43-1024. Amortization of private commercial
capital investment by qualified defense contractor
A. A qualified defense contractor that is certified by the department of commerce
under section 41-1508 may elect pursuant to this section to amortize the cost of any new
device, machinery, equipment or other capital investment that is used exclusively for
private commercial activities in this state. The period of amortization allowed by this
section is equal to one-half of the time period allowed pursuant to the internal revenue
code for the same class of property. In computing Arizona taxable income, the
amortization is allowed as a subtraction ratably over the period allowed by this section
beginning with the month in which the device, machinery, equipment or other capital
investment is placed in exclusively private commercial service in this state.
B. The taxpayer shall make the election under this section by an appropriate
statement in the income tax return for the initial taxable year. The taxpayer may also
elect to discontinue amortization with respect to the remainder of the amortization
period by an appropriate statement in the income tax return for the taxable year in which
the election to discontinue is made.
C. In determining the adjusted basis for the purposes of subsection A of this
section, the device, machinery, equipment or other capital investment shall include only
an amount that is properly attributable to constructing, installing or acquiring the
device, machinery, equipment or other investment as certified by the department of
commerce. The taxpayer shall use the adjusted basis determined pursuant to this section
in determining the gain on the sale or other disposition of a capital investment that is
amortized under this section.
D. The subtraction provided by this section is in lieu of any allowance for
exhaustion, wear and tear of the property allowed by section 167 or 179 of the internal
revenue code.
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