Introduced Version
HOUSE BILL No. 1277
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3.
Synopsis: Taxation of retired and active members of USPHS.
Establishes the definition of "qualified uniformed service income" for
the purpose of determining a taxpayer's adjusted gross income. Adds
a taxpayer who is a member of the United States public health service
(USPHS) commissioned corps to the taxpayers who are eligible to
receive an income tax deduction for military pay, retirement, or
survivor benefits.
Effective: July 1, 2023.
Pack
January 11, 2023, read first time and referred to Committee on Ways and Means.
2023 IN 1277—LS 6765/DI 116 Introduced
First Regular Session of the 123rd General Assembly (2023)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2022 Regular Session of the General Assembly.
HOUSE BILL No. 1277
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 6-3-1-3.5, AS AMENDED BY P.L.180-2022(ss),
2 SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2023]: Sec. 3.5. When used in this article, the term "adjusted
4 gross income" shall mean the following:
5 (a) In the case of all individuals, "adjusted gross income" (as
6 defined in Section 62 of the Internal Revenue Code), modified as
7 follows:
8 (1) Subtract income that is exempt from taxation under this article
9 by the Constitution and statutes of the United States.
10 (2) Except as provided in subsection (c), add an amount equal to
11 any deduction or deductions allowed or allowable pursuant to
12 Section 62 of the Internal Revenue Code for taxes based on or
13 measured by income and levied at the state level by any state of
14 the United States.
15 (3) Subtract one thousand dollars ($1,000), or in the case of a
16 joint return filed by a husband and wife, subtract for each spouse
17 one thousand dollars ($1,000).
2023 IN 1277—LS 6765/DI 116 2
1 (4) Subtract one thousand dollars ($1,000) for:
2 (A) each of the exemptions provided by Section 151(c) of the
3 Internal Revenue Code (as effective January 1, 2017);
4 (B) each additional amount allowable under Section 63(f) of
5 the Internal Revenue Code; and
6 (C) the spouse of the taxpayer if a separate return is made by
7 the taxpayer and if the spouse, for the calendar year in which
8 the taxable year of the taxpayer begins, has no gross income
9 and is not the dependent of another taxpayer.
10 (5) Subtract:
11 (A) One thousand five hundred dollars ($1,500) for each of the
12 exemptions allowed under Section 151(c)(1)(B) of the Internal
13 Revenue Code (as effective January 1, 2004).
14 (B) One thousand five hundred dollars ($1,500) for each
15 exemption allowed under Section 151(c) of the Internal
16 Revenue Code (as effective January 1, 2017) for an individual:
17 (i) who is less than nineteen (19) years of age or is a
18 full-time student who is less than twenty-four (24) years of
19 age;
20 (ii) for whom the taxpayer is the legal guardian; and
21 (iii) for whom the taxpayer does not claim an exemption
22 under clause (A).
23 (C) Five hundred dollars ($500) for each additional amount
24 allowable under Section 63(f)(1) of the Internal Revenue Code
25 if the federal adjusted gross income of the taxpayer, or the
26 taxpayer and the taxpayer's spouse in the case of a joint return,
27 is less than forty thousand dollars ($40,000). In the case of a
28 married individual filing a separate return, the qualifying
29 income amount in this clause is equal to twenty thousand
30 dollars ($20,000).
31 (D) Three thousand dollars ($3,000) for each exemption
32 allowed under Section 151(c) of the Internal Revenue Code (as
33 effective January 1, 2017) for an individual who is:
34 (i) an adopted child of the taxpayer; and
35 (ii) less than nineteen (19) years of age or is a full-time
36 student who is less than twenty-four (24) years of age.
37 This amount is in addition to any amount subtracted under
38 clause (A) or (B).
39 This amount is in addition to the amount subtracted under
40 subdivision (4).
41 (6) Subtract any amounts included in federal adjusted gross
42 income under Section 111 of the Internal Revenue Code as a
2023 IN 1277—LS 6765/DI 116 3
1 recovery of items previously deducted as an itemized deduction
2 from adjusted gross income.
3 (7) Subtract any amounts included in federal adjusted gross
4 income under the Internal Revenue Code which amounts were
5 received by the individual as supplemental railroad retirement
6 annuities under 45 U.S.C. 231 and which are not deductible under
7 subdivision (1).
8 (8) Subtract an amount equal to the amount of federal Social
9 Security and Railroad Retirement benefits included in a taxpayer's
10 federal gross income by Section 86 of the Internal Revenue Code.
11 (9) In the case of a nonresident taxpayer or a resident taxpayer
12 residing in Indiana for a period of less than the taxpayer's entire
13 taxable year, the total amount of the deductions allowed pursuant
14 to subdivisions (3), (4), and (5) shall be reduced to an amount
15 which bears the same ratio to the total as the taxpayer's income
16 taxable in Indiana bears to the taxpayer's total income.
17 (10) In the case of an individual who is a recipient of assistance
18 under IC 12-10-6-1, IC 12-10-6-2.1, IC 12-15-2-2, or IC 12-15-7,
19 subtract an amount equal to that portion of the individual's
20 adjusted gross income with respect to which the individual is not
21 allowed under federal law to retain an amount to pay state and
22 local income taxes.
23 (11) In the case of an eligible individual, subtract the amount of
24 a Holocaust victim's settlement payment included in the
25 individual's federal adjusted gross income.
26 (12) Subtract an amount equal to the portion of any premiums
27 paid during the taxable year by the taxpayer for a qualified long
28 term care policy (as defined in IC 12-15-39.6-5) for the taxpayer
29 or the taxpayer's spouse if the taxpayer and the taxpayer's spouse
30 file a joint income tax return or the taxpayer is otherwise entitled
31 to a deduction under this subdivision for the taxpayer's spouse, or
32 both.
33 (13) Subtract an amount equal to the lesser of:
34 (A) two thousand five hundred dollars ($2,500), or one
35 thousand two hundred fifty dollars ($1,250) in the case of a
36 married individual filing a separate return; or
37 (B) the amount of property taxes that are paid during the
38 taxable year in Indiana by the individual on the individual's
39 principal place of residence.
40 (14) Subtract an amount equal to the amount of a September 11
41 terrorist attack settlement payment included in the individual's
42 federal adjusted gross income.
2023 IN 1277—LS 6765/DI 116 4
1 (15) Add or subtract the amount necessary to make the adjusted
2 gross income of any taxpayer that owns property for which bonus
3 depreciation was allowed in the current taxable year or in an
4 earlier taxable year equal to the amount of adjusted gross income
5 that would have been computed had an election not been made
6 under Section 168(k) of the Internal Revenue Code to apply bonus
7 depreciation to the property in the year that it was placed in
8 service.
9 (16) Add an amount equal to any deduction allowed under
10 Section 172 of the Internal Revenue Code (concerning net
11 operating losses).
