New York New York State Depreciation Schedule for IRC Section 168(k) Property

New York State Depreciation Schedule for IRC Section 168(k) Property
Form IT-398 New York State Depreciation Schedule for IRC Section 168(k) Property Tax Year 2023
Department of Taxation and Finance

New York State Depreciation Schedule for
IRC Section 168(k) Property

IT-398

Use this form only for property placed in service inside or outside New York State after May 31, 2003.
	 Name(s) as shown on return 	

Identifying number as shown on return	

Mark an X in one box to show the income tax return you are filing and submit this form with that return.
IT-201, Resident	

IT-203, Nonresident and part-year resident	

IT-204, Partnership	

IT-205, Fiduciary

Part 1 – Depreciation information for Internal Revenue Code (IRC) section 168(k) property (except for resurgence zone property and
New York liberty zone property described in IRC section 1400L(b)(2)) placed in service inside or outside New York State,
beginning after May 31, 2003 (see instructions)
	

A	

	
Description of property	
	
(use additional sheet if needed)	
		

B	

C	

Date placed	
in service	

D	E	

Depreciable	
Conv.	
basis		

(mmddyyyy)

				
				
				
				

Method	
	

F	

New York	
depreciation deduction	

.00			
.00			
.00			
.00			

G

Federal depreciation
deduction

.00		
.00
.00		
.00
.00		
.00
.00		
.00

.00	

	1	 Enter column F and column G totals................................................................. 	 1 	

.00

Transfer the column F total to:

Transfer the column G total to:

Form IT-225, line 10, Total amount column and enter
subtraction modification S-213 in the Number column.

Form IT-225, line 1, Total amount column and enter
addition modification A-209 in the Number column.

Part 2 – Year-of-disposition adjustment for IRC section 168(k) property (except for resurgence zone property and New York liberty
zone property described in IRC section 1400L(b)(2)) placed in service inside or outside New York State, beginning after
	
May 31, 2003 (see instructions)
Mark an X in the box if you claimed an investment credit on Form IT-212, Investment Credit, for any property listed
  below (see instructions)..........................................................................................................................................................................
	

	
	

A	

Description of property	
(use additional sheet if needed)	

B	C	

Date of	
disposition	

Method of	
disposition	

D	

Total New York	
depreciation deduction	

E

Total federal
depreciation deduction

							
.00		
.00
							
.00		
.00
							
.00		
.00
							
.00		
.00
	2	 Enter column D and column E totals................................................................. 	 2	
	3	 Enter amount from line 2, column E.........................................................................................................	
	4	 Enter amount from line 2, column D........................................................................................................	
	5	 Subtract line 4 from line 3........................................................................................................................	
Transfer the line 5 amount to Form IT-225, line 10, Total amount column and enter
subtraction modification S-214 in the Number column.

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.00	
3	
4	
5	

.00
.00
.00
.00

IT-398 (2023) (back)

Instructions

General instructions

For tax years beginning after December 31, 2002, New York State (NYS)
does not allow the federal special depreciation deduction for Internal
Revenue Code (IRC) section 168(k) property (except for resurgence
zone property and New York liberty zone property described in IRC
section 1400L(b)(2)), placed in service inside or outside NYS after
May 31, 2003. Instead, you are allowed a NYS depreciation deduction
determined under IRC section 167, as that section would have applied
to the property if it had been acquired on September 10, 2001. You may
take the deduction for NYS depreciation until the property is disposed of
or fully depreciated.
If you claimed ACRS depreciation on your federal return for property
placed in service beginning after May 31, 2003 (except for resurgence
zone property and New York liberty zone property described in
IRC section 1400L(b)(2)), complete Part 1.
Use this form to compute your NYS adjustments for NYS depreciation
and federal depreciation deductions.
As described in IRC section 1400L(b)(2), New York liberty zone property
must have been placed in service on or before December 31, 2006, or
in the case of nonresidential real property and residential rental property,
on or before December 31, 2009.
Qualified resurgence zone property means qualified property described
in IRC section 168(k) for which all of the following apply:
•	 substantially all use of the property is in the resurgence zone; and
•	 the use is in the active conduct of a trade or business by the taxpayer
in the resurgence zone; and
•	 the original use by the taxpayer commences after December 31, 2002.
The resurgence zone is defined as the area of New York County
bounded on the south by a line running from the intersection of the
Hudson River with the Holland Tunnel, running east to Canal Street, then
running along the centerline of Canal Street to the intersection of Bowery
and Canal Street. It then runs in a southeasterly direction diagonally
across the Manhattan Bridge Plaza to the Manhattan Bridge, along the
centerline of the Manhattan Bridge to the point where the centerline
would intersect with the east bank of the East River. It is bounded on the
north by a line running from the intersection of the Hudson River with the
Holland Tunnel, running north along West Avenue to the intersection of
Clarkson Street. It then runs east along the centerline of Clarkson Street
to the intersection of Washington Avenue, then running south along the
centerline of Washington Avenue to the intersection of West Houston
Street. It continues east along the centerline of West Houston Street,
then at the intersection of Avenue of the Americas, continues east along
the centerline of East Houston Street to the east bank of the East River.
If you have an interest in a passive activity, the modifications required
under Tax Law sections 612(b)(8) and (c)(16) for federal depreciation
and NYS depreciation must be made for the full amounts allowable
as a federal depreciation deduction (100%), even though the activity
may be subject to federal loss deduction limitations. It is only under
IRC section 469 (Passive Activity Losses and Credits Limited) that there
is a limitation on passive loss deductions.
In the case of a partnership using IRC section 168 to determine
depreciation, the individual partners should make the adjustments
to income on their personal income tax returns. The adjustments for
partners are their distributive share of NYS depreciation and federal
depreciation, determined by the partnership as of the end of the
partnership year ending within the partner’s tax year. Form IT‑398 should
be completed only by the partnership, and not by each individual partner.
This treatment is the same for a beneficiary of an estate or trust that is
on a fiscal-year basis.
If you are a shareholder of an electing New York State S corporation,
the S corporation should provide your proportionate share of the
S corporation’s depreciation deduction.

