Rental/Royalty Income that California Handles differently

California law has not always conformed to federal law regarding depreciation methods, special credits, or accelerated write-offs.  See form 3885 here.

Consequently, the recovery periods and the basis on which the depreciation is calculated may be different from the amounts used for federal purposes. Reportable differences may occur if all or part of your assets were placed in service: 

• Before January 1, 1987. California disallowed depreciation under the federal Accelerated Cost Recovery System (ACRS). California depreciation is calculated in the same manner as in prior years for those assets. 
• On or after January 1, 1987. California provides special credits and accelerated write-offs that affect the California basis for qualifying assets. California does not conform to all the changes to federal law enacted in 1993. Therefore, the California basis or recovery periods may be different for some assets.

California law does not conform to the federal law for: 

• • IRC Section 168(k) relating to the depreciation deduction for certain assets 
• • The enhanced IRC Section 179 expensing election • The expanded definition of IRC Section 179 property for certain depreciable tangible personal property related to furnishing lodging and for qualified real property for improvements to nonresidential real property 

Additional differences may occur for the following: 

• Luxury Automobile Depreciation: Sport utility vehicles and minivans built on a truck chassis are included in the definition of trucks and vans when applying the 6,000 pound gross weight limit However, California does not conform to the federal modifications to depreciation limitations on luxury automobiles (IRC Section 280F)

@chapinreyes