12 (17) Add or subtract the amount necessary to make the adjusted
13 gross income of any taxpayer that placed Section 179 property (as
14 defined in Section 179 of the Internal Revenue Code) in service
15 in the current taxable year or in an earlier taxable year equal to
16 the amount of adjusted gross income that would have been
17 computed had an election for federal income tax purposes not
18 been made for the year in which the property was placed in
19 service to take deductions under Section 179 of the Internal
20 Revenue Code in a total amount exceeding the sum of:
21 (A) twenty-five thousand dollars ($25,000) to the extent
22 deductions under Section 179 of the Internal Revenue Code
23 were not elected as provided in clause (B); and
24 (B) for taxable years beginning after December 31, 2017, the
25 deductions elected under Section 179 of the Internal Revenue
26 Code on property acquired in an exchange if:
27 (i) the exchange would have been eligible for
28 nonrecognition of gain or loss under Section 1031 of the
29 Internal Revenue Code in effect on January 1, 2017;
30 (ii) the exchange is not eligible for nonrecognition of gain or
31 loss under Section 1031 of the Internal Revenue Code; and
32 (iii) the taxpayer made an election to take deductions under
33 Section 179 of the Internal Revenue Code with regard to the
34 acquired property in the year that the property was placed
35 into service.
36 The amount of deductions allowable for an item of property
37 under this clause may not exceed the amount of adjusted gross
38 income realized on the property that would have been deferred
39 under the Internal Revenue Code in effect on January 1, 2017.
40 (18) Subtract an amount equal to the amount of the taxpayer's
41 qualified military income or qualified uniformed service
42 income that was not excluded from the taxpayer's gross income
2023 IN 1277—LS 6765/DI 116 5
1 for federal income tax purposes under Section 112 of the Internal
2 Revenue Code.
3 (19) Subtract income that is:
4 (A) exempt from taxation under IC 6-3-2-21.7 (certain income
5 derived from patents); and
6 (B) included in the individual's federal adjusted gross income
7 under the Internal Revenue Code.
8 (20) Add an amount equal to any income not included in gross
9 income as a result of the deferral of income arising from business
10 indebtedness discharged in connection with the reacquisition after
11 December 31, 2008, and before January 1, 2011, of an applicable
12 debt instrument, as provided in Section 108(i) of the Internal
13 Revenue Code. Subtract the amount necessary from the adjusted
14 gross income of any taxpayer that added an amount to adjusted
15 gross income in a previous year to offset the amount included in
16 federal gross income as a result of the deferral of income arising
17 from business indebtedness discharged in connection with the
18 reacquisition after December 31, 2008, and before January 1,
19 2011, of an applicable debt instrument, as provided in Section
20 108(i) of the Internal Revenue Code.
21 (21) Add the amount excluded from federal gross income under
22 Section 103 of the Internal Revenue Code for interest received on
23 an obligation of a state other than Indiana, or a political
24 subdivision of such a state, that is acquired by the taxpayer after
25 December 31, 2011.
26 (22) Subtract an amount as described in Section 1341(a)(2) of the
27 Internal Revenue Code to the extent, if any, that the amount was
28 previously included in the taxpayer's adjusted gross income for a
29 prior taxable year.
30 (23) For taxable years beginning after December 25, 2016, add an
31 amount equal to the deduction for deferred foreign income that
32 was claimed by the taxpayer for the taxable year under Section
33 965(c) of the Internal Revenue Code.
34 (24) Subtract any interest expense paid or accrued in the current
35 taxable year but not deducted as a result of the limitation imposed
36 under Section 163(j)(1) of the Internal Revenue Code. Add any
37 interest expense paid or accrued in a previous taxable year but
38 allowed as a deduction under Section 163 of the Internal Revenue
39 Code in the current taxable year. For purposes of this subdivision,
40 an interest expense is considered paid or accrued only in the first
41 taxable year the deduction would have been allowable under
42 Section 163 of the Internal Revenue Code if the limitation under
2023 IN 1277—LS 6765/DI 116 6
1 Section 163(j)(1) of the Internal Revenue Code did not exist.
2 (25) Subtract the amount that would have been excluded from
3 gross income but for the enactment of Section 118(b)(2) of the
4 Internal Revenue Code for taxable years ending after December
5 22, 2017.
6 (26) For taxable years beginning after December 31, 2019, and
7 before January 1, 2021, add an amount of the deduction claimed
8 under Section 62(a)(22) of the Internal Revenue Code.
9 (27) For taxable years beginning after December 31, 2019, for
10 payments made by an employer under an education assistance
11 program after March 27, 2020:
12 (A) add the amount of payments by an employer that are
13 excluded from the taxpayer's federal gross income under
14 Section 127(c)(1)(B) of the Internal Revenue Code; and
15 (B) deduct the interest allowable under Section 221 of the
16 Internal Revenue Code, if the disallowance under Section
17 221(e)(1) of the Internal Revenue Code did not apply to the
18 payments described in clause (A). For purposes of applying
19 Section 221(b) of the Internal Revenue Code to the amount
20 allowable under this clause, the amount under clause (A) shall
21 not be added to adjusted gross income.
22 (28) Add an amount equal to the remainder of:
23 (A) the amount allowable as a deduction under Section 274(n)
24 of the Internal Revenue Code; minus
25 (B) the amount otherwise allowable as a deduction under
26 Section 274(n) of the Internal Revenue Code, if Section
27 274(n)(2)(D) of the Internal Revenue Code was not in effect
28 for amounts paid or incurred after December 31, 2020.
29 (29) For taxable years beginning after December 31, 2017, and
30 before January 1, 2021, add an amount equal to the excess
31 business loss of the taxpayer as defined in Section 461(l)(3) of the
32 Internal Revenue Code. In addition:
33 (A) If a taxpayer has an excess business loss under this
34 subdivision and also has modifications under subdivisions (15)
35 and (17) for property placed in service during the taxable year,
36 the taxpayer shall treat a portion of the taxable year
37 modifications for that property as occurring in the taxable year
38 the property is placed in service and a portion of the
39 modifications as occurring in the immediately following
40 taxable year.
41 (B) The portion of the modifications under subdivisions (15)
42 and (17) for property placed in service during the taxable year
2023 IN 1277—LS 6765/DI 116 7
1 treated as occurring in the taxable year in which the property
2 is placed in service equals:
3 (i) the modification for the property otherwise determined
4 under this section; minus
5 (ii) the excess business loss disallowed under this
6 subdivision;
7 but not less than zero (0).
8 (C) The portion of the modifications under subdivisions (15)
9 and (17) for property placed in service during the taxable year
10 treated as occurring in the taxable year immediately following
11 the taxable year in which the property is placed in service
12 equals the modification for the property otherwise determined
13 under this section minus the amount in clause (B).
14 (D) Any reallocation of modifications between taxable years
15 under clauses (B) and (C) shall be first allocated to the
16 modification under subdivision (15), then to the modification
17 under subdivision (17).
