IT-398: New York State Depreciation Schedule for IRC Section 168(k) Property (2025)
New York · NY DTF · Used for tax years 2025
Form IT-398 is New York State’s depreciation schedule for IRC Section 168(k) property. It reports New York and federal depreciation deductions and calculates New York income adjustments, including adjustments for property disposed of during the year.
Who files this form
Use Form IT-398 to calculate New York depreciation adjustments for IRC § 168(k) property placed in service inside or outside New York State after May 31, 2003. Resurgence zone property and the New York liberty zone property described in the form are excluded.
- Complete Part 1 if you claimed federal accelerated cost recovery system (ACRS) depreciation on qualifying property.
- Complete Part 2 if you disposed of qualifying property and must adjust New York income for the difference between total New York and federal depreciation.
- For a partnership using IRC § 168 to determine depreciation, the partnership completes IT-398, not each individual partner. Partners report their shares of the adjustments on their personal income tax returns.
- Nonresidents and part-year residents must complete IT-398 as if they were New York residents for the entire year.
Do not use IT-398 to report depreciation on covered residential properties owned by institutional real estate investors under the special rules described in the form.
What you'll need
Have the following information available to complete IT-398:
- Your name and identifying number as shown on your tax return.
- Property descriptions, dates placed in service, depreciable basis, depreciation methods, and New York and federal depreciation amounts.
- Federal Form 4562, column E, for the depreciation convention entered in Part 1, column D.
- For disposed property, the disposition date and method, plus total New York and federal depreciation claimed.
- Form IT-225, where the depreciation adjustments are reported.
- Form IT-212 and its instructions if you claimed an investment credit on listed property or need to calculate a credit adjustment after disposition.
If you filed a joint federal return but must file separate New York returns, submit a schedule with each return showing each spouse’s separate amounts as if separate federal returns had been filed, and explain any differences.
How to file
Enter your name and Social Security number or employer identification number. Mark one box for the New York return you are filing: IT-201, IT-203, IT-204, or IT-205. Submit IT-398 with that return.
For Part 1:
- Enter the property and depreciation information. Use an additional sheet if needed.
- Transfer the column F total to Form IT-225, line 10, Total amount column, using subtraction modification S-213 in the Number column.
- Transfer the column G total to Form IT-225, line 1, Total amount column, using addition modification A-209 in the Number column.
For Part 2, subtract total New York depreciation from total federal depreciation as directed on lines 2 through 5. Transfer line 5 to Form IT-225, line 10, Total amount column, using subtraction modification S-214 in the Number column.
The supplied text does not provide a mailing address or e-filing directions.
Common mistakes
- Using the form for excluded property. Use IT-398 only for property placed in service after May 31, 2003. The form excludes specified resurgence zone and New York liberty zone property and says not to report covered properties subject to the institutional real estate investor rules.
- Depreciating land. The instructions state that land is never depreciable.
- Reducing passive-activity adjustments because of federal loss limits. The required federal and New York depreciation modifications must reflect the full allowable amounts, even when federal loss deduction limitations apply.
- Completing separate IT-398 forms for individual partners. For a partnership using IRC § 168, only the partnership completes the form.
- Overlooking credit adjustments after disposition. If property for which specified credits were taken on IT-212 is disposed of or removed from qualified use too soon, the difference between the credit taken and the credit allowed for actual use must be added to income tax in the year of disposition.
Questions people ask
Why are New York and federal depreciation different?
For the property covered by this form, New York does not allow the federal special depreciation deduction. Instead, New York allows depreciation determined under IRC § 167 as it would have applied if the property had been acquired on September 10, 2001.
How long can I take New York depreciation?
You may take the New York depreciation deduction until the property is disposed of or fully depreciated.
What counts as a disposition?
Disposition includes sale, exchange, transfer, and obsolescence, but is not limited to those events.
What if we filed jointly federally but must file separately in New York?
Complete only one IT-398 using the amounts from your joint federal return. Submit a schedule with each New York return showing each spouse’s separate amounts as if separate federal returns had been filed, and explain any differences.
What if I am a shareholder of an electing New York S corporation?
The S corporation should provide your proportionate share of its depreciation deduction.