Indiana Senate Bill SB0419 Latest Draft

                            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.
SENATE ENROLLED ACT No. 419
AN ACT to amend the Indiana Code concerning taxation.
Be it enacted by the General Assembly of the State of Indiana:
SECTION 1. IC 6-2.5-5-2, AS AMENDED BY P.L.239-2017,
SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2023]: Sec. 2. (a) Transactions involving agricultural
machinery, tools, and equipment, including material handling
equipment purchased for the purpose of transporting materials into
activities described in this subsection from an onsite location, are
exempt from the state gross retail tax if the person acquiring that
property acquires it for the person's direct use in the direct production,
extraction, harvesting, or processing of agricultural commodities.
(b) Transactions involving agricultural machinery or equipment are
exempt from the state gross retail tax if:
(1) the person acquiring the property acquires it for use in
conjunction with the production of food and food ingredients or
commodities for sale;
(2) the person acquiring the property is occupationally engaged in
the production of food or commodities which the person sells for
human or animal consumption or uses for further food and food
ingredients or commodity production; and
(3) the machinery or equipment is designed for use in gathering,
moving, or spreading animal waste.
(c) Transactions involving agricultural machinery or equipment,
including material handling equipment purchased for the purpose of
transporting materials into activities described in this subsection from
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an onsite location, are exempt from the state gross retail tax if the
person acquiring the property:
(1) acquires it for the person's direct use in:
(A) the direct application of fertilizers, pesticides, fungicides,
seeds, and other tangible personal property; or
(B) the direct extraction, harvesting, or processing of
agricultural commodities;
for consideration; and
(2) is occupationally engaged in providing the services described
in subdivision (1) on property that is:
(A) owned or rented by another person occupationally engaged
in agricultural production; and
(B) used for agricultural production.
(d) If a transaction:
(1) involving agricultural machinery, tools, or equipment
qualifies for an exemption under subsection (a), (b), or (c);
(2) involves agricultural machinery, tools, or equipment
included on the person's business tangible personal property
tax return, or, if IC 6-1.1-3-7.2(f) applies, agricultural
machinery, tools, or equipment that would otherwise be
included on a business tangible personal property tax return;
and
(3) the agricultural machinery, tools, or equipment is
predominately used for exempt purposes under subsection (a),
(b), or (c);
the entire transaction is exempt from the application of the state
gross retail tax regardless of whether the person also uses or
intends to use the property for a nonexempt purpose. 
(e) The amount of state gross retail tax or use tax imposed on
transactions involving agricultural machinery, tools, or equipment
that meet the qualifications of subsection (d)(1) and (d)(2), but not
subsection (d)(3), is prorated based on the purchaser's nonexempt
use.
(f) If agricultural machinery, tools, or equipment described in
this section is purchased in Indiana but is used outside of Indiana,
subsection (d)(2) shall apply as if the agricultural machinery, tools,
or equipment was located in Indiana.
(g) The department may amend the administrative rules to
conform with subsection (d).
SECTION 2. IC 6-2.5-5-8.5, AS AMENDED BY THE
TECHNICAL CORRECTIONS BILL OF THE 2023 GENERAL
ASSEMBLY, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
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UPON PASSAGE]: Sec. 8.5. Transactions involving electrical energy,
natural or artificial gas, water, steam, or steam heating service sold or
furnished by a power subsidiary or a person engaged as a public utility
are exempt from the state gross retail tax when:
(1) the a power subsidiary or person provides, installs, constructs,
services, or removes tangible personal property which is used in
connection with the furnishing of the services or commodities
listed in IC 6-2.5-4-5;
(2) the a power subsidiary or person sells the services or
commodities listed in IC 6-2.5-4-5 to another public utility or
power subsidiary or a person described in IC 6-2.5-4-6; or
(3) the a power subsidiary or person sells the services or
commodities listed in IC 6-2.5-4-5 and all of the following
conditions are satisfied:
(A) The services or commodities are sold to a business that:
(i) relocates all or part of its operations to a facility; or
(ii) expands all or part of its operations in a facility;
located in a military base (as defined in IC 36-7-30-1(c)), a
military base reuse area established under IC 36-7-14.5-12.5
that is or formerly was a military base (as defined in
IC 36-7-30-1(c)), or a qualified military base enhancement
area established under IC 36-7-34.
(B) The business uses the services or commodities in the
facility described in clause (A) not later than five (5) years
after the operation operations that relocated to the facility, or
expanded in the facility, commence.
(C) The sales of the services or commodities are separately
metered for use by the relocated or expanded operations.
(D) In the case of a business that uses the services or
commodities in a qualified military base enhancement area
established under IC 36-7-34-4(1), the business must satisfy at
least one (1) of the following criteria:
(i) The business is a participant in the technology transfer
program conducted by the qualified military base (as defined
in IC 36-7-34-3).
(ii) The business is a United States Department of Defense
contractor.
(iii) The business and the qualified military base have a
mutually beneficial relationship evidenced by a
memorandum of understanding between the business and
the United States Department of Defense.
(E) In the case of a business that uses the services and
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commodities in a qualified military base enhancement area
established under IC 36-7-34-4(2), the business must satisfy at
least one (1) of the following criteria:
(i) The business is a participant in the technology transfer
program conducted by the qualified military base (as defined
in IC 36-7-34-3).
(ii) The business and the qualified miliary base have a
mutually beneficial relationship evidenced by a
memorandum of understanding between the business and
the qualified military base (as defined in IC 36-7-34-3).
However, this subdivision does not apply to a business that
substantially reduces or ceases its operations at another
location in Indiana in order to relocate its operations in an area
described in this subdivision, unless the department
determines that the business had existing operations in the area
described in this subdivision and that the operations relocated
to the area are an expansion of the business's operations in the
area.
However, this subdivision does not apply to a business that
substantially reduces or ceases its operations at another
location in Indiana in order to relocate its operations in an
area described in this subdivision, unless the department
determines that the business had existing operations in the
area described in this subdivision and that the operations
relocated to the area are an expansion of the business's
operations in the area.
SECTION 3. IC 6-2.5-5-10.7 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2023]: Sec. 10.7. (a) This section does not
apply to tangible personal property that:
(1) is used to store or consume usable energy, electricity, or
heat;
(2) is used to convey, transfer, or alter generated electricity;
or
(3) will be used to produce energy for the purchaser's
residential use, regardless of whether any of the energy
produced may be sold to a public utility or power subsidiary.
(b) As used in this section, "solar energy system" means any
device that converts solar energy to a form of usable energy with
an originally rated nameplate production capacity of at least two
(2) megawatts.
(c) As used in this section, "wind energy system" means any
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device, including a wind turbine, windmill, and wind charger, that
converts wind energy to a form of usable energy with an originally
rated nameplate production capacity of at least two (2) megawatts.
(d) A transaction involving tangible personal property is exempt
from the state gross retail tax if the:
(1) tangible personal property is a component of a solar
energy system or wind energy system; and
(2) person acquiring the tangible personal property is a:
(A) public utility that furnishes or sells electrical energy;
(B) power subsidiary (as defined in IC 6-2.5-1-22.5) that
furnishes or sells electrical energy to a power utility
described in clause (A); or
(C) business that furnishes or sells electrical energy to a
public utility described in clause (A), to a power subsidiary
described in clause (B), or to a renewable utility grade
solar electricity or wind facility that is used to generate
electricity for resale to consumers or wholesalers.
SECTION 4. IC 6-2.5-8-3 IS REPEALED [EFFECTIVE UPON
PASSAGE]. Sec. 3. (a) A manufacturer or wholesaler may register with
the department as a purchaser of property in exempt transactions. A
manufacturer or wholesaler wishing to register must apply in the same
manner and pay the same fee as a retail merchant under section 1 of
this chapter.
(b) Upon receiving the application and fee, the department may
issue a manufacturer's or wholesaler's certificate for each place of
business listed on the application. Each certificate shall contain a serial
number and the location of the place of business for which it is issued.
SECTION 5. IC 6-2.5-8-5, AS AMENDED BY P.L.111-2006,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 5. A certificate issued under section 3 or 4 of
this chapter is valid so long as the business or exempt organization is
in existence.
SECTION 6. IC 6-2.5-8-7, AS AMENDED BY P.L.156-2020,
SECTION 21, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 7. (a) The department may, for good cause,
revoke a certificate issued under section 1 3, or 4 of this chapter.
However, the department must give the certificate holder at least five
(5) days notice before it revokes the certificate under this subsection.
Good cause for revocation may include the following:
(1) Failure to:
(A) file a return required under this chapter or for any tax
collected for the state in trust; or
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(B) remit any tax collected for the state in trust.
(2) Being charged with a violation of any provision under IC 35.
(3) Being subject to a court order under IC 7.1-2-6-7,
IC 32-30-6-8, IC 32-30-7, or IC 32-30-8.
(4) Being charged with a violation of IC 23-15-12.
(5) Operating as a retail merchant where the certificate issued
under section 1 of this chapter could have been denied under
section 1(e) of this chapter prior to its issuance.
The department may revoke a certificate before a criminal adjudication
or without a criminal charge being filed. If the department gives notice
of an intent to revoke based on an alleged violation of subdivision (2),
the department shall hold a public hearing to determine whether good
cause exists. If the department finds in a public hearing by a
preponderance of the evidence that a person has committed a violation
described in subdivision (2), the department shall proceed in
accordance with subsection (i) (if the violation resulted in a criminal
conviction) or subsection (j) (if the violation resulted in a judgment for
an infraction).
(b) The department shall revoke a certificate issued under section
1 3, or 4 of this chapter if, for a period of three (3) years, the certificate
holder fails to:
(1) file the returns required by IC 6-2.5-6-1; or
(2) report the collection of any state gross retail or use tax on the
returns filed under IC 6-2.5-6-1.
However, the department must give the certificate holder at least five
(5) days notice before it revokes the certificate.
(c) The department may, for good cause, revoke a certificate issued
under section 1 of this chapter after at least five (5) days notice to the
certificate holder if:
(1) the certificate holder is subject to an innkeeper's tax under
IC 6-9; and
(2) a board, bureau, or commission established under IC 6-9 files
a written statement with the department.
(d) The statement filed under subsection (c) must state that:
(1) information obtained by the board, bureau, or commission
under IC 6-8.1-7-1 indicates that the certificate holder has not
complied with IC 6-9; and
(2) the board, bureau, or commission has determined that
significant harm will result to the county from the certificate
holder's failure to comply with IC 6-9.
(e) The department shall revoke or suspend a certificate issued
under section 1 of this chapter after at least five (5) days notice to the
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certificate holder if:
(1) the certificate holder owes taxes, penalties, fines, interest, or
costs due under IC 6-1.1 that remain unpaid at least sixty (60)
days after the due date under IC 6-1.1; and
(2) the treasurer of the county to which the taxes are due requests
the department to revoke or suspend the certificate.
(f) The department shall reinstate a certificate suspended under
subsection (e) if the taxes and any penalties due under IC 6-1.1 are paid
or the county treasurer requests the department to reinstate the
certificate because an agreement for the payment of taxes and any
penalties due under IC 6-1.1 has been reached to the satisfaction of the
county treasurer.
(g) The department shall revoke a certificate issued under section
1 of this chapter after at least five (5) days notice to the certificate
holder if the department finds in a public hearing by a preponderance
of the evidence that the certificate holder has violated IC 35-45-5-3,
IC 35-45-5-3.5, or IC 35-45-5-4.
(h) If a person makes a payment for the certificate under section 1
or 3 of this chapter with a check, credit card, debit card, or electronic
funds transfer, and the department is unable to obtain payment of the
check, credit card, debit card, or electronic funds transfer for its full
face amount when the check, credit card, debit card, or electronic funds
transfer is presented for payment through normal banking channels, the
department shall notify the person by mail that the check, credit card,
debit card, or electronic funds transfer was not honored and that the
person has five (5) days after the notice is mailed to pay the fee in cash,
by certified check, or other guaranteed payment. If the person fails to
make the payment within the five (5) day period, the department shall
revoke the certificate.
