.

[Abby Normal]

I would not file AZ. Any depreciation difference when selling the property will be accounted for then, by showing a smaller AZ gain (or larger loss).

These state decoupling rules drive me nuts!

[Dot]

They sent money to AZ with their extension so I need to file the return to get their refund (if they have one coming). I am thinking the depreciation should not be included on the return because the rental loss exceeds the depreciation taken.

Totally agree about state rules and have spent way too much time on this matter.

[Abby Normal]

Enter an AZ loss in the same amount as the depreciation addition to zero it out.

[Max W]

AZ conforms to federal depreciation, but not Bonus  Dep.

[Abby Normal]

3 hours ago, Max W said:

AZ conforms to federal depreciation, but not Bonus  Dep.

I avoid bonus for that very reason. It cuts down on state differences.

[Catherine]

2 hours ago, Abby Normal said:

I avoid bonus for that very reason. It cuts down on state differences.

I do as well.  A client needs an overwhelming reason to need it before I'll cave in.  This has happened possibly twice in over twenty years.

[Dot]

Me too! Thank you for your help.