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Per the Illinois Department of Revenue, if a taxpayer purchases a luxury auto and takes the maximum amount of bonus depreciation allowed at the federal level, there will be no subtraction on Form IL-4562, line 5 in the first year for the luxury auto. Even if you have an addback bonus on Form IL-4562, line 1 for a luxury auto placed in service in the current year, there will not be a subtraction on line 5. 

For this luxury auto there is no other current depreciation besides the bonus depreciation. Thus, if you follow the line instructions on Form IL-4562, line 5, there is no amount to enter. In later years there will be a subtraction on line 5 for this asset, and when the asset is sold, the basis difference will be accounted for on Form IL-4562. For luxury autos with bonus depreciation taken on them, just like other Section 168(k) assets, this is merely a timing difference between federal and Illinois depreciation.

Related topic: 1120 Illinois frequently asked questions

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