18 (30) Add an amount equal to the amount excluded from federal
19 gross income under Section 108(f)(5) of the Internal Revenue
20 Code. For purposes of this subdivision:
21 (A) if an amount excluded under Section 108(f)(5) of the
22 Internal Revenue Code would be excludible under Section
23 108(a)(1)(B) of the Internal Revenue Code, the exclusion
24 under Section 108(a)(1)(B) of the Internal Revenue Code shall
25 take precedence; and
26 (B) if an amount would have been excludible under Section
27 108(f)(5) of the Internal Revenue Code as in effect on January
28 1, 2020, the amount is not required to be added back under this
29 subdivision.
30 (31) For taxable years ending after March 12, 2020, subtract an
31 amount equal to the deduction disallowed pursuant to:
32 (A) Section 2301(e) of the CARES Act (Public Law 116-136),
33 as modified by Sections 206 and 207 of the Taxpayer Certainty
34 and Disaster Relief Tax Act (Division EE of Public Law
35 116-260); and
36 (B) Section 3134(e) of the Internal Revenue Code.
37 (32) Subtract the amount of an annual grant amount distributed to
38 a taxpayer's Indiana education scholarship account under
39 IC 20-51.4-4-2 that is used for a qualified expense (as defined in
40 IC 20-51.4-2-9) or to an Indiana enrichment scholarship account
41 under IC 20-52 that is used for qualified expenses (as defined in
42 IC 20-52-2-6), to the extent the distribution used for the qualified
2023 IN 1277—LS 6765/DI 116 8
1 expense is included in the taxpayer's federal adjusted gross
2 income under the Internal Revenue Code.
3 (33) For taxable years beginning after December 31, 2019, and
4 before January 1, 2021, add an amount equal to the amount of
5 unemployment compensation excluded from federal gross income
6 under Section 85(c) of the Internal Revenue Code.
7 (34) For taxable years beginning after December 31, 2022,
8 subtract an amount equal to the deduction disallowed under
9 Section 280C(h) of the Internal Revenue Code.
10 (35) Subtract any other amounts the taxpayer is entitled to deduct
11 under IC 6-3-2.
12 (b) In the case of corporations, the same as "taxable income" (as
13 defined in Section 63 of the Internal Revenue Code) adjusted as
14 follows:
15 (1) Subtract income that is exempt from taxation under this article
16 by the Constitution and statutes of the United States.
17 (2) Add an amount equal to any deduction or deductions allowed
18 or allowable pursuant to Section 170 of the Internal Revenue
19 Code (concerning charitable contributions).
20 (3) Except as provided in subsection (c), add an amount equal to
21 any deduction or deductions allowed or allowable pursuant to
22 Section 63 of the Internal Revenue Code for taxes based on or
23 measured by income and levied at the state level by any state of
24 the United States.
25 (4) Subtract an amount equal to the amount included in the
26 corporation's taxable income under Section 78 of the Internal
27 Revenue Code (concerning foreign tax credits).
28 (5) Add or subtract the amount necessary to make the adjusted
29 gross income of any taxpayer that owns property for which bonus
30 depreciation was allowed in the current taxable year or in an
31 earlier taxable year equal to the amount of adjusted gross income
32 that would have been computed had an election not been made
33 under Section 168(k) of the Internal Revenue Code to apply bonus
34 depreciation to the property in the year that it was placed in
35 service.
36 (6) Add an amount equal to any deduction allowed under Section
37 172 of the Internal Revenue Code (concerning net operating
38 losses).
39 (7) Add or subtract the amount necessary to make the adjusted
40 gross income of any taxpayer that placed Section 179 property (as
41 defined in Section 179 of the Internal Revenue Code) in service
42 in the current taxable year or in an earlier taxable year equal to
2023 IN 1277—LS 6765/DI 116 9
1 the amount of adjusted gross income that would have been
2 computed had an election for federal income tax purposes not
3 been made for the year in which the property was placed in
4 service to take deductions under Section 179 of the Internal
5 Revenue Code in a total amount exceeding the sum of:
6 (A) twenty-five thousand dollars ($25,000) to the extent
7 deductions under Section 179 of the Internal Revenue Code
8 were not elected as provided in clause (B); and
9 (B) for taxable years beginning after December 31, 2017, the
10 deductions elected under Section 179 of the Internal Revenue
11 Code on property acquired in an exchange if:
12 (i) the exchange would have been eligible for
13 nonrecognition of gain or loss under Section 1031 of the
14 Internal Revenue Code in effect on January 1, 2017;
15 (ii) the exchange is not eligible for nonrecognition of gain or
16 loss under Section 1031 of the Internal Revenue Code; and
17 (iii) the taxpayer made an election to take deductions under
18 Section 179 of the Internal Revenue Code with regard to the
19 acquired property in the year that the property was placed
20 into service.
21 The amount of deductions allowable for an item of property
22 under this clause may not exceed the amount of adjusted gross
23 income realized on the property that would have been deferred
24 under the Internal Revenue Code in effect on January 1, 2017.
25 (8) Add to the extent required by IC 6-3-2-20:
26 (A) the amount of intangible expenses (as defined in
27 IC 6-3-2-20) for the taxable year that reduced the corporation's
28 taxable income (as defined in Section 63 of the Internal
29 Revenue Code) for federal income tax purposes; and
30 (B) any directly related interest expenses (as defined in
31 IC 6-3-2-20) that reduced the corporation's adjusted gross
32 income (determined without regard to this subdivision). For
33 purposes of this clause, any directly related interest expense
34 that constitutes business interest within the meaning of Section
35 163(j) of the Internal Revenue Code shall be considered to
36 have reduced the taxpayer's federal taxable income only in the
37 first taxable year in which the deduction otherwise would have
38 been allowable under Section 163 of the Internal Revenue
39 Code if the limitation under Section 163(j)(1) of the Internal
40 Revenue Code did not exist.
41 (9) Add an amount equal to any deduction for dividends paid (as
42 defined in Section 561 of the Internal Revenue Code) to
2023 IN 1277—LS 6765/DI 116 10
1 shareholders of a captive real estate investment trust (as defined
2 in section 34.5 of this chapter).
3 (10) Subtract income that is:
4 (A) exempt from taxation under IC 6-3-2-21.7 (certain income
5 derived from patents); and
6 (B) included in the corporation's taxable income under the
7 Internal Revenue Code.
8 (11) Add an amount equal to any income not included in gross
9 income as a result of the deferral of income arising from business
10 indebtedness discharged in connection with the reacquisition after
11 December 31, 2008, and before January 1, 2011, of an applicable
12 debt instrument, as provided in Section 108(i) of the Internal
13 Revenue Code. Subtract from the adjusted gross income of any
14 taxpayer that added an amount to adjusted gross income in a
15 previous year the amount necessary to offset the amount included
16 in federal gross income as a result of the deferral of income
17 arising from business indebtedness discharged in connection with
18 the reacquisition after December 31, 2008, and before January 1,
19 2011, of an applicable debt instrument, as provided in Section
20 108(i) of the Internal Revenue Code.