(i) If the department finds in a public hearing by a preponderance of
the evidence that a person has a conviction for an offense under
IC 35-48-4 and the conviction involved the sale of or the offer to sell,
in the normal course of business, a synthetic drug (as defined in
IC 35-31.5-2-321), a synthetic drug lookalike substance (as defined in
IC 35-31.5-2-321.5 (before its repeal on July 1, 2019)), a controlled
substance analog (as defined in IC 35-48-1-9.3), or a substance
represented to be a controlled substance (as described in
IC 35-48-4-4.6) by a retail merchant in a place of business for which
the retail merchant has been issued a registered retail merchant
certificate under section 1 of this chapter, the department:
(1) shall suspend the registered retail merchant certificate for the
place of business for one (1) year; and
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(2) may not issue another retail merchant certificate under section
1 of this chapter for one (1) year to any person:
(A) that:
(i) applied for; or
(ii) made a retail transaction under;
the retail merchant certificate suspended under subdivision
(1); or
(B) that:
(i) owned or co-owned, directly or indirectly; or
(ii) was an officer, a director, a manager, or a partner of;
the retail merchant that was issued the retail merchant
certificate suspended under subdivision (1).
(j) If the department finds in a public hearing by a preponderance of
the evidence that a person has a judgment for a violation of
IC 35-48-4-10.5 (before its repeal on July 1, 2019) as an infraction and
the violation involved the sale of or the offer to sell, in the normal
course of business, a synthetic drug or a synthetic drug lookalike
substance by a retail merchant in a place of business for which the
retail merchant has been issued a registered retail merchant certificate
under section 1 of this chapter, the department:
(1) may suspend the registered retail merchant certificate for the
place of business for six (6) months; and
(2) may withhold issuance of another retail merchant certificate
under section 1 of this chapter for six (6) months to any person:
(A) that:
(i) applied for; or
(ii) made a retail transaction under;
the retail merchant certificate suspended under subdivision
(1); or
(B) that:
(i) owned or co-owned, directly or indirectly; or
(ii) was an officer, a director, a manager, or a partner of;
the retail merchant that was issued the retail merchant
certificate suspended under subdivision (1).
(k) If the department finds in a public hearing by a preponderance
of the evidence that a person has a conviction for a violation of
IC 35-48-4-10(d)(3) and the conviction involved an offense committed
by a retail merchant in a place of business for which the retail merchant
has been issued a registered retail merchant certificate under section 1
of this chapter, the department:
(1) shall suspend the registered retail merchant certificate for the
place of business for one (1) year; and
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(2) may not issue another retail merchant certificate under section
1 of this chapter for one (1) year to any person:
(A) that:
(i) applied for; or
(ii) made a retail transaction under;
the retail merchant certificate suspended under subdivision
(1); or
(B) that:
(i) owned or co-owned, directly or indirectly; or
(ii) was an officer, a director, a manager, or a partner of;
the retail merchant that was issued the retail merchant
certificate suspended under subdivision (1).
SECTION 7. IC 6-3-1-3.5, AS AMENDED BY P.L.1-2023,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 3.5. When used in this
article, the term "adjusted gross income" shall mean the following:
(a) In the case of all individuals, "adjusted gross income" (as
defined in Section 62 of the Internal Revenue Code), modified as
follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Except as provided in subsection (c), add an amount equal to
any deduction or deductions allowed or allowable pursuant to
Section 62 of the Internal Revenue Code for taxes based on or
measured by income and levied at the state level by any state of
the United States.
(3) Subtract one thousand dollars ($1,000), or in the case of a
joint return filed by a husband and wife, subtract for each spouse
one thousand dollars ($1,000).
(4) Subtract one thousand dollars ($1,000) for:
(A) each of the exemptions provided by Section 151(c) of the
Internal Revenue Code (as effective January 1, 2017);
(B) each additional amount allowable under Section 63(f) of
the Internal Revenue Code; and
(C) the spouse of the taxpayer if a separate return is made by
the taxpayer and if the spouse, for the calendar year in which
the taxable year of the taxpayer begins, has no gross income
and is not the dependent of another taxpayer.
(5) Subtract:
(A) One thousand five hundred dollars ($1,500) for each of the
exemptions allowed under Section 151(c)(1)(B) of the Internal
Revenue Code (as effective January 1, 2004).
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(B) One thousand five hundred dollars ($1,500) for each
exemption allowed under Section 151(c) of the Internal
Revenue Code (as effective January 1, 2017) for an individual:
(i) who is less than nineteen (19) years of age or is a
full-time student who is less than twenty-four (24) years of
age;
(ii) for whom the taxpayer is the legal guardian; and
(iii) for whom the taxpayer does not claim an exemption
under clause (A).
(C) Five hundred dollars ($500) for each additional amount
allowable under Section 63(f)(1) of the Internal Revenue Code
if the federal adjusted gross income of the taxpayer, or the
taxpayer and the taxpayer's spouse in the case of a joint return,
is less than forty thousand dollars ($40,000). In the case of a
married individual filing a separate return, the qualifying
income amount in this clause is equal to twenty thousand
dollars ($20,000).
(D) Three thousand dollars ($3,000) for each exemption
allowed under Section 151(c) of the Internal Revenue Code (as
effective January 1, 2017) for an individual who is:
(i) an adopted child of the taxpayer; and
(ii) less than nineteen (19) years of age or is a full-time
student who is less than twenty-four (24) years of age.
This amount is in addition to any amount subtracted under
clause (A) or (B).
This amount is in addition to the amount subtracted under
subdivision (4).
(6) Subtract any amounts included in federal adjusted gross
income under Section 111 of the Internal Revenue Code as a
recovery of items previously deducted as an itemized deduction
from adjusted gross income.
(7) Subtract any amounts included in federal adjusted gross
income under the Internal Revenue Code which amounts were
received by the individual as supplemental railroad retirement
annuities under 45 U.S.C. 231 and which are not deductible under
subdivision (1).
(8) Subtract an amount equal to the amount of federal Social
Security and Railroad Retirement benefits included in a taxpayer's
federal gross income by Section 86 of the Internal Revenue Code.
(9) In the case of a nonresident taxpayer or a resident taxpayer
residing in Indiana for a period of less than the taxpayer's entire
taxable year, the total amount of the deductions allowed pursuant
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to subdivisions (3), (4), and (5) shall be reduced to an amount
which bears the same ratio to the total as the taxpayer's income
taxable in Indiana bears to the taxpayer's total income.
(10) In the case of an individual who is a recipient of assistance
under IC 12-10-6-1, IC 12-10-6-2.1, IC 12-15-2-2, or IC 12-15-7,
subtract an amount equal to that portion of the individual's
adjusted gross income with respect to which the individual is not
allowed under federal law to retain an amount to pay state and
local income taxes.
(11) In the case of an eligible individual, subtract the amount of
a Holocaust victim's settlement payment included in the
individual's federal adjusted gross income.
(12) Subtract an amount equal to the portion of any premiums
paid during the taxable year by the taxpayer for a qualified long
term care policy (as defined in IC 12-15-39.6-5) for the taxpayer
or the taxpayer's spouse if the taxpayer and the taxpayer's spouse
file a joint income tax return or the taxpayer is otherwise entitled
to a deduction under this subdivision for the taxpayer's spouse, or
both.
(13) Subtract an amount equal to the lesser of:
(A) two thousand five hundred dollars ($2,500), or one
thousand two hundred fifty dollars ($1,250) in the case of a
married individual filing a separate return; or
(B) the amount of property taxes that are paid during the
taxable year in Indiana by the individual on the individual's
principal place of residence.
(14) Subtract an amount equal to the amount of a September 11
terrorist attack settlement payment included in the individual's
federal adjusted gross income.
(15) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that owns property for which bonus
depreciation was allowed in the current taxable year or in an
earlier taxable year equal to the amount of adjusted gross income
that would have been computed had an election not been made
under Section 168(k) of the Internal Revenue Code to apply bonus
depreciation to the property in the year that it was placed in
service.
(16) Add an amount equal to any deduction allowed under
Section 172 of the Internal Revenue Code (concerning net
operating losses).
(17) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that placed Section 179 property (as
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defined in Section 179 of the Internal Revenue Code) in service
in the current taxable year or in an earlier taxable year equal to
the amount of adjusted gross income that would have been
computed had an election for federal income tax purposes not
been made for the year in which the property was placed in
service to take deductions under Section 179 of the Internal
Revenue Code in a total amount exceeding the sum of:
(A) twenty-five thousand dollars ($25,000) to the extent
deductions under Section 179 of the Internal Revenue Code
were not elected as provided in clause (B); and
(B) for taxable years beginning after December 31, 2017, the
deductions elected under Section 179 of the Internal Revenue
Code on property acquired in an exchange if:
(i) the exchange would have been eligible for
nonrecognition of gain or loss under Section 1031 of the
Internal Revenue Code in effect on January 1, 2017;
(ii) the exchange is not eligible for nonrecognition of gain or
loss under Section 1031 of the Internal Revenue Code; and
(iii) the taxpayer made an election to take deductions under
Section 179 of the Internal Revenue Code with regard to the
acquired property in the year that the property was placed
into service.
The amount of deductions allowable for an item of property
under this clause may not exceed the amount of adjusted gross
income realized on the property that would have been deferred
under the Internal Revenue Code in effect on January 1, 2017.
(18) Subtract an amount equal to the amount of the taxpayer's
qualified military income that was not excluded from the
taxpayer's gross income for federal income tax purposes under
Section 112 of the Internal Revenue Code.
(19) Subtract income that is:
(A) exempt from taxation under IC 6-3-2-21.7 (certain income
derived from patents); and
(B) included in the individual's federal adjusted gross income
under the Internal Revenue Code.
(20) Add an amount equal to any income not included in gross
income as a result of the deferral of income arising from business
indebtedness discharged in connection with the reacquisition after
December 31, 2008, and before January 1, 2011, of an applicable
debt instrument, as provided in Section 108(i) of the Internal
Revenue Code. Subtract the amount necessary from the adjusted
gross income of any taxpayer that added an amount to adjusted
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gross income in a previous year to offset the amount included in
federal gross income as a result of the deferral of income arising
from business indebtedness discharged in connection with the
reacquisition after December 31, 2008, and before January 1,
2011, of an applicable debt instrument, as provided in Section
108(i) of the Internal Revenue Code.
(21) Add the amount excluded from federal gross income under
Section 103 of the Internal Revenue Code for interest received on
an obligation of a state other than Indiana, or a political
subdivision of such a state, that is acquired by the taxpayer after
December 31, 2011. For purposes of this subdivision:
(A) if the taxpayer receives interest from a pass through
entity, a regulated investment company, a hedge fund, or
similar arrangement, the taxpayer will be considered to
have acquired the obligation on the date the entity
acquired the obligation;
(B) if ownership of the obligation occurs by means other
than a purchase, the date of acquisition of the obligation
shall be the date ownership of the obligation was
transferred, except to the extent provided in clause (A),
and if a portion of the obligation is acquired on multiple
dates, the date of acquisition shall be considered separately
for each portion of the obligation; and
(C) if ownership of the obligation occurred as the result of
a refinancing of another obligation, the acquisition date
shall be the date on which the obligation was refinanced.
(22) Subtract an amount as described in Section 1341(a)(2) of the
Internal Revenue Code to the extent, if any, that the amount was
previously included in the taxpayer's adjusted gross income for a
prior taxable year.
(23) For taxable years beginning after December 25, 2016, add an
amount equal to the deduction for deferred foreign income that
was claimed by the taxpayer for the taxable year under Section
965(c) of the Internal Revenue Code.
(24) Subtract any interest expense paid or accrued in the current
taxable year but not deducted as a result of the limitation imposed
under Section 163(j)(1) of the Internal Revenue Code. Add any
interest expense paid or accrued in a previous taxable year but
allowed as a deduction under Section 163 of the Internal Revenue
Code in the current taxable year. For purposes of this subdivision,
an interest expense is considered paid or accrued only in the first
taxable year the deduction would have been allowable under
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Section 163 of the Internal Revenue Code if the limitation under
Section 163(j)(1) of the Internal Revenue Code did not exist.
