The reference to the Internal Revenue Code, which provides the starting point for determining North Carolina taxable income, has been updated to January 1, 2011.[10]  The session law updating the reference to the Internal Revenue Code also included provisions that require adjustments to be made to federal taxable income relating to bonus depreciation deductions allowed under I.R.C. § 168 and expense deductions allowed under I.R.C. § 179.

For tax years 2010 through 2012, taxpayers are required to add to federal taxable income 85% of the amount allowed as a bonus depreciation deduction under I.R.C. §§ 168(k) or 168(n) for property placed in service during the tax year.[11]  For the next five tax years, taxpayers may deduct the amount of bonus depreciation added to federal taxable income in five equal installments.[12]

For tax years 2010 through 2011, taxpayers must add to federal taxable income 85% of the amount by which the taxpayer’s expense deduction under I.R.C. § 179 for property placed in service in tax year 2010 or 2011 exceeds the amount that would have been allowed under I.R.C. § 179 as of May 1, 2010.[13]  For the next five tax years, taxpayers may deduct the amount added to federal taxable income under N.C. Gen. Stat. § 105-130.5(a)(23) or N.C. Gen. Stat. § 105-134.6(c)(15) in five equal installments.[14]