21 (12) Add the amount excluded from federal gross income under
22 Section 103 of the Internal Revenue Code for interest received on
23 an obligation of a state other than Indiana, or a political
24 subdivision of such a state, that is acquired by the taxpayer after
25 December 31, 2011.
26 (13) For taxable years beginning after December 25, 2016:
27 (A) for a corporation other than a real estate investment trust,
28 add:
29 (i) an amount equal to the amount reported by the taxpayer
30 on IRC 965 Transition Tax Statement, line 1; or
31 (ii) if the taxpayer deducted an amount under Section 965(c)
32 of the Internal Revenue Code in determining the taxpayer's
33 taxable income for purposes of the federal income tax, the
34 amount deducted under Section 965(c) of the Internal
35 Revenue Code; and
36 (B) for a real estate investment trust, add an amount equal to
37 the deduction for deferred foreign income that was claimed by
38 the taxpayer for the taxable year under Section 965(c) of the
39 Internal Revenue Code, but only to the extent that the taxpayer
40 included income pursuant to Section 965 of the Internal
41 Revenue Code in its taxable income for federal income tax
42 purposes or is required to add back dividends paid under
2023 IN 1277—LS 6765/DI 116 11
1 subdivision (9).
2 (14) Add an amount equal to the deduction that was claimed by
3 the taxpayer for the taxable year under Section 250(a)(1)(B) of the
4 Internal Revenue Code (attributable to global intangible
5 low-taxed income). The taxpayer shall separately specify the
6 amount of the reduction under Section 250(a)(1)(B)(i) of the
7 Internal Revenue Code and under Section 250(a)(1)(B)(ii) of the
8 Internal Revenue Code.
9 (15) Subtract any interest expense paid or accrued in the current
10 taxable year but not deducted as a result of the limitation imposed
11 under Section 163(j)(1) of the Internal Revenue Code. Add any
12 interest expense paid or accrued in a previous taxable year but
13 allowed as a deduction under Section 163 of the Internal Revenue
14 Code in the current taxable year. For purposes of this subdivision,
15 an interest expense is considered paid or accrued only in the first
16 taxable year the deduction would have been allowable under
17 Section 163 of the Internal Revenue Code if the limitation under
18 Section 163(j)(1) of the Internal Revenue Code did not exist.
19 (16) Subtract the amount that would have been excluded from
20 gross income but for the enactment of Section 118(b)(2) of the
21 Internal Revenue Code for taxable years ending after December
22 22, 2017.
23 (17) Add an amount equal to the remainder of:
24 (A) the amount allowable as a deduction under Section 274(n)
25 of the Internal Revenue Code; minus
26 (B) the amount otherwise allowable as a deduction under
27 Section 274(n) of the Internal Revenue Code, if Section
28 274(n)(2)(D) of the Internal Revenue Code was not in effect
29 for amounts paid or incurred after December 31, 2020.
30 (18) For taxable years ending after March 12, 2020, subtract an
31 amount equal to the deduction disallowed pursuant to:
32 (A) Section 2301(e) of the CARES Act (Public Law 116-136),
33 as modified by Sections 206 and 207 of the Taxpayer Certainty
34 and Disaster Relief Tax Act (Division EE of Public Law
35 116-260); and
36 (B) Section 3134(e) of the Internal Revenue Code.
37 (19) For taxable years beginning after December 31, 2022,
38 subtract an amount equal to the deduction disallowed under
39 Section 280C(h) of the Internal Revenue Code.
40 (20) Add or subtract any other amounts the taxpayer is:
41 (A) required to add or subtract; or
42 (B) entitled to deduct;
2023 IN 1277—LS 6765/DI 116 12
1 under IC 6-3-2.
2 (c) The following apply to taxable years beginning after December
3 31, 2018, for purposes of the add back of any deduction allowed on the
4 taxpayer's federal income tax return for wagering taxes, as provided in
5 subsection (a)(2) if the taxpayer is an individual or subsection (b)(3) if
6 the taxpayer is a corporation:
7 (1) For taxable years beginning after December 31, 2018, and
8 before January 1, 2020, a taxpayer is required to add back under
9 this section eighty-seven and five-tenths percent (87.5%) of any
10 deduction allowed on the taxpayer's federal income tax return for
11 wagering taxes.
12 (2) For taxable years beginning after December 31, 2019, and
13 before January 1, 2021, a taxpayer is required to add back under
14 this section seventy-five percent (75%) of any deduction allowed
15 on the taxpayer's federal income tax return for wagering taxes.
16 (3) For taxable years beginning after December 31, 2020, and
17 before January 1, 2022, a taxpayer is required to add back under
18 this section sixty-two and five-tenths percent (62.5%) of any
19 deduction allowed on the taxpayer's federal income tax return for
20 wagering taxes.
21 (4) For taxable years beginning after December 31, 2021, and
22 before January 1, 2023, a taxpayer is required to add back under
23 this section fifty percent (50%) of any deduction allowed on the
24 taxpayer's federal income tax return for wagering taxes.
25 (5) For taxable years beginning after December 31, 2022, and
26 before January 1, 2024, a taxpayer is required to add back under
27 this section thirty-seven and five-tenths percent (37.5%) of any
28 deduction allowed on the taxpayer's federal income tax return for
29 wagering taxes.
30 (6) For taxable years beginning after December 31, 2023, and
31 before January 1, 2025, a taxpayer is required to add back under
32 this section twenty-five percent (25%) of any deduction allowed
33 on the taxpayer's federal income tax return for wagering taxes.
34 (7) For taxable years beginning after December 31, 2024, and
35 before January 1, 2026, a taxpayer is required to add back under
36 this section twelve and five-tenths percent (12.5%) of any
37 deduction allowed on the taxpayer's federal income tax return for
38 wagering taxes.
39 (8) For taxable years beginning after December 31, 2025, a
40 taxpayer is not required to add back under this section any amount
41 of a deduction allowed on the taxpayer's federal income tax return
42 for wagering taxes.
2023 IN 1277—LS 6765/DI 116 13
1 (d) In the case of life insurance companies (as defined in Section
2 816(a) of the Internal Revenue Code) that are organized under Indiana
3 law, the same as "life insurance company taxable income" (as defined
4 in Section 801 of the Internal Revenue Code), adjusted as follows:
5 (1) Subtract income that is exempt from taxation under this article
6 by the Constitution and statutes of the United States.
7 (2) Add an amount equal to any deduction allowed or allowable
8 under Section 170 of the Internal Revenue Code (concerning
9 charitable contributions).