(25) Subtract the amount that would have been excluded from
gross income but for the enactment of Section 118(b)(2) of the
Internal Revenue Code for taxable years ending after December
22, 2017.
(26) For taxable years beginning after December 31, 2019, and
before January 1, 2021, add an amount of the deduction claimed
under Section 62(a)(22) of the Internal Revenue Code.
(27) For taxable years beginning after December 31, 2019, for
payments made by an employer under an education assistance
program after March 27, 2020:
(A) add the amount of payments by an employer that are
excluded from the taxpayer's federal gross income under
Section 127(c)(1)(B) of the Internal Revenue Code; and
(B) deduct the interest allowable under Section 221 of the
Internal Revenue Code, if the disallowance under Section
221(e)(1) of the Internal Revenue Code did not apply to the
payments described in clause (A). For purposes of applying
Section 221(b) of the Internal Revenue Code to the amount
allowable under this clause, the amount under clause (A) shall
not be added to adjusted gross income.
(28) Add an amount equal to the remainder of:
(A) the amount allowable as a deduction under Section 274(n)
of the Internal Revenue Code; minus
(B) the amount otherwise allowable as a deduction under
Section 274(n) of the Internal Revenue Code, if Section
274(n)(2)(D) of the Internal Revenue Code was not in effect
for amounts paid or incurred after December 31, 2020.
(29) For taxable years beginning after December 31, 2017, and
before January 1, 2021, add an amount equal to the excess
business loss of the taxpayer as defined in Section 461(l)(3) of the
Internal Revenue Code. In addition:
(A) If a taxpayer has an excess business loss under this
subdivision and also has modifications under subdivisions (15)
and (17) for property placed in service during the taxable year,
the taxpayer shall treat a portion of the taxable year
modifications for that property as occurring in the taxable year
the property is placed in service and a portion of the
modifications as occurring in the immediately following
taxable year.
(B) The portion of the modifications under subdivisions (15)
SEA 419 — CC 1 15
and (17) for property placed in service during the taxable year
treated as occurring in the taxable year in which the property
is placed in service equals:
(i) the modification for the property otherwise determined
under this section; minus
(ii) the excess business loss disallowed under this
subdivision;
but not less than zero (0).
(C) The portion of the modifications under subdivisions (15)
and (17) for property placed in service during the taxable year
treated as occurring in the taxable year immediately following
the taxable year in which the property is placed in service
equals the modification for the property otherwise determined
under this section minus the amount in clause (B).
(D) Any reallocation of modifications between taxable years
under clauses (B) and (C) shall be first allocated to the
modification under subdivision (15), then to the modification
under subdivision (17).
(30) Add an amount equal to the amount excluded from federal
gross income under Section 108(f)(5) of the Internal Revenue
Code. For purposes of this subdivision:
(A) if an amount excluded under Section 108(f)(5) of the
Internal Revenue Code would be excludible under Section
108(a)(1)(B) of the Internal Revenue Code, the exclusion
under Section 108(a)(1)(B) of the Internal Revenue Code shall
take precedence; and
(B) if an amount would have been excludible under Section
108(f)(5) of the Internal Revenue Code as in effect on January
1, 2020, the amount is not required to be added back under this
subdivision.
(31) For taxable years ending after March 12, 2020, subtract an
amount equal to the deduction disallowed pursuant to:
(A) Section 2301(e) of the CARES Act (Public Law 116-136),
as modified by Sections 206 and 207 of the Taxpayer Certainty
and Disaster Relief Tax Act (Division EE of Public Law
116-260); and
(B) Section 3134(e) of the Internal Revenue Code.
(32) Subtract the amount of an annual grant amount distributed to
a taxpayer's Indiana education scholarship account under
IC 20-51.4-4-2 that is used for a qualified expense (as defined in
IC 20-51.4-2-9) or to an Indiana enrichment scholarship account
under IC 20-52 that is used for qualified expenses (as defined in
SEA 419 — CC 1 16
IC 20-52-2-6), to the extent the distribution used for the qualified
expense is included in the taxpayer's federal adjusted gross
income under the Internal Revenue Code.
(33) For taxable years beginning after December 31, 2019, and
before January 1, 2021, add an amount equal to the amount of
unemployment compensation excluded from federal gross income
under Section 85(c) of the Internal Revenue Code.
(34) For taxable years beginning after December 31, 2022,
subtract an amount equal to the deduction disallowed under
Section 280C(h) of the Internal Revenue Code.
(35) For taxable years beginning after December 31, 2021, add
or subtract amounts related to specified research or
experimental procedures as required under IC 6-3-2-29.
(35) (36) Subtract any other amounts the taxpayer is entitled to
deduct under IC 6-3-2.
(b) In the case of corporations, the same as "taxable income" (as
defined in Section 63 of the Internal Revenue Code) adjusted as
follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Add an amount equal to any deduction or deductions allowed
or allowable pursuant to Section 170 of the Internal Revenue
Code (concerning charitable contributions).
(3) Except as provided in subsection (c), add an amount equal to
any deduction or deductions allowed or allowable pursuant to
Section 63 of the Internal Revenue Code for taxes based on or
measured by income and levied at the state level by any state of
the United States.
(4) Subtract an amount equal to the amount included in the
corporation's taxable income under Section 78 of the Internal
Revenue Code (concerning foreign tax credits).
(5) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that owns property for which bonus
depreciation was allowed in the current taxable year or in an
earlier taxable year equal to the amount of adjusted gross income
that would have been computed had an election not been made
under Section 168(k) of the Internal Revenue Code to apply bonus
depreciation to the property in the year that it was placed in
service.
(6) Add an amount equal to any deduction allowed under Section
172 of the Internal Revenue Code (concerning net operating
losses).
SEA 419 — CC 1 17
(7) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that placed Section 179 property (as
defined in Section 179 of the Internal Revenue Code) in service
in the current taxable year or in an earlier taxable year equal to
the amount of adjusted gross income that would have been
computed had an election for federal income tax purposes not
been made for the year in which the property was placed in
service to take deductions under Section 179 of the Internal
Revenue Code in a total amount exceeding the sum of:
(A) twenty-five thousand dollars ($25,000) to the extent
deductions under Section 179 of the Internal Revenue Code
were not elected as provided in clause (B); and
(B) for taxable years beginning after December 31, 2017, the
deductions elected under Section 179 of the Internal Revenue
Code on property acquired in an exchange if:
(i) the exchange would have been eligible for
nonrecognition of gain or loss under Section 1031 of the
Internal Revenue Code in effect on January 1, 2017;
(ii) the exchange is not eligible for nonrecognition of gain or
loss under Section 1031 of the Internal Revenue Code; and
(iii) the taxpayer made an election to take deductions under
Section 179 of the Internal Revenue Code with regard to the
acquired property in the year that the property was placed
into service.
The amount of deductions allowable for an item of property
under this clause may not exceed the amount of adjusted gross
income realized on the property that would have been deferred
under the Internal Revenue Code in effect on January 1, 2017.
(8) Add to the extent required by IC 6-3-2-20:
(A) the amount of intangible expenses (as defined in
IC 6-3-2-20) for the taxable year that reduced the corporation's
taxable income (as defined in Section 63 of the Internal
Revenue Code) for federal income tax purposes; and
(B) any directly related interest expenses (as defined in
IC 6-3-2-20) that reduced the corporation's adjusted gross
income (determined without regard to this subdivision). For
purposes of this clause, any directly related interest expense
that constitutes business interest within the meaning of Section
163(j) of the Internal Revenue Code shall be considered to
have reduced the taxpayer's federal taxable income only in the
first taxable year in which the deduction otherwise would have
been allowable under Section 163 of the Internal Revenue
SEA 419 — CC 1 18
Code if the limitation under Section 163(j)(1) of the Internal
Revenue Code did not exist.
(9) Add an amount equal to any deduction for dividends paid (as
defined in Section 561 of the Internal Revenue Code) to
shareholders of a captive real estate investment trust (as defined
in section 34.5 of this chapter).
(10) Subtract income that is:
(A) exempt from taxation under IC 6-3-2-21.7 (certain income
derived from patents); and
(B) included in the corporation's taxable income under the
Internal Revenue Code.
(11) Add an amount equal to any income not included in gross
income as a result of the deferral of income arising from business
indebtedness discharged in connection with the reacquisition after
December 31, 2008, and before January 1, 2011, of an applicable
debt instrument, as provided in Section 108(i) of the Internal
Revenue Code. Subtract from the adjusted gross income of any
taxpayer that added an amount to adjusted gross income in a
previous year the amount necessary to offset the amount included
in federal gross income as a result of the deferral of income
arising from business indebtedness discharged in connection with
the reacquisition after December 31, 2008, and before January 1,
2011, of an applicable debt instrument, as provided in Section
108(i) of the Internal Revenue Code.
(12) Add the amount excluded from federal gross income under
Section 103 of the Internal Revenue Code for interest received on
an obligation of a state other than Indiana, or a political
subdivision of such a state, that is acquired by the taxpayer after
December 31, 2011. For purposes of this subdivision:
(A) if the taxpayer receives interest from a pass through
entity, a regulated investment company, a hedge fund, or
similar arrangement, the taxpayer will be considered to
have acquired the obligation on the date the entity
acquired the obligation;
(B) if ownership of the obligation occurs by means other
than a purchase, the date of acquisition of the obligation
shall be the date ownership of the obligation was
transferred, except to the extent provided in clause (A),
and if a portion of the obligation is acquired on multiple
dates, the date of acquisition shall be considered separately
for each portion of the obligation; and
(C) if ownership of the obligation occurred as the result of
SEA 419 — CC 1 19
a refinancing of another obligation, the acquisition date
shall be the date on which the obligation was refinanced.
(13) For taxable years beginning after December 25, 2016:
(A) for a corporation other than a real estate investment trust,
add:
(i) an amount equal to the amount reported by the taxpayer
on IRC 965 Transition Tax Statement, line 1; or
(ii) if the taxpayer deducted an amount under Section 965(c)
of the Internal Revenue Code in determining the taxpayer's
taxable income for purposes of the federal income tax, the
amount deducted under Section 965(c) of the Internal
Revenue Code; and
(B) for a real estate investment trust, add an amount equal to
the deduction for deferred foreign income that was claimed by
the taxpayer for the taxable year under Section 965(c) of the
Internal Revenue Code, but only to the extent that the taxpayer
included income pursuant to Section 965 of the Internal
Revenue Code in its taxable income for federal income tax
purposes or is required to add back dividends paid under
subdivision (9).
(14) Add an amount equal to the deduction that was claimed by
the taxpayer for the taxable year under Section 250(a)(1)(B) of the
Internal Revenue Code (attributable to global intangible
low-taxed income). The taxpayer shall separately specify the
amount of the reduction under Section 250(a)(1)(B)(i) of the
Internal Revenue Code and under Section 250(a)(1)(B)(ii) of the
Internal Revenue Code.
(15) Subtract any interest expense paid or accrued in the current
taxable year but not deducted as a result of the limitation imposed
under Section 163(j)(1) of the Internal Revenue Code. Add any
interest expense paid or accrued in a previous taxable year but
allowed as a deduction under Section 163 of the Internal Revenue
Code in the current taxable year. For purposes of this subdivision,
an interest expense is considered paid or accrued only in the first
taxable year the deduction would have been allowable under
Section 163 of the Internal Revenue Code if the limitation under
Section 163(j)(1) of the Internal Revenue Code did not exist.
(16) Subtract the amount that would have been excluded from
gross income but for the enactment of Section 118(b)(2) of the
Internal Revenue Code for taxable years ending after December
22, 2017.
