XI. State Tax Conformity Nightmare
ØA. Bonus tax depreciation and direct expensing will
be expensive for states
that conform to the Federal tax law in taxing asset cost recovery, but if they do not conform, their taxpayers
will face significant
complexity. Some states have already enacted conformity and others that are still in session could do
so. Some who have
completed their session could come back in special session to enact conformity. On the other side,
although the Act contains
$20 billion in direct state aid, some states may choose not to conform, even to the point of calling a special
legislative session to
decouple and avoid the lost revenue for their tight state budgets.
ØB. The differences between Federal and state rules
will require separate
records and calculations for the life of the property acquired.
ØC. For multi-state corporations, the variety of
methods of accounting for cost
recovery could be an accounting and tax compliance nightmare.
ØD. The AICPA Tax Division will post information on
state law conformity prior to
the filing season.