10 (3) Add an amount equal to a deduction allowed or allowable
11 under Section 805 or Section 832(c) of the Internal Revenue Code
12 for taxes based on or measured by income and levied at the state
13 level by any state.
14 (4) Subtract an amount equal to the amount included in the
15 company's taxable income under Section 78 of the Internal
16 Revenue Code (concerning foreign tax credits).
17 (5) Add or subtract the amount necessary to make the adjusted
18 gross income of any taxpayer that owns property for which bonus
19 depreciation was allowed in the current taxable year or in an
20 earlier taxable year equal to the amount of adjusted gross income
21 that would have been computed had an election not been made
22 under Section 168(k) of the Internal Revenue Code to apply bonus
23 depreciation to the property in the year that it was placed in
24 service.
25 (6) Add an amount equal to any deduction allowed under Section
26 172 of the Internal Revenue Code (concerning net operating
27 losses).
28 (7) Add or subtract the amount necessary to make the adjusted
29 gross income of any taxpayer that placed Section 179 property (as
30 defined in Section 179 of the Internal Revenue Code) in service
31 in the current taxable year or in an earlier taxable year equal to
32 the amount of adjusted gross income that would have been
33 computed had an election for federal income tax purposes not
34 been made for the year in which the property was placed in
35 service to take deductions under Section 179 of the Internal
36 Revenue Code in a total amount exceeding the sum of:
37 (A) twenty-five thousand dollars ($25,000) to the extent
38 deductions under Section 179 of the Internal Revenue Code
39 were not elected as provided in clause (B); and
40 (B) for taxable years beginning after December 31, 2017, the
41 deductions elected under Section 179 of the Internal Revenue
42 Code on property acquired in an exchange if:
2023 IN 1277—LS 6765/DI 116 14
1 (i) the exchange would have been eligible for
2 nonrecognition of gain or loss under Section 1031 of the
3 Internal Revenue Code in effect on January 1, 2017;
4 (ii) the exchange is not eligible for nonrecognition of gain or
5 loss under Section 1031 of the Internal Revenue Code; and
6 (iii) the taxpayer made an election to take deductions under
7 Section 179 of the Internal Revenue Code with regard to the
8 acquired property in the year that the property was placed
9 into service.
10 The amount of deductions allowable for an item of property
11 under this clause may not exceed the amount of adjusted gross
12 income realized on the property that would have been deferred
13 under the Internal Revenue Code in effect on January 1, 2017.
14 (8) Subtract income that is:
15 (A) exempt from taxation under IC 6-3-2-21.7 (certain income
16 derived from patents); and
17 (B) included in the insurance company's taxable income under
18 the Internal Revenue Code.
19 (9) Add an amount equal to any income not included in gross
20 income as a result of the deferral of income arising from business
21 indebtedness discharged in connection with the reacquisition after
22 December 31, 2008, and before January 1, 2011, of an applicable
23 debt instrument, as provided in Section 108(i) of the Internal
24 Revenue Code. Subtract from the adjusted gross income of any
25 taxpayer that added an amount to adjusted gross income in a
26 previous year the amount necessary to offset the amount included
27 in federal gross income as a result of the deferral of income
28 arising from business indebtedness discharged in connection with
29 the reacquisition after December 31, 2008, and before January 1,
30 2011, of an applicable debt instrument, as provided in Section
31 108(i) of the Internal Revenue Code.
32 (10) Add an amount equal to any exempt insurance income under
33 Section 953(e) of the Internal Revenue Code that is active
34 financing income under Subpart F of Subtitle A, Chapter 1,
35 Subchapter N of the Internal Revenue Code.
36 (11) Add the amount excluded from federal gross income under
37 Section 103 of the Internal Revenue Code for interest received on
38 an obligation of a state other than Indiana, or a political
39 subdivision of such a state, that is acquired by the taxpayer after
40 December 31, 2011.
41 (12) For taxable years beginning after December 25, 2016, add:
42 (A) an amount equal to the amount reported by the taxpayer on
2023 IN 1277—LS 6765/DI 116 15
1 IRC 965 Transition Tax Statement, line 1; or
2 (B) if the taxpayer deducted an amount under Section 965(c)
3 of the Internal Revenue Code in determining the taxpayer's
4 taxable income for purposes of the federal income tax, the
5 amount deducted under Section 965(c) of the Internal Revenue
6 Code.
7 (13) Add an amount equal to the deduction that was claimed by
8 the taxpayer for the taxable year under Section 250(a)(1)(B) of the
9 Internal Revenue Code (attributable to global intangible
10 low-taxed income). The taxpayer shall separately specify the
11 amount of the reduction under Section 250(a)(1)(B)(i) of the
12 Internal Revenue Code and under Section 250(a)(1)(B)(ii) of the
13 Internal Revenue Code.
14 (14) Subtract any interest expense paid or accrued in the current
15 taxable year but not deducted as a result of the limitation imposed
16 under Section 163(j)(1) of the Internal Revenue Code. Add any
17 interest expense paid or accrued in a previous taxable year but
18 allowed as a deduction under Section 163 of the Internal Revenue
19 Code in the current taxable year. For purposes of this subdivision,
20 an interest expense is considered paid or accrued only in the first
21 taxable year the deduction would have been allowable under
22 Section 163 of the Internal Revenue Code if the limitation under
23 Section 163(j)(1) of the Internal Revenue Code did not exist.
24 (15) Subtract the amount that would have been excluded from
25 gross income but for the enactment of Section 118(b)(2) of the
26 Internal Revenue Code for taxable years ending after December
27 22, 2017.
28 (16) Add an amount equal to the remainder of:
29 (A) the amount allowable as a deduction under Section 274(n)
30 of the Internal Revenue Code; minus
31 (B) the amount otherwise allowable as a deduction under
32 Section 274(n) of the Internal Revenue Code, if Section
33 274(n)(2)(D) of the Internal Revenue Code was not in effect
34 for amounts paid or incurred after December 31, 2020.
35 (17) For taxable years ending after March 12, 2020, subtract an
36 amount equal to the deduction disallowed pursuant to:
37 (A) Section 2301(e) of the CARES Act (Public Law 116-136),
38 as modified by Sections 206 and 207 of the Taxpayer Certainty
39 and Disaster Relief Tax Act (Division EE of Public Law
40 116-260); and
41 (B) Section 3134(e) of the Internal Revenue Code.
42 (18) For taxable years beginning after December 31, 2022,
2023 IN 1277—LS 6765/DI 116 16
1 subtract an amount equal to the deduction disallowed under
2 Section 280C(h) of the Internal Revenue Code.
3 (19) Add or subtract any other amounts the taxpayer is:
4 (A) required to add or subtract; or
5 (B) entitled to deduct;
6 under IC 6-3-2.