(17) Add an amount equal to the remainder of:
SEA 419 — CC 1 20
(A) the amount allowable as a deduction under Section 274(n)
of the Internal Revenue Code; minus
(B) the amount otherwise allowable as a deduction under
Section 274(n) of the Internal Revenue Code, if Section
274(n)(2)(D) of the Internal Revenue Code was not in effect
for amounts paid or incurred after December 31, 2020.
(18) For taxable years ending after March 12, 2020, subtract an
amount equal to the deduction disallowed pursuant to:
(A) Section 2301(e) of the CARES Act (Public Law 116-136),
as modified by Sections 206 and 207 of the Taxpayer Certainty
and Disaster Relief Tax Act (Division EE of Public Law
116-260); and
(B) Section 3134(e) of the Internal Revenue Code.
(19) For taxable years beginning after December 31, 2022,
subtract an amount equal to the deduction disallowed under
Section 280C(h) of the Internal Revenue Code.
(20) For taxable years beginning after December 31, 2021,
subtract the amount of any:
(A) federal, state, or local grant received by the taxpayer;
and
(B) discharged federal, state, or local indebtedness
incurred by the taxpayer;
for purposes of providing or expanding access to broadband
service in this state.
(21) For taxable years beginning after December 31, 2021, add
or subtract amounts related to specified research or
experimental procedures as required under IC 6-3-2-29.
(20) (22) Add or subtract any other amounts the taxpayer is:
(A) required to add or subtract; or
(B) entitled to deduct;
under IC 6-3-2.
(c) The following apply to taxable years beginning after December
31, 2018, for purposes of the add back of any deduction allowed on the
taxpayer's federal income tax return for wagering taxes, as provided in
subsection (a)(2) if the taxpayer is an individual or subsection (b)(3) if
the taxpayer is a corporation:
(1) For taxable years beginning after December 31, 2018, and
before January 1, 2020, a taxpayer is required to add back under
this section eighty-seven and five-tenths percent (87.5%) of any
deduction allowed on the taxpayer's federal income tax return for
wagering taxes.
(2) For taxable years beginning after December 31, 2019, and
SEA 419 — CC 1 21
before January 1, 2021, a taxpayer is required to add back under
this section seventy-five percent (75%) of any deduction allowed
on the taxpayer's federal income tax return for wagering taxes.
(3) For taxable years beginning after December 31, 2020, and
before January 1, 2022, a taxpayer is required to add back under
this section sixty-two and five-tenths percent (62.5%) of any
deduction allowed on the taxpayer's federal income tax return for
wagering taxes.
(4) For taxable years beginning after December 31, 2021, and
before January 1, 2023, a taxpayer is required to add back under
this section fifty percent (50%) of any deduction allowed on the
taxpayer's federal income tax return for wagering taxes.
(5) For taxable years beginning after December 31, 2022, and
before January 1, 2024, a taxpayer is required to add back under
this section thirty-seven and five-tenths percent (37.5%) of any
deduction allowed on the taxpayer's federal income tax return for
wagering taxes.
(6) For taxable years beginning after December 31, 2023, and
before January 1, 2025, a taxpayer is required to add back under
this section twenty-five percent (25%) of any deduction allowed
on the taxpayer's federal income tax return for wagering taxes.
(7) For taxable years beginning after December 31, 2024, and
before January 1, 2026, a taxpayer is required to add back under
this section twelve and five-tenths percent (12.5%) of any
deduction allowed on the taxpayer's federal income tax return for
wagering taxes.
(8) For taxable years beginning after December 31, 2025, a
taxpayer is not required to add back under this section any amount
of a deduction allowed on the taxpayer's federal income tax return
for wagering taxes.
(d) In the case of life insurance companies (as defined in Section
816(a) of the Internal Revenue Code) that are organized under Indiana
law, the same as "life insurance company taxable income" (as defined
in Section 801 of the Internal Revenue Code), adjusted as follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Add an amount equal to any deduction allowed or allowable
under Section 170 of the Internal Revenue Code (concerning
charitable contributions).
(3) Add an amount equal to a deduction allowed or allowable
under Section 805 or Section 832(c) of the Internal Revenue Code
for taxes based on or measured by income and levied at the state
SEA 419 — CC 1 22
level by any state.
(4) Subtract an amount equal to the amount included in the
company's taxable income under Section 78 of the Internal
Revenue Code (concerning foreign tax credits).
(5) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that owns property for which bonus
depreciation was allowed in the current taxable year or in an
earlier taxable year equal to the amount of adjusted gross income
that would have been computed had an election not been made
under Section 168(k) of the Internal Revenue Code to apply bonus
depreciation to the property in the year that it was placed in
service.
(6) Add an amount equal to any deduction allowed under Section
172 of the Internal Revenue Code (concerning net operating
losses).
(7) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that placed Section 179 property (as
defined in Section 179 of the Internal Revenue Code) in service
in the current taxable year or in an earlier taxable year equal to
the amount of adjusted gross income that would have been
computed had an election for federal income tax purposes not
been made for the year in which the property was placed in
service to take deductions under Section 179 of the Internal
Revenue Code in a total amount exceeding the sum of:
(A) twenty-five thousand dollars ($25,000) to the extent
deductions under Section 179 of the Internal Revenue Code
were not elected as provided in clause (B); and
(B) for taxable years beginning after December 31, 2017, the
deductions elected under Section 179 of the Internal Revenue
Code on property acquired in an exchange if:
(i) the exchange would have been eligible for
nonrecognition of gain or loss under Section 1031 of the
Internal Revenue Code in effect on January 1, 2017;
(ii) the exchange is not eligible for nonrecognition of gain or
loss under Section 1031 of the Internal Revenue Code; and
(iii) the taxpayer made an election to take deductions under
Section 179 of the Internal Revenue Code with regard to the
acquired property in the year that the property was placed
into service.
The amount of deductions allowable for an item of property
under this clause may not exceed the amount of adjusted gross
income realized on the property that would have been deferred
SEA 419 — CC 1 23
under the Internal Revenue Code in effect on January 1, 2017.
(8) Subtract income that is:
(A) exempt from taxation under IC 6-3-2-21.7 (certain income
derived from patents); and
(B) included in the insurance company's taxable income under
the Internal Revenue Code.
(9) Add an amount equal to any income not included in gross
income as a result of the deferral of income arising from business
indebtedness discharged in connection with the reacquisition after
December 31, 2008, and before January 1, 2011, of an applicable
debt instrument, as provided in Section 108(i) of the Internal
Revenue Code. Subtract from the adjusted gross income of any
taxpayer that added an amount to adjusted gross income in a
previous year the amount necessary to offset the amount included
in federal gross income as a result of the deferral of income
arising from business indebtedness discharged in connection with
the reacquisition after December 31, 2008, and before January 1,
2011, of an applicable debt instrument, as provided in Section
108(i) of the Internal Revenue Code.
(10) Add an amount equal to any exempt insurance income under
Section 953(e) of the Internal Revenue Code that is active
financing income under Subpart F of Subtitle A, Chapter 1,
Subchapter N of the Internal Revenue Code.
(11) Add the amount excluded from federal gross income under
Section 103 of the Internal Revenue Code for interest received on
an obligation of a state other than Indiana, or a political
subdivision of such a state, that is acquired by the taxpayer after
December 31, 2011. For purposes of this subdivision:
(A) if the taxpayer receives interest from a pass through
entity, a regulated investment company, a hedge fund, or
similar arrangement, the taxpayer will be considered to
have acquired the obligation on the date the entity
acquired the obligation;
(B) if ownership of the obligation occurs by means other
than a purchase, the date of acquisition of the obligation
shall be the date ownership of the obligation was
transferred, except to the extent provided in clause (A),
and if a portion of the obligation is acquired on multiple
dates, the date of acquisition shall be considered separately
for each portion of the obligation; and
(C) if ownership of the obligation occurred as the result of
a refinancing of another obligation, the acquisition date
SEA 419 — CC 1 24
shall be the date on which the obligation was refinanced.
(12) For taxable years beginning after December 25, 2016, add:
(A) an amount equal to the amount reported by the taxpayer on
IRC 965 Transition Tax Statement, line 1; or
(B) if the taxpayer deducted an amount under Section 965(c)
of the Internal Revenue Code in determining the taxpayer's
taxable income for purposes of the federal income tax, the
amount deducted under Section 965(c) of the Internal Revenue
Code.
(13) Add an amount equal to the deduction that was claimed by
the taxpayer for the taxable year under Section 250(a)(1)(B) of the
Internal Revenue Code (attributable to global intangible
low-taxed income). The taxpayer shall separately specify the
amount of the reduction under Section 250(a)(1)(B)(i) of the
Internal Revenue Code and under Section 250(a)(1)(B)(ii) of the
Internal Revenue Code.
(14) Subtract any interest expense paid or accrued in the current
taxable year but not deducted as a result of the limitation imposed
under Section 163(j)(1) of the Internal Revenue Code. Add any
interest expense paid or accrued in a previous taxable year but
allowed as a deduction under Section 163 of the Internal Revenue
Code in the current taxable year. For purposes of this subdivision,
an interest expense is considered paid or accrued only in the first
taxable year the deduction would have been allowable under
Section 163 of the Internal Revenue Code if the limitation under
Section 163(j)(1) of the Internal Revenue Code did not exist.
(15) Subtract the amount that would have been excluded from
gross income but for the enactment of Section 118(b)(2) of the
Internal Revenue Code for taxable years ending after December
22, 2017.
(16) Add an amount equal to the remainder of:
(A) the amount allowable as a deduction under Section 274(n)
of the Internal Revenue Code; minus
(B) the amount otherwise allowable as a deduction under
Section 274(n) of the Internal Revenue Code, if Section
274(n)(2)(D) of the Internal Revenue Code was not in effect
for amounts paid or incurred after December 31, 2020.
(17) For taxable years ending after March 12, 2020, subtract an
amount equal to the deduction disallowed pursuant to:
(A) Section 2301(e) of the CARES Act (Public Law 116-136),
as modified by Sections 206 and 207 of the Taxpayer Certainty
and Disaster Relief Tax Act (Division EE of Public Law
SEA 419 — CC 1 25
116-260); and
(B) Section 3134(e) of the Internal Revenue Code.
(18) For taxable years beginning after December 31, 2022,
subtract an amount equal to the deduction disallowed under
Section 280C(h) of the Internal Revenue Code.
(19) For taxable years beginning after December 31, 2021, add
or subtract amounts related to specified research or
experimental procedures as required under IC 6-3-2-29.
(19) (20) Add or subtract any other amounts the taxpayer is:
(A) required to add or subtract; or
(B) entitled to deduct;
under IC 6-3-2.
(e) In the case of insurance companies subject to tax under Section
831 of the Internal Revenue Code and organized under Indiana law, the
same as "taxable income" (as defined in Section 832 of the Internal
Revenue Code), adjusted as follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Add an amount equal to any deduction allowed or allowable
under Section 170 of the Internal Revenue Code (concerning
charitable contributions).
(3) Add an amount equal to a deduction allowed or allowable
under Section 805 or Section 832(c) of the Internal Revenue Code
for taxes based on or measured by income and levied at the state
level by any state.
(4) Subtract an amount equal to the amount included in the
company's taxable income under Section 78 of the Internal
Revenue Code (concerning foreign tax credits).
(5) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that owns property for which bonus
depreciation was allowed in the current taxable year or in an
earlier taxable year equal to the amount of adjusted gross income
that would have been computed had an election not been made
under Section 168(k) of the Internal Revenue Code to apply bonus
depreciation to the property in the year that it was placed in
service.
(6) Add an amount equal to any deduction allowed under Section
172 of the Internal Revenue Code (concerning net operating
losses).
