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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
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Question about Net Decoupling Modification for Maryland State

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Question about Net Decoupling Modification for Maryland State return.

On my Maryland State K-1, for line B-3 "Net decoupling modification" I have an amount here. Do I need to enter this on Maryland State Return Form 502, Line 5? This considerably increases my Maryland state income. I guess it disallows my federal 179 depreciation if I must.
Welcome and thanks for your question!

While I understand your reluctance to increase your taxable income, unfortunately, you do need to enter the net coupling modification on Line 5 of Form 502. The code you will need to enter on the line is DP.

You are correct that the decoupling is related to Section 179 depreciation. Maryland has decoupled from the federal provisions and caps Section 179 at $25,000, so unfortunately any federal 179 above that must be added back and taxed for Maryland purposes.

If you have any follow-up questions, please feel free to ask. Thank you.
DanielleCPA and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

The problem is the amount of "net coupling modification" is much higher than the amount over $25,000.


 


So the "net decoupling modification" on my K1 is 14856. This number comes from Form 500DM from the S-Corp. On the 500DM from the S-Corp, I see the below. 26948 is the total assets the business put into operation in 2012. All 26948 of assets we took the section 179 deduction. I don't get how column 2 is calculated, where does the 12092 come from? 26948 - 12092 = 14856. The 14856 is seen on my K1 under "net decoupling modification". I am the only member of the s-corp. This 14856 is definitely more than the amount I feel I should decouple, which is 26948 - 25000 = 1948. This is done in TurboTax. Is my net decoupling modification incorrectly calculated by TurboTax?


 


 


Customer: replied 3 years ago.

No worries, I figured it out. The high number is XXXXX I Maryland disallows a full Section 179 deduction for "canned software". You lead me in the right direction, thanks

You're welcome. If there is anything else you need, please let me know. Have a wonderful evening!