SECTION 5. DRAFTING

INFORMATION

The principal author of this notice is Douglas H. Kim of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this notice, contact Mr. Kim at (202) 622–4930 (not a toll-free call).

(4) Qualified leasehold improvement property as defined in § 168(k)(3) and § 1.168(k)–1(c) and depreciated under § 168;

(5) Nonresidential real property as defined in § 168(e)(2)(B) and depreciated under § 168; or

(6) Residential rental property as defined in § 168(e)(2)(A) and depreciated under § 168.

.03 Time and Manner of Making the Election .

(1) In general . Except as provided in section 4.03(3) of this notice, an election not to deduct the Kansas additional first year depreciation for any class of property that is RA property placed in service during the taxable year must be made by the due date (including extensions) of the federal tax return for the taxable year in which the RA property is placed in service by the taxpayer. Except as provided in sections 4.03(2) and (3) of this notice, the election not to deduct the Kansas additional first year depreciation must be made in the manner prescribed on Form 4562, Depre- ciation and Amortization, and its instructions.

(2) Returns for the taxable year that in- cludes May 5, 2007, filed on or after Au- gust 11, 2008 . If a taxpayer files its federal tax return for the taxable year that includes May 5, 2007, on or after August 11, 2008, and wants to make the election not to deduct the Kansas additional first year depreciation for any class of property that is RA property placed in service by the taxpayer on or after May 5, 2007, during the taxable year that includes May 5, 2007, the

taxpayer must follow the instructions for that taxable year’s Form 4562, Deprecia- tion and Amortization (see “Election Out” on page 4 of the 2006 or 2007 Instructions for Form 4562). Pursuant to those instructions, the taxpayer attaches a statement to its timely filed return (including extensions) identifying the class of property for which the taxpayer is making the election and indicating that, for such class of property, the taxpayer is electing not to claim the Kansas additional first year depreciation.

(3) Special rules for returns for the tax- able year that includes May 5, 2007, filed before August 11, 2008 .

(a) If a taxpayer files its federal tax return for the taxable year that includes May 5, 2007, before August 11, 2008, then the taxpayer has made the election not to deduct the Kansas additional first year depreciation for a class of property that is RA property placed in service by the taxpayer on or after May 5, 2007, during the taxable year that includes May 5, 2007, if the taxpayer:

(i) made the election within the time prescribed in section 4.03(1) of this notice and in the manner prescribed in section 4.03(2) of this notice; (ii) made the election within the time prescribed in section 4.03(1) of this notice and included with the taxpayer’s federal tax return for the taxable year that includes May 5, 2007, an affirmative statement to the effect that the taxpayer is not deducting the Kansas additional first year depreciation for the class of property. The affirmative statement may be a statement attached

August 11, 2008 309 2008–32 I.R.B.