(7) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that placed Section 179 property (as
defined in Section 179 of the Internal Revenue Code) in service
SEA 419 — CC 1 26
in the current taxable year or in an earlier taxable year equal to
the amount of adjusted gross income that would have been
computed had an election for federal income tax purposes not
been made for the year in which the property was placed in
service to take deductions under Section 179 of the Internal
Revenue Code in a total amount exceeding the sum of:
(A) twenty-five thousand dollars ($25,000) to the extent
deductions under Section 179 of the Internal Revenue Code
were not elected as provided in clause (B); and
(B) for taxable years beginning after December 31, 2017, the
deductions elected under Section 179 of the Internal Revenue
Code on property acquired in an exchange if:
(i) the exchange would have been eligible for
nonrecognition of gain or loss under Section 1031 of the
Internal Revenue Code in effect on January 1, 2017;
(ii) the exchange is not eligible for nonrecognition of gain or
loss under Section 1031 of the Internal Revenue Code; and
(iii) the taxpayer made an election to take deductions under
Section 179 of the Internal Revenue Code with regard to the
acquired property in the year that the property was placed
into service.
The amount of deductions allowable for an item of property
under this clause may not exceed the amount of adjusted gross
income realized on the property that would have been deferred
under the Internal Revenue Code in effect on January 1, 2017.
(8) Subtract income that is:
(A) exempt from taxation under IC 6-3-2-21.7 (certain income
derived from patents); and
(B) included in the insurance company's taxable income under
the Internal Revenue Code.
(9) Add an amount equal to any income not included in gross
income as a result of the deferral of income arising from business
indebtedness discharged in connection with the reacquisition after
December 31, 2008, and before January 1, 2011, of an applicable
debt instrument, as provided in Section 108(i) of the Internal
Revenue Code. Subtract from the adjusted gross income of any
taxpayer that added an amount to adjusted gross income in a
previous year the amount necessary to offset the amount included
in federal gross income as a result of the deferral of income
arising from business indebtedness discharged in connection with
the reacquisition after December 31, 2008, and before January 1,
2011, of an applicable debt instrument, as provided in Section
SEA 419 — CC 1 27
108(i) of the Internal Revenue Code.
(10) Add an amount equal to any exempt insurance income under
Section 953(e) of the Internal Revenue Code that is active
financing income under Subpart F of Subtitle A, Chapter 1,
Subchapter N of the Internal Revenue Code.
(11) Add the amount excluded from federal gross income under
Section 103 of the Internal Revenue Code for interest received on
an obligation of a state other than Indiana, or a political
subdivision of such a state, that is acquired by the taxpayer after
December 31, 2011. For purposes of this subdivision:
(A) if the taxpayer receives interest from a pass through
entity, a regulated investment company, a hedge fund, or
similar arrangement, the taxpayer will be considered to
have acquired the obligation on the date the entity
acquired the obligation;
(B) if ownership of the obligation occurs by means other
than a purchase, the date of acquisition of the obligation
shall be the date ownership of the obligation was
transferred, except to the extent provided in clause (A),
and if a portion of the obligation is acquired on multiple
dates, the date of acquisition shall be considered separately
for each portion of the obligation; and
(C) if ownership of the obligation occurred as the result of
a refinancing of another obligation, the acquisition date
shall be the date on which the obligation was refinanced.
(12) For taxable years beginning after December 25, 2016, add:
(A) an amount equal to the amount reported by the taxpayer on
IRC 965 Transition Tax Statement, line 1; or
(B) if the taxpayer deducted an amount under Section 965(c)
of the Internal Revenue Code in determining the taxpayer's
taxable income for purposes of the federal income tax, the
amount deducted under Section 965(c) of the Internal Revenue
Code.
(13) Add an amount equal to the deduction that was claimed by
the taxpayer for the taxable year under Section 250(a)(1)(B) of the
Internal Revenue Code (attributable to global intangible
low-taxed income). The taxpayer shall separately specify the
amount of the reduction under Section 250(a)(1)(B)(i) of the
Internal Revenue Code and under Section 250(a)(1)(B)(ii) of the
Internal Revenue Code.
(14) Subtract any interest expense paid or accrued in the current
taxable year but not deducted as a result of the limitation imposed
SEA 419 — CC 1 28
under Section 163(j)(1) of the Internal Revenue Code. Add any
interest expense paid or accrued in a previous taxable year but
allowed as a deduction under Section 163 of the Internal Revenue
Code in the current taxable year. For purposes of this subdivision,
an interest expense is considered paid or accrued only in the first
taxable year the deduction would have been allowable under
Section 163 of the Internal Revenue Code if the limitation under
Section 163(j)(1) of the Internal Revenue Code did not exist.
(15) Subtract the amount that would have been excluded from
gross income but for the enactment of Section 118(b)(2) of the
Internal Revenue Code for taxable years ending after December
22, 2017.
(16) Add an amount equal to the remainder of:
(A) the amount allowable as a deduction under Section 274(n)
of the Internal Revenue Code; minus
(B) the amount otherwise allowable as a deduction under
Section 274(n) of the Internal Revenue Code, if Section
274(n)(2)(D) of the Internal Revenue Code was not in effect
for amounts paid or incurred after December 31, 2020.
(17) For taxable years ending after March 12, 2020, subtract an
amount equal to the deduction disallowed pursuant to:
(A) Section 2301(e) of the CARES Act (Public Law 116-136),
as modified by Sections 206 and 207 of the Taxpayer Certainty
and Disaster Relief Tax Act (Division EE of Public Law
116-260); and
(B) Section 3134(e) of the Internal Revenue Code.
(18) For taxable years beginning after December 31, 2022,
subtract an amount equal to the deduction disallowed under
Section 280C(h) of the Internal Revenue Code.
(19) For taxable years beginning after December 31, 2021, add
or subtract amounts related to specified research or
experimental procedures as required under IC 6-3-2-29.
(19) (20) Add or subtract any other amounts the taxpayer is:
(A) required to add or subtract; or
(B) entitled to deduct;
under IC 6-3-2.
(f) In the case of trusts and estates, "taxable income" (as defined for
trusts and estates in Section 641(b) of the Internal Revenue Code)
adjusted as follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Subtract an amount equal to the amount of a September 11
SEA 419 — CC 1 29
terrorist attack settlement payment included in the federal
adjusted gross income of the estate of a victim of the September
11 terrorist attack or a trust to the extent the trust benefits a victim
of the September 11 terrorist attack.
(3) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that owns property for which bonus
depreciation was allowed in the current taxable year or in an
earlier taxable year equal to the amount of adjusted gross income
that would have been computed had an election not been made
under Section 168(k) of the Internal Revenue Code to apply bonus
depreciation to the property in the year that it was placed in
service.
(4) Add an amount equal to any deduction allowed under Section
172 of the Internal Revenue Code (concerning net operating
losses).
(5) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that placed Section 179 property (as
defined in Section 179 of the Internal Revenue Code) in service
in the current taxable year or in an earlier taxable year equal to
the amount of adjusted gross income that would have been
computed had an election for federal income tax purposes not
been made for the year in which the property was placed in
service to take deductions under Section 179 of the Internal
Revenue Code in a total amount exceeding the sum of:
(A) twenty-five thousand dollars ($25,000) to the extent
deductions under Section 179 of the Internal Revenue Code
were not elected as provided in clause (B); and
(B) for taxable years beginning after December 31, 2017, the
deductions elected under Section 179 of the Internal Revenue
Code on property acquired in an exchange if:
(i) the exchange would have been eligible for
nonrecognition of gain or loss under Section 1031 of the
Internal Revenue Code in effect on January 1, 2017;
(ii) the exchange is not eligible for nonrecognition of gain or
loss under Section 1031 of the Internal Revenue Code; and
(iii) the taxpayer made an election to take deductions under
Section 179 of the Internal Revenue Code with regard to the
acquired property in the year that the property was placed
into service.
The amount of deductions allowable for an item of property
under this clause may not exceed the amount of adjusted gross
income realized on the property that would have been deferred
SEA 419 — CC 1 30
under the Internal Revenue Code in effect on January 1, 2017.
(6) Subtract income that is:
(A) exempt from taxation under IC 6-3-2-21.7 (certain income
derived from patents); and
(B) included in the taxpayer's taxable income under the
Internal Revenue Code.
(7) Add an amount equal to any income not included in gross
income as a result of the deferral of income arising from business
indebtedness discharged in connection with the reacquisition after
December 31, 2008, and before January 1, 2011, of an applicable
debt instrument, as provided in Section 108(i) of the Internal
Revenue Code. Subtract from the adjusted gross income of any
taxpayer that added an amount to adjusted gross income in a
previous year the amount necessary to offset the amount included
in federal gross income as a result of the deferral of income
arising from business indebtedness discharged in connection with
the reacquisition after December 31, 2008, and before January 1,
2011, of an applicable debt instrument, as provided in Section
108(i) of the Internal Revenue Code.
(8) Add the amount excluded from federal gross income under
Section 103 of the Internal Revenue Code for interest received on
an obligation of a state other than Indiana, or a political
subdivision of such a state, that is acquired by the taxpayer after
December 31, 2011. For purposes of this subdivision:
(A) if the taxpayer receives interest from a pass through
entity, a regulated investment company, a hedge fund, or
similar arrangement, the taxpayer will be considered to
have acquired the obligation on the date the entity
acquired the obligation;
(B) if ownership of the obligation occurs by means other
than a purchase, the date of acquisition of the obligation
shall be the date ownership of the obligation was
transferred, except to the extent provided in clause (A),
and if a portion of the obligation is acquired on multiple
dates, the date of acquisition shall be considered separately
for each portion of the obligation; and
(C) if ownership of the obligation occurred as the result of
a refinancing of another obligation, the acquisition date
shall be the date on which the obligation was refinanced.
(9) For taxable years beginning after December 25, 2016, add an
amount equal to:
(A) the amount reported by the taxpayer on IRC 965
SEA 419 — CC 1 31
Transition Tax Statement, line 1;
(B) if the taxpayer deducted an amount under Section 965(c)
of the Internal Revenue Code in determining the taxpayer's
taxable income for purposes of the federal income tax, the
amount deducted under Section 965(c) of the Internal Revenue
Code; and
(C) with regard to any amounts of income under Section 965
of the Internal Revenue Code distributed by the taxpayer, the
deduction under Section 965(c) of the Internal Revenue Code
attributable to such distributed amounts and not reported to the
beneficiary.
For purposes of this article, the amount required to be added back
under clause (B) is not considered to be distributed or
distributable to a beneficiary of the estate or trust for purposes of
Sections 651 and 661 of the Internal Revenue Code.
(10) Subtract any interest expense paid or accrued in the current
taxable year but not deducted as a result of the limitation imposed
under Section 163(j)(1) of the Internal Revenue Code. Add any
interest expense paid or accrued in a previous taxable year but
allowed as a deduction under Section 163 of the Internal Revenue
Code in the current taxable year. For purposes of this subdivision,
an interest expense is considered paid or accrued only in the first
taxable year the deduction would have been allowable under
Section 163 of the Internal Revenue Code if the limitation under
Section 163(j)(1) of the Internal Revenue Code did not exist.
(11) Add an amount equal to the deduction for qualified business
income that was claimed by the taxpayer for the taxable year
under Section 199A of the Internal Revenue Code.
(12) Subtract the amount that would have been excluded from
gross income but for the enactment of Section 118(b)(2) of the
Internal Revenue Code for taxable years ending after December
22, 2017.
(13) Add an amount equal to the remainder of:
(A) the amount allowable as a deduction under Section 274(n)
of the Internal Revenue Code; minus
(B) the amount otherwise allowable as a deduction under
Section 274(n) of the Internal Revenue Code, if Section
274(n)(2)(D) of the Internal Revenue Code was not in effect
for amounts paid or incurred after December 31, 2020.
(14) For taxable years beginning after December 31, 2017, and
before January 1, 2021, add an amount equal to the excess
business loss of the taxpayer as defined in Section 461(l)(3) of the
SEA 419 — CC 1 32
Internal Revenue Code. In addition:
(A) If a taxpayer has an excess business loss under this
subdivision and also has modifications under subdivisions (3)
and (5) for property placed in service during the taxable year,
the taxpayer shall treat a portion of the taxable year
modifications for that property as occurring in the taxable year
the property is placed in service and a portion of the
modifications as occurring in the immediately following
taxable year.
