Form IL-4562, Special Depreciation, should be filed by taxpayers who file an income or replacement tax return and report special depreciation on their federal Form 4562, Depreciation and Amortization, or Form 2106, Employee Business Expenses. The purpose of Form IL-4562 is to reverse the effects of the bonus depreciation (other than 100 percent bonus depreciation) allowed by IRC Section 168(k)
Property acquired before September 28, 2017 and placed in service in 2018 is subject federally to 40 percent bonus depreciation. Because the IITA does not make a provision for property subject to the federal bonus depreciation rate of 40 percent, an Illinois subtraction modification cannot be claimed for the property until the last year of regular depreciation. However, an Illinois special depreciation addition must be reported for 40 percent bonus depreciation in the same year in which you claimed a federal special depreciation allowance for the property. The 100 percent bonus depreciation allowed under Public Law 115-97, commonly referred to as the Tax Cuts and Jobs Act, is already allowed by Illinois, so no adjustments are required. Do not include 100 percent bonus depreciation property on Form IL-4562.
For more information refer to Form IL-4562, Special Depreciation.