If you are a nonresident or part-year resident, you must complete
Form IT-398 as if you were a NYS resident for the entire year.
If you are married and file a joint federal return but are required to file
separate NYS returns, complete only one Form IT-398 showing the
amounts from your joint federal return. Submit a schedule with each
return showing each spouse’s separate amounts, as if separate federal
returns were filed, and explain any differences.

Specific instructions

See the instructions for your tax return for the Privacy notification or if
you need help contacting the Tax Department.
Enter your name and identifying number (your Social Security number
or employer identification number) in the spaces provided on the front
of this form. Mark an X in the box that indicates which NYS income tax
return you are filing and submit this form with that return.
Part 1 – Depreciation
Depreciation is the annual deduction allowed to recover the cost or other
basis of business or investment property having a useful life substantially
beyond the tax year. However, land is never depreciable. Depreciation
starts when you first use the property in your business or for the
production of income. It ends when you take the property out of service,
deduct all your depreciable cost or other basis, or no longer use the
property in your business or for the production of income. (See Part 2 for
the deduction to be taken in the year you dispose of the property.)
Column C – Enter the depreciable basis of the assets you place in
service in the same year. Depreciable basis is the cost or other basis
reduced by the part of the basis you elected to amortize or expense
under IRC section 179, and any federal investment credit subtracted
when computing the federal unadjusted basis of the asset.
Column D – The applicable convention determines the portion of the
tax year for which the depreciation is allowable during a year property is
either disposed of or placed in service. Enter in column D the convention
you used from federal Form 4562, column E.
Column E – Indicate the depreciation method selected for the
computation of the NYS allowable depreciation deduction. Any
consistent depreciation method that would have been allowed under
IRC section 167, as that section would have applied to the property
if it had been acquired on September 10, 2001, without regard to
section 168(k), is acceptable.
Column F – Enter your NYS depreciation deduction in column F, based
on the method you elected in column E.
Column G – Enter the depreciation deduction you took on your federal
return.
Part 2 – Year-of-disposition adjustment
If you dispose of IRC section 168(k) property (except for resurgence
zone property and New York liberty zone property described in IRC
section 1400L(b)(2)) that you placed in service inside or outside NYS
after May 31, 2003, you must adjust your NYS income by the difference
between the total NYS depreciation deduction and the total federal
depreciation deduction claimed on that property.
Note: If property on which the investment credit, retail enterprise
credit, or research and development credit was taken on Form IT-212,
Investment Credit, is disposed of or removed from qualified use before
its useful life or specified holding period ends, the difference between
the credit taken and the credit allowed for actual use must be added
to your income tax in the year of disposition. See Form IT-212 and its
instructions for more information and to calculate the amount.
Column C – Enter the method used to dispose of the property.
Disposition includes, but is not limited to, sale, exchange, transfer, and
obsolescence.
Column D – Enter the total NYS depreciation deduction you claimed on
the property you disposed of.
Column E – Enter the total federal depreciation deduction you claimed
on your federal return for the disposition of your property.

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