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California Differences MACRS ADS Property

California generally conforms to Federal MACRS rules for individuals. CA does NOT conform to:

  • Bonus Depreciation (none allowed)
  • The shortened recovery periods for Indian reservation property
  • The 15-year recovery period, straight-line method, for qualified improvement property (qualified leasehold improvements, qualified retail property, and qualified restaurant property) (CA is 39 years) or treating these types of property as Sec 179 property
  • Inclusion of off-the-shelf computer software as Sec. 179 property, and
  • The higher first-year luxury auto depreciation limit when federal bonus depreciation is claimed.

California does not conform to the 3-year recovery period for racehorses of any age (personal income tax only) placed in service before 2022.

For California disease-infested vineyards, the recovery period for replacement vines is reduced from 10 years to 5 years for CA purposes (for post-1991 replacements due to phylloxera infestations and post-1996 replanting due to Pierce’s disease). A written certification from an independent state-certified integrated pest management adviser, or a state agricultural commissioner or adviser, that specifies that the replanting was necessary to restore a vineyard infested with phylloxera or Pierce's disease is required. The taxpayer must retain the certification for future audit purposes.

Use Form FTB 3885A, Depreciation and Amortization Adjustments, for individual returns when there is a difference between the amount of depreciation and amortization allowed as a deduction using California law and the amount allowed using federal law.

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