(B) The portion of the modifications under subdivisions (3)
and (5) for property placed in service during the taxable year
treated as occurring in the taxable year in which the property
is placed in service equals:
(i) the modification for the property otherwise determined
under this section; minus
(ii) the excess business loss disallowed under this
subdivision;
but not less than zero (0).
(C) The portion of the modifications under subdivisions (3)
and (5) for property placed in service during the taxable year
treated as occurring in the taxable year immediately following
the taxable year in which the property is placed in service
equals the modification for the property otherwise determined
under this section minus the amount in clause (B).
(D) Any reallocation of modifications between taxable years
under clauses (B) and (C) shall be first allocated to the
modification under subdivision (3), then to the modification
under subdivision (5).
(15) For taxable years ending after March 12, 2020, subtract an
amount equal to the deduction disallowed pursuant to:
(A) Section 2301(e) of the CARES Act (Public Law 116-136),
as modified by Sections 206 and 207 of the Taxpayer Certainty
and Disaster Relief Tax Act (Division EE of Public Law
116-260); and
(B) Section 3134(e) of the Internal Revenue Code.
(16) For taxable years beginning after December 31, 2022,
subtract an amount equal to the deduction disallowed under
Section 280C(h) of the Internal Revenue Code.
(17) Except as provided in subsection (c), for taxable years
beginning after December 31, 2022, add an amount equal to any
deduction or deductions allowed or allowable in determining
taxable income under Section 641(b) of the Internal Revenue
SEA 419 — CC 1 33
Code for taxes based on or measured by income and levied at the
state level by any state of the United States.
(18) For taxable years beginning after December 31, 2021, add
or subtract amounts related to specified research or
experimental procedures as required under IC 6-3-2-29.
(18) (19) Add or subtract any other amounts the taxpayer is:
(A) required to add or subtract; or
(B) entitled to deduct;
under IC 6-3-2.
(g) For purposes of IC 6-3-2.1, IC 6-3-4-12, IC 6-3-4-13, and
IC 6-3-4-15 for taxable years beginning after December 31, 2022,
"adjusted gross income" of a pass through entity means the aggregate
of items of ordinary income and loss in the case of a partnership or a
corporation described in IC 6-3-2-2.8(2), or aggregate distributable net
income of a trust or estate as defined in Section 643 of the Internal
Revenue Code, whichever is applicable, for the taxable year modified
as follows:
(1) Add the separately stated items of income and gains, or the
equivalent items that must be considered separately by a
beneficiary, as determined for federal purposes, attributed to the
partners, shareholders, or beneficiaries of the pass through entity,
determined without regard to whether the owner is permitted to
exclude all or part of the income or gain or deduct any amount
against the income or gain.
(2) Subtract the separately stated items of deductions or losses or
items that must be considered separately by beneficiaries, as
determined for federal purposes, attributed to partners,
shareholders, or beneficiaries of the pass through entity and that
are deductible by an individual in determining adjusted gross
income as defined under Section 62 of the Internal Revenue
Code:
(A) limited as if the partners, shareholders, and beneficiaries
deducted the maximum allowable loss or deduction allowable
for the taxable year prior to any amount deductible from the
pass through entity; but
(B) not considering any disallowance of deductions resulting
from federal basis limitations for the partner, shareholder, or
beneficiary.
(3) Add or subtract any modifications to adjusted gross income
that would be required both for individuals under subsection (a)
and corporations under subsection (b) to the extent otherwise
provided in those subsections, including amounts that are
SEA 419 — CC 1 34
allowable for which such modifications are necessary to account
for separately stated items in subdivision (1) or (2).
(h) Subsections (a)(35), (b)(20), (d)(19), (e)(19), or (f)(18) (a)(36),
(b)(22), (d)(20), (e)(20), or (f)(19) may not be construed to require an
add back or allow a deduction or exemption more than once for a
particular add back, deduction, or exemption.
(i) For taxable years beginning after December 25, 2016, if:
(1) a taxpayer is a shareholder, either directly or indirectly, in a
corporation that is an E&P deficit foreign corporation as defined
in Section 965(b)(3)(B) of the Internal Revenue Code, and the
earnings and profit deficit, or a portion of the earnings and profit
deficit, of the E&P deficit foreign corporation is permitted to
reduce the federal adjusted gross income or federal taxable
income of the taxpayer, the deficit, or the portion of the deficit,
shall also reduce the amount taxable under this section to the
extent permitted under the Internal Revenue Code, however, in no
case shall this permit a reduction in the amount taxable under
Section 965 of the Internal Revenue Code for purposes of this
section to be less than zero (0); and
(2) the Internal Revenue Service issues guidance that such an
income or deduction is not reported directly on a federal tax
return or is to be reported in a manner different than specified in
this section, this section shall be construed as if federal adjusted
gross income or federal taxable income included the income or
deduction.
(j) If a partner is required to include an item of income, a deduction,
or another tax attribute in the partner's adjusted gross income tax return
pursuant to IC 6-3-4.5, such item shall be considered to be includible
in the partner's federal adjusted gross income or federal taxable
income, regardless of whether such item is actually required to be
reported by the partner for federal income tax purposes. For purposes
of this subsection:
(1) items for which a valid election is made under IC 6-3-4.5-6,
IC 6-3-4.5-8, or IC 6-3-4.5-9 shall not be required to be included
in the partner's adjusted gross income or taxable income; and
(2) items for which the partnership did not make an election under
IC 6-3-4.5-6, IC 6-3-4.5-8, or IC 6-3-4.5-9, but for which the
partnership is required to remit tax pursuant to IC 6-3-4.5-18,
shall be included in the partner's adjusted gross income or taxable
income.
(k) The following apply for purposes of this section:
(1) For purposes of subsections (b) and (f), if a taxpayer is an
SEA 419 — CC 1 35
organization that has more than one (1) trade or business
subject to the provisions of Section 512(a)(6) of the Internal
Revenue Code, the following rules apply for taxable years
beginning after December 31, 2017:
(A) If a trade or business has federal unrelated business
taxable income of zero (0) or greater for a taxable year, the
unrelated business taxable income and modifications
required under this section shall be combined in
determining the adjusted gross income of the taxpayer and
shall not be treated as being subject to the provisions of
Section 512(a)(6) of the Internal Revenue Code if one (1) or
more trades or businesses have negative Indiana adjusted
gross income after adjustments.
(B) If a trade or business has federal unrelated business
taxable income of less than zero (0) for a taxable year, the
taxpayer shall apply the modifications under this section
for the taxable year against the net operating loss in the
manner required under IC 6-3-2-2.5 and IC 6-3-2-2.6 for
separately stated net operating losses. However, if the
application of modifications required under IC 6-3-2-2.5 or
IC 6-3-2-2.6 results in the separately stated net operating
loss for the trade or business being zero (0), the
modifications that increase adjusted gross income under
this section and remain after the calculations to adjust the
separately stated net operating loss to zero (0) that result
from the trade or business must be treated as
modifications to which clause (A) applies for the taxable
year.
(C) If a trade or business otherwise described in Section
512(a)(6) of the Internal Revenue Code incurred a net
operating loss for a taxable year beginning after December
31, 2017, and before January 1, 2021, and the net operating
loss was carried back for federal tax purposes:
(i) if the loss was carried back to a taxable year for which
the requirements under Section 512(a)(6) of the Internal
Revenue Code did not apply, the portion of the loss and
modifications attributable to the loss shall be treated as
adjusted gross income of the taxpayer for the first
taxable year of the taxpayer beginning after December
31, 2022, and shall be treated as part of the adjusted
gross income attributable to clause (A), unless, and to the
extent, the loss and modifications were applied to
SEA 419 — CC 1 36
adjusted gross income for a previous taxable year, as
determined under this article; and
(ii) if the loss was carried back to a taxable year for
which the requirements under Section 512(a)(6) of the
Internal Revenue Code applied, the portion of the loss
and modifications attributable to the loss shall be treated
as adjusted gross income of the taxpayer for the first
taxable year of the taxpayer beginning after December
31, 2022, and for purposes of this clause, the inclusion of
losses and modifications shall be in the same manner as
provided in clause (B), unless, and to the extent, the loss
and modifications were applied to adjusted gross income
for a previous taxable year, as determined under this
article.
(D) Notwithstanding any provision in this subdivision, if a
taxpayer computed its adjusted gross income for a taxable
year beginning before January 1, 2023, based on a
reasonable interpretation of this article, the taxpayer shall
be permitted to compute its adjusted gross income for
those taxable years based on that interpretation. However,
a taxpayer must continue to report any tax attributes for
taxable years beginning after December 31, 2022, in a
manner consistent with its previous interpretation.
(2) In the case of a corporation, other than a captive real
estate investment trust, for which the adjusted gross income
under this article is determined after a deduction for
dividends paid under the Internal Revenue Code, the
modifications required under this section shall be applied in
ratio to the corporation's taxable income (as defined in
Section 63 of the Internal Revenue Code) after deductions for
dividends paid under the Internal Revenue Code compared to
the corporation's taxable income (as defined in Section 63 of
the Internal Revenue Code) before the deduction for
dividends paid under the Internal Revenue Code.
(3) In the case of a trust or estate, the trust or estate is
required to include only the portion of the modifications not
passed through to beneficiaries.
(4) In the case of a taxpayer for which modifications are
required to be applied against a separately stated net
operating loss under IC 6-3-2-2.5 or IC 6-3-2-2.6, the
modifications required under this section must be adjusted to
reflect the required application of the modifications against a
SEA 419 — CC 1 37
separately stated net operating loss, in order to avoid the
application of a particular modification multiple times.
SECTION 8. IC 6-3-1-11, AS AMENDED BY P.L.165-2021,
SECTION 72, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 11. (a) The term "Internal
Revenue Code" means the Internal Revenue Code of 1986 of the
United States as amended and in effect on March 31, 2021. January
1, 2023.
(b) Whenever the Internal Revenue Code is mentioned in this
article, or in another provision of the Indiana Code that cites the
definition of "Internal Revenue Code" provided in this section, the
particular provisions that are referred to, together with all the other
provisions of the Internal Revenue Code in effect on March 31, 2021,
January 1, 2023, that pertain to the provisions specifically mentioned,
shall be regarded as incorporated in this article by reference and have
the same force and effect as though fully set forth in this article. To the
extent that a federal statute in the United States Code is enacted or
amended in a title other than the Internal Revenue Code on or before
March 31, 2021, January 1, 2023, and affects federal adjusted gross
income, federal taxable income, federal tax credits, or other federal tax
attributes, the federal statute shall be considered to be part of the
Internal Revenue Code as amended and in effect on March 31, 2021.
January 1, 2023. To the extent:
(1) the provisions of the Internal Revenue Code apply to this
article, regulations adopted under Section 7805(a) of the Internal
Revenue Code, and in effect on March 31, 2021; January 1,
2023; and
(2) a federal statute in the United States Code that is enacted or
amended in a title other than the Internal Revenue Code on or
before March 31, 2021, January 1, 2023, and affects federal
adjusted gross income, federal taxable income, federal tax credits,
or other federal tax attributes applies to this article, regulations
adopted under the federal statute of the United States Code and in
effect on March 31, 2021; January 1, 2023;
shall be regarded as rules adopted by the department under this article,
unless the department adopts specific rules that supersede the
regulation.
(c) An amendment to the Internal Revenue Code made by an act
passed by Congress before March 31, 2021, January 1, 2023, other
than the federal 21st Century Cures Act (P.L. 114-255) and the federal
Disaster Tax Relief and Airport and Airway Extension Act of 2017
(P.L. 115-63), that is effective for any taxable year that began before
SEA 419 — CC 1 38
March 31, 2021, January 1, 2023, and that affects:
(1) individual adjusted gross income (as defined in Section 62 of
the Internal Revenue Code);
(2) corporate taxable income (as defined in Section 63 of the
Internal Revenue Code);
(3) trust and estate taxable income (as defined in Section 641(b)
of the Internal Revenue Code);
(4) life insurance company taxable income (as defined in Section
801(b) of the Internal Revenue Code);
(5) mutual insurance company taxable income (as defined in
Section 821(b) of the Internal Revenue Code); or
(6) taxable income (as defined in Section 832 of the Internal
Revenue Code);
is also effective for that same taxable year for purposes of determining
adjusted gross income under section 3.5 of this chapter and
IC 6-5.5-1-2.
