Exercise 5.1 Effects of State-Federal Depreciation Differences over Time State Adjustment Table Fill in the state adjustment below. Decimals and special characters are not accepted. Negative numbers are represented by parentheses. the overall expenses allowed. A lower state deduction in an earlier year will be balanced out by higher deductions in later years until the entire cost of the property is recovered on both the state and federal returns. Tax Year Federal California Depreciation Depreciation State Adustment 2015 $1,800 $600 We'll use California as our example one more time. William Boggs, a resident of California, placed a $3,000, 5-year asset in service on June 1, 2015. In 2015, he claimed the 50% bonus depreciation on his federal return and depreciated the difference. For California, he depreciated the full $3,000. 2016 $480 $960 2017 $288 $576 Let's take a look at what William's federal and California depreciation expenses will look like over the asset's recovery period. 2018 $173 $346 2019 $173 $346 MI In the table, the total state and federal depreciation for each year of the asset's recovery period is calculated for you in the appropriate column. In the third column, calculate the amount of the adjustment needed on the state return. 2020 $86 $172 TOTAL $3,000 $3,000 If the federal deduction is greater than the state deduction, enter the adjustment as a positive number. Check Answers If the state deduction is greater than the federal deduction, enter the adjustment as a negative number