7 (e) In the case of insurance companies subject to tax under Section
8 831 of the Internal Revenue Code and organized under Indiana law, the
9 same as "taxable income" (as defined in Section 832 of the Internal
10 Revenue Code), adjusted as follows:
11 (1) Subtract income that is exempt from taxation under this article
12 by the Constitution and statutes of the United States.
13 (2) Add an amount equal to any deduction allowed or allowable
14 under Section 170 of the Internal Revenue Code (concerning
15 charitable contributions).
16 (3) Add an amount equal to a deduction allowed or allowable
17 under Section 805 or Section 832(c) of the Internal Revenue Code
18 for taxes based on or measured by income and levied at the state
19 level by any state.
20 (4) Subtract an amount equal to the amount included in the
21 company's taxable income under Section 78 of the Internal
22 Revenue Code (concerning foreign tax credits).
23 (5) Add or subtract the amount necessary to make the adjusted
24 gross income of any taxpayer that owns property for which bonus
25 depreciation was allowed in the current taxable year or in an
26 earlier taxable year equal to the amount of adjusted gross income
27 that would have been computed had an election not been made
28 under Section 168(k) of the Internal Revenue Code to apply bonus
29 depreciation to the property in the year that it was placed in
30 service.
31 (6) Add an amount equal to any deduction allowed under Section
32 172 of the Internal Revenue Code (concerning net operating
33 losses).
34 (7) Add or subtract the amount necessary to make the adjusted
35 gross income of any taxpayer that placed Section 179 property (as
36 defined in Section 179 of the Internal Revenue Code) in service
37 in the current taxable year or in an earlier taxable year equal to
38 the amount of adjusted gross income that would have been
39 computed had an election for federal income tax purposes not
40 been made for the year in which the property was placed in
41 service to take deductions under Section 179 of the Internal
42 Revenue Code in a total amount exceeding the sum of:
2023 IN 1277—LS 6765/DI 116 17
1 (A) twenty-five thousand dollars ($25,000) to the extent
2 deductions under Section 179 of the Internal Revenue Code
3 were not elected as provided in clause (B); and
4 (B) for taxable years beginning after December 31, 2017, the
5 deductions elected under Section 179 of the Internal Revenue
6 Code on property acquired in an exchange if:
7 (i) the exchange would have been eligible for
8 nonrecognition of gain or loss under Section 1031 of the
9 Internal Revenue Code in effect on January 1, 2017;
10 (ii) the exchange is not eligible for nonrecognition of gain or
11 loss under Section 1031 of the Internal Revenue Code; and
12 (iii) the taxpayer made an election to take deductions under
13 Section 179 of the Internal Revenue Code with regard to the
14 acquired property in the year that the property was placed
15 into service.
16 The amount of deductions allowable for an item of property
17 under this clause may not exceed the amount of adjusted gross
18 income realized on the property that would have been deferred
19 under the Internal Revenue Code in effect on January 1, 2017.
20 (8) Subtract income that is:
21 (A) exempt from taxation under IC 6-3-2-21.7 (certain income
22 derived from patents); and
23 (B) included in the insurance company's taxable income under
24 the Internal Revenue Code.
25 (9) Add an amount equal to any income not included in gross
26 income as a result of the deferral of income arising from business
27 indebtedness discharged in connection with the reacquisition after
28 December 31, 2008, and before January 1, 2011, of an applicable
29 debt instrument, as provided in Section 108(i) of the Internal
30 Revenue Code. Subtract from the adjusted gross income of any
31 taxpayer that added an amount to adjusted gross income in a
32 previous year the amount necessary to offset the amount included
33 in federal gross income as a result of the deferral of income
34 arising from business indebtedness discharged in connection with
35 the reacquisition after December 31, 2008, and before January 1,
36 2011, of an applicable debt instrument, as provided in Section
37 108(i) of the Internal Revenue Code.
38 (10) Add an amount equal to any exempt insurance income under
39 Section 953(e) of the Internal Revenue Code that is active
40 financing income under Subpart F of Subtitle A, Chapter 1,
41 Subchapter N of the Internal Revenue Code.
42 (11) Add the amount excluded from federal gross income under
2023 IN 1277—LS 6765/DI 116 18
1 Section 103 of the Internal Revenue Code for interest received on
2 an obligation of a state other than Indiana, or a political
3 subdivision of such a state, that is acquired by the taxpayer after
4 December 31, 2011.
5 (12) For taxable years beginning after December 25, 2016, add:
6 (A) an amount equal to the amount reported by the taxpayer on
7 IRC 965 Transition Tax Statement, line 1; or
8 (B) if the taxpayer deducted an amount under Section 965(c)
9 of the Internal Revenue Code in determining the taxpayer's
10 taxable income for purposes of the federal income tax, the
11 amount deducted under Section 965(c) of the Internal Revenue
12 Code.
13 (13) Add an amount equal to the deduction that was claimed by
14 the taxpayer for the taxable year under Section 250(a)(1)(B) of the
15 Internal Revenue Code (attributable to global intangible
16 low-taxed income). The taxpayer shall separately specify the
17 amount of the reduction under Section 250(a)(1)(B)(i) of the
18 Internal Revenue Code and under Section 250(a)(1)(B)(ii) of the
19 Internal Revenue Code.
20 (14) Subtract any interest expense paid or accrued in the current
21 taxable year but not deducted as a result of the limitation imposed
22 under Section 163(j)(1) of the Internal Revenue Code. Add any
23 interest expense paid or accrued in a previous taxable year but
24 allowed as a deduction under Section 163 of the Internal Revenue
25 Code in the current taxable year. For purposes of this subdivision,
26 an interest expense is considered paid or accrued only in the first
27 taxable year the deduction would have been allowable under
28 Section 163 of the Internal Revenue Code if the limitation under
29 Section 163(j)(1) of the Internal Revenue Code did not exist.
30 (15) Subtract the amount that would have been excluded from
31 gross income but for the enactment of Section 118(b)(2) of the
32 Internal Revenue Code for taxable years ending after December
33 22, 2017.
34 (16) Add an amount equal to the remainder of:
35 (A) the amount allowable as a deduction under Section 274(n)
36 of the Internal Revenue Code; minus
37 (B) the amount otherwise allowable as a deduction under
38 Section 274(n) of the Internal Revenue Code, if Section
39 274(n)(2)(D) of the Internal Revenue Code was not in effect
40 for amounts paid or incurred after December 31, 2020.
41 (17) For taxable years ending after March 12, 2020, subtract an
42 amount equal to the deduction disallowed pursuant to:
2023 IN 1277—LS 6765/DI 116 19
1 (A) Section 2301(e) of the CARES Act (Public Law 116-136),
2 as modified by Sections 206 and 207 of the Taxpayer Certainty
3 and Disaster Relief Tax Act (Division EE of Public Law
4 116-260); and
5 (B) Section 3134(e) of the Internal Revenue Code.
