Corporate Tax Base 2. The CIT is decoupled from federal bonus depreciation. Consequently, taxpayers must add back to business income bonus depreciation that was taken on the federal return....

The amount of IRC §179 expense deduction taken on a taxpayer's federal tax return will be allowed in computing CIT business income. This amount will not vary in computing business income for federal and Michigan tax purposes. A taxpayer that did not elect and take a federal §179 expense deduction on its federal tax return may not claim the federal deduction in its computation of business income under the CIT.

Any IRC §168(k) bonus depreciation claimed on a taxpayer's federal return will not be allowed for CIT purposes. MCL 206.603(2); 206.607(1). Taxpayers should re-compute CIT depreciation using a federally accepted depreciation method that computes a depreciation amount as if IRC §168(k) was not in effect. This depreciation method must be used consistently over the life of the asset until retired or disposed of when computing CIT business income. The federal depreciation expense that is calculated as if §168(k) was not in effect is the deduction used in calculating CIT business income. A taxpayer must keep sufficient records to track the basis of the asset and depreciation deduction claimed for purposes of the CIT.