(d) This subsection applies to a taxable year ending before January
1, 2013. The following provisions of the Internal Revenue Code that
were amended by the Tax Relief Act, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) are
treated as though they were not amended by the Tax Relief Act,
Unemployment Insurance Reauthorization, and Job Creation Act of
2010 (P.L. 111-312):
(1) Section 1367(a)(2) of the Internal Revenue Code pertaining to
an adjustment of basis of the stock of shareholders.
(2) Section 871(k)(1)(C) and 871(k)(2)(C) of the Internal
Revenue Code pertaining the treatment of certain dividends of
regulated investment companies.
(3) Section 897(h)(4)(A)(ii) of the Internal Revenue Code
pertaining to regulated investment companies qualified entity
treatment.
(4) Section 512(b)(13)(E)(iv) of the Internal Revenue Code
pertaining to the modification of tax treatment of certain
payments to controlling exempt organizations.
(5) Section 613A(c)(6)(H)(ii) of the Internal Revenue Code
pertaining to the limitations on percentage depletion in the case
of oil and gas wells.
(6) Section 451(i)(3) of the Internal Revenue Code pertaining to
special rule for sales or dispositions to implement Federal Energy
Regulatory Commission or state electric restructuring policy for
qualified electric utilities.
(7) Section 954(c)(6) of the Internal Revenue Code pertaining to
SEA 419 — CC 1 39
the look-through treatment of payments between related
controlled foreign corporation under foreign personal holding
company rules.
The department shall develop forms and adopt any necessary rules
under IC 4-22-2 to implement this subsection.
SECTION 9. IC 6-3-1-39 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 39. (a) The term
"preliminary federal net operating loss" means:
(1) in the case of a taxpayer that has a federal net operating
loss for a taxable year, the taxpayer's federal net operating
loss under Section 172 of the Internal Revenue Code; and
(2) in the case of a taxpayer that does not have a federal net
operating loss for a taxable year:
(A) the taxpayer's:
(i) in the case of an individual, or, except as provided in
item (iii) or (iv), a corporation, federal taxable income as
defined in Section 63 of the Internal Revenue Code;
(ii) in the case of an estate or trust, federal taxable
income as defined in Section 641(b) of the Internal
Revenue Code;
(iii) in the case of an insurance company subject to the
tax imposed under Section 831 of the Internal Revenue
Code, federal taxable income as defined in Section 832(b)
of the Internal Revenue Code; and
(iv) in the case of a life insurance company subject to the
tax imposed under Section 801(a) of the Internal
Revenue Code, federal life insurance company taxable
income as defined in Section 801(b) of the Internal
Revenue Code; plus
(B) any amounts that are disallowed for the taxpayer in
computing a federal net operating loss for a taxable year,
excluding any amounts used in determining a separately
stated net operating loss; minus
(C) any amounts by which a federal net operating loss is
increased for a taxable year, excluding any amounts used
in determining a separately stated net operating loss.
For purposes of IC 6-3-2-2.5 and IC 6-3-2-2.6, a preliminary
federal net operating loss described in subdivision (1) must be
expressed as a negative number, and a preliminary federal net
operating loss described in subdivision (2) may be expressed as a
positive or negative number, subject to the determination under
SEA 419 — CC 1 40
subdivision (2).
(b) The term does not include a separately stated net operating
loss, or any amounts used in determining a separately stated net
operating loss.
SECTION 10. IC 6-3-1-40 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 40. (a) The term
"separately stated net operating loss" means a federal net
operating loss, or a portion of a federal net operating loss,
determined according to the Internal Revenue Code that is:
(1) computed as an allowable federal net operating loss with
regard to a taxable year; and
(2) required to be carried forward or carried back under the
Internal Revenue Code;
regardless of whether the taxpayer had federal taxable income for
the year of the loss.
(b) A separately stated net operating loss for a taxable year
includes:
(1) an excess business loss for the taxable year under Section
461(l) of the Internal Revenue Code;
(2) a federal net operating loss for a trade or business that is
not allowable in the taxable year in which the loss was
incurred as a result of the application of Section 512(a)(6)(C)
of the Internal Revenue Code, with the federal net operating
loss determined separately for each trade or business; and
(3) a federal net operating loss that is not affected by excess
inclusion income under Section 860E of the Internal Revenue
Code.
(c) For purposes of IC 6-3-2-2.5 and IC 6-3-2-2.6, a separately
stated net operating loss must be expressed as a negative number.
SECTION 11. IC 6-3-2-1.9 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2021 (RETROACTIVE)]: Sec. 1.9. (a) This section applies only to
a taxable year ending after June 30, 2021, and beginning before
January 1, 2023.
(b) For purposes of determining a net operating loss deduction
under IC 6-3-2-2.5 or IC 6-3-2-2.6, the term "federal taxable
income" means:
(1) in the case of an individual, or, except as provided in
subdivision (3) or (4), a corporation, federal taxable income as
defined in Section 63 of the Internal Revenue Code;
(2) in the case of an estate or trust, federal taxable income as
SEA 419 — CC 1 41
defined in Section 641(b) of the Internal Revenue Code;
(3) in the case of an insurance company subject to the tax
imposed under Section 831 of the Internal Revenue Code,
federal taxable income as defined in Section 832(b) of the
Internal Revenue Code; and
(4) in the case of a life insurance company subject to the tax
imposed under Section 801(a) of the Internal Revenue Code,
federal life insurance company taxable income as defined in
Section 801(b) of the Internal Revenue Code.
SECTION 12. IC 6-3-2-2.5, AS AMENDED BY P.L.1-2023,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 2.5. (a) This section
applies to a resident person.
(b) Resident persons are entitled to a net operating loss deduction.
The amount of the deduction taken in a taxable year may not exceed
the taxpayer's unused Indiana net operating losses carried over to that
year. A taxpayer is not entitled to carryback any net operating losses
after December 31, 2011.
(c) An Indiana net operating loss equals the sum of the following:
(1) Subject to subsection (j), any separately stated net
operating loss, plus each of the following, as applicable:
(A) In the case of an individual, any deductions allowable
in determining the separately stated net operating loss for
the taxable year, but not allowable in determining federal
adjusted gross income.
(B) In the case of a separately stated net operating loss that
results from an excess business loss (as defined in Section
461(l) of the Internal Revenue Code) for a taxable year
beginning after December 31, 2022, the modifications
required by IC 6-3-1-3.5, as set forth in subsection (d), that
result in an increase of the taxpayer's Indiana adjusted
gross income and that arise from federal deductions that
resulted in the excess business loss.
(C) In the case of a separately stated net operating loss not
described in clause (B), the modifications required by
IC 6-3-1-3.5, as set forth in subsection (d). For purposes of
this clause, a modification that results in an increase to a
taxpayer's adjusted gross income is considered an addition,
and a modification that results in a decrease to a
taxpayer's adjusted gross income is considered a
subtraction.
If the amount determined under this subdivision is less than
SEA 419 — CC 1 42
zero (0), the amount is an Indiana net operating loss.
(1) (2) Subject to subsection (j), the taxpayer's preliminary
federal net operating loss for a taxable year as calculated under
Section 172 of the Internal Revenue Code, adjusted for plus the
sum of the following:
(A) The application of certain modifications required by
IC 6-3-1-3.5 as set forth in subsection (d)(1) and, (d). For
purposes of this clause, a modification that results in an
increase to a taxpayer's adjusted gross income is
considered an addition, and a modification that results in
a decrease to a taxpayer's adjusted gross income is
considered a subtraction.
(B) In the case of an individual, reduced by any deductions
allowable in determining the preliminary federal net
operating loss for the taxable year, but not allowable in
determining federal adjusted gross income.
If the amount determined under this subdivision is less than
zero (0), the amount is an Indiana net operating loss. If the
amount determined under this subdivision is equal to or
greater than zero (0), the Indiana net operating loss under this
subdivision is zero (0).
(2) (3) The excess business loss deduction disallowed under
IC 6-3-1-3.5(a)(29) and IC 6-3-1-3.5(f)(14). and
(3) for taxable years beginning after December 31, 2020, a loss
for a taxable year disallowed because of Section 461(l) of the
Internal Revenue Code, without any modifications under
subsection (d).
(d) The following provisions apply For purposes of subsection (c),
(1) the modifications that are to be applied are those
modifications required under IC 6-3-1-3.5 for the same taxable
year in which each net operating loss was incurred, except that the
modifications do not include the modifications required under:
(A) (1) IC 6-3-1-3.5(a)(3);
(B) (2) IC 6-3-1-3.5(a)(4);
(C) (3) IC 6-3-1-3.5(a)(5);
(D) IC 6-3-1-3.5(a)(35); (4) IC 6-3-1-3.5(a)(36);
(E) IC 6-3-1-3.5(f)(11); and
(F) IC 6-3-1-3.5(f)(18). (5) IC 6-3-1-3.5(f)(19); and
(6) any modification required under Section 172(d) or Section
512(b) of the Internal Revenue Code that is also required
under IC 6-3-1-3.5 in determining Indiana adjusted gross
income.
SEA 419 — CC 1 43
(2) An Indiana net operating loss includes a net operating loss that
arises when the applicable modifications required by IC 6-3-1-3.5
as set forth in subdivision (1) exceed the sum of the taxpayer's
federal adjusted gross income (as defined in Section 62 of the
Internal Revenue Code) if the taxpayer is an individual, or federal
taxable income (as defined in Section 63 of the Internal Revenue
Code) if the taxpayer is a trust or an estate for the taxable year in
which the Indiana net operating loss is determined and the
modifications otherwise required for federal net operating losses
for the taxable year by Section 172(d) of the Internal Revenue
Code. A modification that reduces a federal net operating loss
shall be treated as a positive number for purposes of this
subdivision, and a modification that increases a federal net
operating loss shall be treated as a negative number for purposes
of this subdivision.
(e) Subject to the limitations contained in subsection (g),
subsections (g), (h), and (i), an Indiana net operating loss carryover
shall be available as a deduction from the taxpayer's adjusted gross
income (as defined in IC 6-3-1-3.5) in the carryover year provided in
subsection (f), but not in excess of the taxpayer's adjusted gross income
(as defined in IC 6-3-1-3.5) in the carryover year determined without
regard to this section.
(f) Carryovers shall be determined under this subsection as follows:
(1) An Indiana net operating loss shall be an Indiana net operating
loss carryover to each of the carryover years following the taxable
year of the loss.
(2) An Indiana net operating loss may not be carried over for
more than twenty (20) taxable years after the taxable year of the
loss.
(g) Except as provided in subsection (h), the entire amount of the
Indiana net operating loss for any taxable year shall be carried to the
earliest of the taxable years to which (as determined under subsection
(f)) the loss may be carried. The amount of the Indiana net operating
loss remaining after the deduction is taken under this section in a
taxable year may be carried over as provided in subsection (f). The
amount of the Indiana net operating loss carried over from year to year
shall be reduced to the extent that the Indiana net operating loss
carryover is used by the taxpayer to obtain a deduction in a taxable
year, or as required by subsection (i), until the occurrence of the
earlier of the following:
(1) The entire amount of the Indiana net operating loss has been
used as a deduction or reduced as required by subsection (i).
SEA 419 — CC 1 44
(2) The Indiana net operating loss has been carried over to each
of the carryover years provided by subsection (f).
(h) An Indiana net operating loss that arises after the
application of Section 512(a)(6) of the Internal Revenue Code shall
be allowable only:
(1) in a taxable year in which the trade or business that
generated the federal net operating loss has an adjusted gross
income greater than zero (0) as determined under
IC 6-3-1-3.5; and
(2) against the trade's or business's adjusted gross income;
until the federal net operating loss from the trade or business has
been exhausted. When the federal net operating loss from the trade
or business has been exhausted, and subject to the limitations of
this section, any remaining Indiana net operating loss shall be
allowable against any trade or business of the taxpayer.