6 (18) For taxable years beginning after December 31, 2022,
7 subtract an amount equal to the deduction disallowed under
8 Section 280C(h) of the Internal Revenue Code.
9 (19) Add or subtract any other amounts the taxpayer is:
10 (A) required to add or subtract; or
11 (B) entitled to deduct;
12 under IC 6-3-2.
13 (f) In the case of trusts and estates, "taxable income" (as defined for
14 trusts and estates in Section 641(b) of the Internal Revenue Code)
15 adjusted as follows:
16 (1) Subtract income that is exempt from taxation under this article
17 by the Constitution and statutes of the United States.
18 (2) Subtract an amount equal to the amount of a September 11
19 terrorist attack settlement payment included in the federal
20 adjusted gross income of the estate of a victim of the September
21 11 terrorist attack or a trust to the extent the trust benefits a victim
22 of the September 11 terrorist attack.
23 (3) Add or subtract the amount necessary to make the adjusted
24 gross income of any taxpayer that owns property for which bonus
25 depreciation was allowed in the current taxable year or in an
26 earlier taxable year equal to the amount of adjusted gross income
27 that would have been computed had an election not been made
28 under Section 168(k) of the Internal Revenue Code to apply bonus
29 depreciation to the property in the year that it was placed in
30 service.
31 (4) Add an amount equal to any deduction allowed under Section
32 172 of the Internal Revenue Code (concerning net operating
33 losses).
34 (5) Add or subtract the amount necessary to make the adjusted
35 gross income of any taxpayer that placed Section 179 property (as
36 defined in Section 179 of the Internal Revenue Code) in service
37 in the current taxable year or in an earlier taxable year equal to
38 the amount of adjusted gross income that would have been
39 computed had an election for federal income tax purposes not
40 been made for the year in which the property was placed in
41 service to take deductions under Section 179 of the Internal
42 Revenue Code in a total amount exceeding the sum of:
2023 IN 1277—LS 6765/DI 116 20
1 (A) twenty-five thousand dollars ($25,000) to the extent
2 deductions under Section 179 of the Internal Revenue Code
3 were not elected as provided in clause (B); and
4 (B) for taxable years beginning after December 31, 2017, the
5 deductions elected under Section 179 of the Internal Revenue
6 Code on property acquired in an exchange if:
7 (i) the exchange would have been eligible for
8 nonrecognition of gain or loss under Section 1031 of the
9 Internal Revenue Code in effect on January 1, 2017;
10 (ii) the exchange is not eligible for nonrecognition of gain or
11 loss under Section 1031 of the Internal Revenue Code; and
12 (iii) the taxpayer made an election to take deductions under
13 Section 179 of the Internal Revenue Code with regard to the
14 acquired property in the year that the property was placed
15 into service.
16 The amount of deductions allowable for an item of property
17 under this clause may not exceed the amount of adjusted gross
18 income realized on the property that would have been deferred
19 under the Internal Revenue Code in effect on January 1, 2017.
20 (6) Subtract income that is:
21 (A) exempt from taxation under IC 6-3-2-21.7 (certain income
22 derived from patents); and
23 (B) included in the taxpayer's taxable income under the
24 Internal Revenue Code.
25 (7) Add an amount equal to any income not included in gross
26 income as a result of the deferral of income arising from business
27 indebtedness discharged in connection with the reacquisition after
28 December 31, 2008, and before January 1, 2011, of an applicable
29 debt instrument, as provided in Section 108(i) of the Internal
30 Revenue Code. Subtract from the adjusted gross income of any
31 taxpayer that added an amount to adjusted gross income in a
32 previous year the amount necessary to offset the amount included
33 in federal gross income as a result of the deferral of income
34 arising from business indebtedness discharged in connection with
35 the reacquisition after December 31, 2008, and before January 1,
36 2011, of an applicable debt instrument, as provided in Section
37 108(i) of the Internal Revenue Code.
38 (8) Add the amount excluded from federal gross income under
39 Section 103 of the Internal Revenue Code for interest received on
40 an obligation of a state other than Indiana, or a political
41 subdivision of such a state, that is acquired by the taxpayer after
42 December 31, 2011.
2023 IN 1277—LS 6765/DI 116 21
1 (9) For taxable years beginning after December 25, 2016, add an
2 amount equal to:
3 (A) the amount reported by the taxpayer on IRC 965
4 Transition Tax Statement, line 1;
5 (B) if the taxpayer deducted an amount under Section 965(c)
6 of the Internal Revenue Code in determining the taxpayer's
7 taxable income for purposes of the federal income tax, the
8 amount deducted under Section 965(c) of the Internal Revenue
9 Code; and
10 (C) with regard to any amounts of income under Section 965
11 of the Internal Revenue Code distributed by the taxpayer, the
12 deduction under Section 965(c) of the Internal Revenue Code
13 attributable to such distributed amounts and not reported to the
14 beneficiary.
15 For purposes of this article, the amount required to be added back
16 under clause (B) is not considered to be distributed or
17 distributable to a beneficiary of the estate or trust for purposes of
18 Sections 651 and 661 of the Internal Revenue Code.
19 (10) Subtract any interest expense paid or accrued in the current
20 taxable year but not deducted as a result of the limitation imposed
21 under Section 163(j)(1) of the Internal Revenue Code. Add any
22 interest expense paid or accrued in a previous taxable year but
23 allowed as a deduction under Section 163 of the Internal Revenue
24 Code in the current taxable year. For purposes of this subdivision,
25 an interest expense is considered paid or accrued only in the first
26 taxable year the deduction would have been allowable under
27 Section 163 of the Internal Revenue Code if the limitation under
28 Section 163(j)(1) of the Internal Revenue Code did not exist.
29 (11) Add an amount equal to the deduction for qualified business
30 income that was claimed by the taxpayer for the taxable year
31 under Section 199A of the Internal Revenue Code.
32 (12) Subtract the amount that would have been excluded from
33 gross income but for the enactment of Section 118(b)(2) of the
34 Internal Revenue Code for taxable years ending after December
35 22, 2017.
36 (13) Add an amount equal to the remainder of:
37 (A) the amount allowable as a deduction under Section 274(n)
38 of the Internal Revenue Code; minus
39 (B) the amount otherwise allowable as a deduction under
40 Section 274(n) of the Internal Revenue Code, if Section
41 274(n)(2)(D) of the Internal Revenue Code was not in effect
42 for amounts paid or incurred after December 31, 2020.
2023 IN 1277—LS 6765/DI 116 22
1 (14) For taxable years beginning after December 31, 2017, and
2 before January 1, 2021, add an amount equal to the excess
3 business loss of the taxpayer as defined in Section 461(l)(3) of the
4 Internal Revenue Code. In addition:
5 (A) If a taxpayer has an excess business loss under this
6 subdivision and also has modifications under subdivisions (3)
7 and (5) for property placed in service during the taxable year,
8 the taxpayer shall treat a portion of the taxable year
9 modifications for that property as occurring in the taxable year
10 the property is placed in service and a portion of the
11 modifications as occurring in the immediately following
12 taxable year.
