Eligible Kansas taxpayers are allowed to claim an expense deduction for business machinery and equipment, placed in service in Kansas during the tax year. Effective Tax Year 2013 and forward, only C-Corporations may claim the expense deduction against the corporate income tax liability. The expense deduction will not be available to other types of taxpayers. Effective Tax Year 2014 and forward, privilege taxpayers may claim the expense deduction against the privilege tax liability.
The one-time deduction is allowed for each qualified purchase of machinery and equipment in the year that it is placed in service. The unused expense deduction is treated as a Kansas net operating loss that may be carried forward for ten (10) years. However, effective Tax Year 2013, the Kansas net operating loss deduction is only available to C-Corporations and is no longer available to other types of taxpayers. Eligible investment is machinery and equipment depreciable under the Modified Accelerated Cost Recovery System (MACRS) in section 168 of the Internal Revenue Code, or canned software as defined in section 197 of the Internal Revenue Code. Examples of eligible equipment include manufacturing equipment, office furniture, computers, software and racking. Part of the deduction is recaptured if the property is later sold or moved outside of Kansas during its applicable recovery period.