Section 9-1107. ELECTION TO EXPENSE CERTAIN DEPRECIABLE BUSINESS ASSETS

 

1107.1In the case of a QHTC there shall be allowed a deduction from gross income in computing net income equal to:

 

(a) An amount that is the lesser of forty thousand dollars ($40,000) or the actual cost of property for tangible personal property described in Internal Revenue Code of 1986, as amended (IRC) § 179(d)(1) and including leasehold improvements;

 

(b) If the QHTC is a tenant, the cost of any real property and leasehold improvements regardless of whether or not such improvements become an integral part of the realty; such improvements shall include improvements described in 9 DCMR §§ 702.3, 702.4, and 702.5; or

 

(c) The amount claimed on the QHTC's corresponding federal income tax return should be considered as part of the amount allowed under IRC § 162.1(a).

 

1107.2The following are examples of the application of §1107.1:

 

(a) On January 1, 2001, Company F, a QHTC, purchases computers at a cost of $100,000. The computers are used by Company F to conduct qualified high technology activities. In filing their Federal income tax return, Company F claims the maximum deduction of $20,000 of the cost of the computers. In filing their District franchise tax return, Company F is allowed up to an additional $20,000 of the cost of the computers, for a maximum deduction for D.C. tax purposes of $40,000.

 

(b) Same facts as in Example 1, except Company F does not claim the maximum deduction for Federal tax purposes but claims $10,000.00. In filing their District franchise tax return, Company F is allowed to deduct up to an additional $30,000 of the cost of the computers, for a maximum deduction for D.C. tax purposes of $40,000.

 

source

Final Rulemaking published at 49 DCR 2142 (March 8, 2002).