13 (B) The portion of the modifications under subdivisions (3)
14 and (5) for property placed in service during the taxable year
15 treated as occurring in the taxable year in which the property
16 is placed in service equals:
17 (i) the modification for the property otherwise determined
18 under this section; minus
19 (ii) the excess business loss disallowed under this
20 subdivision;
21 but not less than zero (0).
22 (C) The portion of the modifications under subdivisions (3)
23 and (5) for property placed in service during the taxable year
24 treated as occurring in the taxable year immediately following
25 the taxable year in which the property is placed in service
26 equals the modification for the property otherwise determined
27 under this section minus the amount in clause (B).
28 (D) Any reallocation of modifications between taxable years
29 under clauses (B) and (C) shall be first allocated to the
30 modification under subdivision (3), then to the modification
31 under subdivision (5).
32 (15) For taxable years ending after March 12, 2020, subtract an
33 amount equal to the deduction disallowed pursuant to:
34 (A) Section 2301(e) of the CARES Act (Public Law 116-136),
35 as modified by Sections 206 and 207 of the Taxpayer Certainty
36 and Disaster Relief Tax Act (Division EE of Public Law
37 116-260); and
38 (B) Section 3134(e) of the Internal Revenue Code.
39 (16) For taxable years beginning after December 31, 2022,
40 subtract an amount equal to the deduction disallowed under
41 Section 280C(h) of the Internal Revenue Code.
42 (17) Add or subtract any other amounts the taxpayer is:
2023 IN 1277—LS 6765/DI 116 23
1 (A) required to add or subtract; or
2 (B) entitled to deduct;
3 under IC 6-3-2.
4 (g) Subsections (a)(35), (b)(20), (d)(19), (e)(19), or (f)(17) may not
5 be construed to require an add back or allow a deduction or exemption
6 more than once for a particular add back, deduction, or exemption.
7 (h) For taxable years beginning after December 25, 2016, if:
8 (1) a taxpayer is a shareholder, either directly or indirectly, in a
9 corporation that is an E&P deficit foreign corporation as defined
10 in Section 965(b)(3)(B) of the Internal Revenue Code, and the
11 earnings and profit deficit, or a portion of the earnings and profit
12 deficit, of the E&P deficit foreign corporation is permitted to
13 reduce the federal adjusted gross income or federal taxable
14 income of the taxpayer, the deficit, or the portion of the deficit,
15 shall also reduce the amount taxable under this section to the
16 extent permitted under the Internal Revenue Code, however, in no
17 case shall this permit a reduction in the amount taxable under
18 Section 965 of the Internal Revenue Code for purposes of this
19 section to be less than zero (0); and
20 (2) the Internal Revenue Service issues guidance that such an
21 income or deduction is not reported directly on a federal tax
22 return or is to be reported in a manner different than specified in
23 this section, this section shall be construed as if federal adjusted
24 gross income or federal taxable income included the income or
25 deduction.
26 (i) If a partner is required to include an item of income, a deduction,
27 or another tax attribute in the partner's adjusted gross income tax return
28 pursuant to IC 6-3-4.5, such item shall be considered to be includible
29 in the partner's federal adjusted gross income or federal taxable
30 income, regardless of whether such item is actually required to be
31 reported by the partner for federal income tax purposes. For purposes
32 of this subsection:
33 (1) items for which a valid election is made under IC 6-3-4.5-6,
34 IC 6-3-4.5-8, or IC 6-3-4.5-9 shall not be required to be included
35 in the partner's adjusted gross income or taxable income; and
36 (2) items for which the partnership did not make an election under
37 IC 6-3-4.5-6, IC 6-3-4.5-8, or IC 6-3-4.5-9, but for which the
38 partnership is required to remit tax pursuant to IC 6-3-4.5-18,
39 shall be included in the partner's adjusted gross income or taxable
40 income.
41 SECTION 2. IC 6-3-1-39 IS ADDED TO THE INDIANA CODE
42 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
2023 IN 1277—LS 6765/DI 116 24
1 1, 2023]: Sec. 39. "Qualified uniformed service income" means
2 wages that are paid to an individual employed by the United States
3 public health service commissioned corps.
4 SECTION 3. IC 6-3-2-4, AS AMENDED BY P.L.162-2019,
5 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
6 JULY 1, 2023]: Sec. 4. (a) Each taxable year, an individual, or the
7 individual's surviving spouse, is entitled to the following:
8 (1) An adjusted gross income tax deduction for the first five
9 thousand dollars ($5,000) of income, excluding adjusted gross
10 income described in subdivision (2), received during the taxable
11 year by the individual, or the individual's surviving spouse, for the
12 individual's service in:
13 (A) an active or reserve component of the armed forces of the
14 United States, including the army, navy, air force, coast guard,
15 marine corps, merchant marine, Indiana army national guard,
16 or Indiana air national guard; or
17 (B) the United States public health service commissioned
18 corps.
19 (2) An adjusted gross income tax deduction for income from
20 retirement or survivor's benefits received during the taxable year
21 by the individual, or the individual's surviving spouse, for the
22 individual's service in the United States public health service
23 commissioned corps or an active or reserve component of the
24 armed forces of the United States, including the army, navy, air
25 force, coast guard, marine corps, merchant marine, Indiana army
26 national guard, or Indiana air national guard. The amount of the
27 deduction is the lesser of:
28 (A) the benefits included in the adjusted gross income of the
29 individual or the individual's surviving spouse; or
30 (B) six thousand two hundred fifty dollars ($6,250) plus the
31 following:
32 (i) For taxable years beginning in 2019, twenty-five percent
33 (25%) of the amount of the benefits in excess of six
34 thousand two hundred fifty dollars ($6,250).
35 (ii) For taxable years beginning in 2020, fifty percent (50%)
36 of the amount of the benefits in excess of six thousand two
37 hundred fifty dollars ($6,250).
38 (iii) For taxable years beginning in 2021, seventy-five
39 percent (75%) of the amount of the benefits in excess of six
40 thousand two hundred fifty dollars ($6,250).
41 (iv) For taxable years beginning after 2021, one hundred
42 percent (100%) of the amount of the benefits in excess of six
2023 IN 1277—LS 6765/DI 116 25
1 thousand two hundred fifty dollars ($6,250).
2 (b) An individual whose qualified military income or qualified
3 uniformed service income is subtracted from the individual's federal
4 adjusted gross income under IC 6-3-1-3.5(a)(18) for Indiana individual
5 income tax purposes is not, for that taxable year, entitled to a deduction
6 under this section for the same qualified military income or qualified
7 uniformed service income that is deducted under IC 6-3-1-3.5(a)(18).
2023 IN 1277—LS 6765/DI 116