(i) The following rules apply to an Indiana net operating loss:
(1) If the taxpayer had a discharge of indebtedness that is
excluded from gross income under Section 108(a)(1)(A),
Section 108(a)(1)(B), or Section 108(a)(1)(C) of the Internal
Revenue Code, the Indiana net operating loss shall be reduced
by the remainder of:
(A) the amount of discharge of indebtedness excluded from
federal gross income; minus
(B) the amount of discharge of indebtedness that reduced
the tax attributes under Section 108(b)(2)(D), Section
108(b)(2)(E), or Section 108(b)(2)(F) of the Internal
Revenue Code or was applied for federal tax purposes
under Section 108(b)(5) of the Internal Revenue Code.
(2) Any reduction in an Indiana net operating loss shall be
first applied to the Indiana net operating loss for the taxable
year of the discharge, and then to any Indiana net operating
loss carryovers.
(3) The provisions of Section 108(d)(6) and Section 108(d)(7)
of the Internal Revenue Code shall apply to any discharge of
indebtedness for purposes of determining the reduction of net
operating losses under this section.
(j) The following apply for purposes of calculating an Indiana
net operating loss under subsection (c):
(1) An itemized deduction shall be applied first under
subsection (c)(1), and any amount not applied under
subsection (c)(1) to make the net operating loss equal to zero
(0) shall be applied under subsection (c)(2).
SEA 419 — CC 1 45
(2) In the case of a modification under IC 6-3-1-3.5 required
to modify a separately stated net operating loss or a
preliminary federal net operating loss, the amount of the
modification may not exceed the amount prescribed under
IC 6-3-1-3.5 and must be applied in the following order:
(A) Against a separately stated net operating loss under
subsection (c)(1)(B), but only to the extent necessary to
increase the separately stated net operating loss, after
application of subsection (c)(1)(A) and (c)(1)(B), to an
amount not greater than zero (0).
(B) Against a separately stated net operating loss under
subsection (c)(1)(C), but only to the extent necessary to
increase the separately stated net operating loss to an
amount not greater than zero (0).
(C) To compute a modification to a preliminary federal net
operating loss under subsection (c)(2).
SECTION 13. IC 6-3-2-2.6, AS AMENDED BY P.L.1-2023,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 2.6. (a) This section
applies to a corporation or a nonresident person.
(b) Corporations and nonresident persons are entitled to a net
operating loss deduction. The amount of the deduction taken in a
taxable year may not exceed the taxpayer's unused Indiana net
operating losses carried over to that year. A taxpayer is not entitled to
carryback any net operating losses after December 31, 2011.
(c) An Indiana net operating loss equals the sum of the following:
(1) the taxpayer's federal net operating loss for a taxable year as
calculated under Section 172 of the Internal Revenue Code,
derived from sources within Indiana and adjusted for certain
modifications required by IC 6-3-1-3.5 as set forth in subsection
(d)(1) and, for a nonresident individual, reduced by any
deductions from Indiana sources allowable in determining the
federal net operating loss for the taxable year, but not allowable
in determining federal adjusted gross income;
(1) Subject to subsection (m), any separately stated net
operating loss derived from sources within Indiana, plus each
of the following, as applicable:
(A) In the case of an individual, any deductions allowable
in determining the separately stated net operating loss for
the taxable year that are derived from sources within
Indiana but not allowable in determining federal adjusted
gross income.
SEA 419 — CC 1 46
(B) In the case of a separately stated net operating loss that
results from an excess business loss (as defined in Section
461(l) of the Internal Revenue Code) for a taxable year
beginning after December 31, 2022, the modifications
required by IC 6-3-1-3.5, as set forth in subsection (d)(1),
that result in an increase of the taxpayer's Indiana
adjusted gross income and that arise from federal
deductions that resulted in the excess business loss.
(C) In the case of a separately stated net operating loss not
described in clause (B), the modifications required by
IC 6-3-1-3.5, as set forth in subsection (d)(1). For purposes
of this clause, a modification that results in an increase to
a taxpayer's adjusted gross income is considered an
addition, and a modification that results in a decrease to a
taxpayer's adjusted gross income is considered a
subtraction.
If the amount determined under this subdivision is less than
zero (0), the amount is an Indiana net operating loss.
(2) Subject to subsection (m), the taxpayer's preliminary
federal net operating loss for a taxable year derived from
sources within Indiana plus the sum of the following:
(A) The application of certain modifications required by
IC 6-3-1-3.5 as set forth in subsection (d)(1). For purposes
of this clause, a modification that results in an increase to
a taxpayer's adjusted gross income is considered an
addition, and a modification that results in a decrease to a
taxpayer's adjusted gross income is considered a
subtraction.
(B) In the case of an individual, any deductions derived
from sources within Indiana and allowable in determining
the preliminary federal net operating loss for the taxable
year but not allowable in determining federal adjusted
gross income.
If the amount determined under this subdivision is less than
zero (0), the amount is an Indiana net operating loss. If the
amount determined under this subdivision is equal to or
greater than zero (0), the Indiana net operating loss under this
subdivision is zero (0).
(2) (3) The excess business loss deduction disallowed under
IC 6-3-1-3.5(a)(29) and IC 6-3-1-3.5(f)(14) and incurred from
Indiana sources. and
(3) for taxable years beginning after December 31, 2020, the
SEA 419 — CC 1 47
portion of the loss for a taxable year disallowed because of
Section 461(l) of the Internal Revenue Code and incurred from
Indiana sources, without any modifications under subsection (d).
Any net operating loss under this subdivision shall be computed
in a manner consistent with the computation of adjusted gross
income under IC 6-3.
(d) The following provisions apply for purposes of subsection (c):
(1) The modifications that are to be applied are those
modifications required under IC 6-3-1-3.5 for the same taxable
year in which each net operating loss was incurred, except that the
modifications do not include the modifications required under:
(A) IC 6-3-1-3.5(a)(3);
(B) IC 6-3-1-3.5(a)(4);
(C) IC 6-3-1-3.5(a)(5);
(D) IC 6-3-1-3.5(a)(35); IC 6-3-1-3.5(a)(36);
(E) IC 6-3-1-3.5(b)(14);
(F) IC 6-3-1-3.5(b)(20); (E) IC 6-3-1-3.5(b)(22);
(G) IC 6-3-1-3.5(d)(13);
(H) IC 6-3-1-3.5(d)(19); (F) IC 6-3-1-3.5(d)(20);
(I) IC 6-3-1-3.5(e)(13);
(J) IC 6-3-1-3.5(e)(19); (G) IC 6-3-1-3.5(e)(20);
(K) IC 6-3-1-3.5(f)(11); and
(L) IC 6-3-1-3.5(f)(18). (H) IC 6-3-1-3.5(f)(19); and
(I) any modification required under Section 172(d) or
Section 512(b) of the Internal Revenue Code that is also
required under IC 6-3-1-3.5 in determining Indiana
adjusted gross income.
(2) The amount of the taxpayer's net operating loss that is derived
from sources within Indiana shall be determined in the same
manner that the amount of the taxpayer's adjusted gross income
derived from sources within Indiana is determined under section
2 of this chapter for the same taxable year during which each loss
was incurred.
(3) An Indiana net operating loss includes a net operating loss that
arises when the applicable modifications required by IC 6-3-1-3.5
as set forth in subdivision (1) exceed the sum of:
(A) either:
(i) the taxpayer's federal taxable income (as defined in
Section 63 of the Internal Revenue Code), if the taxpayer is
a corporation, nonresident estate, or nonresident trust; or
(ii) the taxpayer's federal adjusted gross income (as defined
by Section 62 of the Internal Revenue Code), if the taxpayer
SEA 419 — CC 1 48
is a nonresident individual;
for the taxable year in which the Indiana net operating loss is
determined; and
(B) the modifications otherwise required for federal net
operating losses for the taxable year of the Indiana net
operating loss under Section 172(d) of the Internal Revenue
Code or Section 512(b) of the Internal Revenue Code. A
modification that reduces a federal net operating loss shall be
treated as a positive number for purposes of this subdivision,
and a modification that increases a federal net operating loss
shall be treated as a negative number for purposes of this
subdivision.
(e) Subject to the limitations contained in subsection (g),
subsections (g) through (l), an Indiana net operating loss carryover
shall be available as a deduction from the taxpayer's adjusted gross
income derived from sources within Indiana (as defined in section 2 of
this chapter) in the carryover year provided in subsection (f), but not in
excess of the taxpayer's adjusted gross income (as defined in
IC 6-3-1-3.5) in the carryover year determined without regard to the
deduction allowable under this section.
(f) Carryovers shall be determined under this subsection as follows:
(1) An Indiana net operating loss shall be an Indiana net operating
loss carryover to each of the carryover years following the taxable
year of the loss.
(2) An Indiana net operating loss may not be carried over for
more than twenty (20) taxable years after the taxable year of the
loss.
(g) The entire amount of the Indiana net operating loss for any
taxable year shall be carried to the earliest of the taxable years to which
(as determined under subsection (f)) the loss may be carried. The
amount of the Indiana net operating loss remaining after the deduction
is taken under this section in a taxable year may be carried over as
provided in subsection (f). The amount of the Indiana net operating loss
carried over from year to year shall be reduced to the extent that the
Indiana net operating loss carryover is used by the taxpayer to obtain
a deduction in a taxable year, or as required by subsection (i), until
the occurrence of the earlier of the following:
(1) The entire amount of the Indiana net operating loss has been
used as a deduction or reduced as required by subsection (i).
(2) The Indiana net operating loss has been carried over to each
of the carryover years provided by subsection (f).
(h) An Indiana net operating loss deduction determined under this
SEA 419 — CC 1 49
section shall be allowed notwithstanding the fact that in the year the
taxpayer incurred the net operating loss the taxpayer was not subject to
the tax imposed under section 1 of this chapter because the taxpayer
was:
(1) a life insurance company (as defined in Section 816(a) of the
Internal Revenue Code); or
(2) an insurance company subject to tax under Section 831 of the
Internal Revenue Code.
(i) In the case of a life insurance company, this section shall be
applied by substituting life insurance company taxable income (as
defined in Section 801 the Internal Revenue Code) in place of
references to taxable income (as defined in Section 63 of the Internal
Revenue Code).
(i) Notwithstanding subsection (g), the following apply to an
Indiana net operating loss:
(1) An Indiana net operating loss that arises after the
application of Section 512(a)(6) of the Internal Revenue Code
shall be allowable only:
(A) in a taxable year in which the trade or business that
generated the federal net operating loss has an adjusted
gross income derived from sources within Indiana greater
than zero (0) as determined under IC 6-3-1-3.5; and
(B) against the trade's or business's adjusted gross income;
until the federal net operating loss from the trade or business
has been exhausted. When the federal net operating loss from
the trade or business has been exhausted, and subject to the
limitations of this section, any remaining Indiana net
operating loss shall be allowable against any trade or business
of the taxpayer.
(2) In the case of a corporation described in section 2.8(2) of
this chapter, an Indiana net operating loss deduction that is
attributable to a preconversion year may not be greater than
any net recognized built-in gain of the corporation as defined
in Section 1374(d)(2) of the Internal Revenue Code derived
from sources within Indiana.
(j) The following rules apply to an Indiana net operating loss:
(1) If the taxpayer had a discharge of indebtedness derived
from Indiana sources that is excluded from gross income
under Section 108(a)(1)(A), Section 108(a)(1)(B), or Section
108(a)(1)(C) of the Internal Revenue Code, the Indiana net
operating loss shall be reduced by the remainder of:
(A) the amount of discharge of indebtedness excluded from
SEA 419 — CC 1 50
federal gross income derived from Indiana sources; minus
(B) the amount of discharge of indebtedness derived from
Indiana sources that reduced the tax attributes under
Section 108(b)(2)(D), Section 108(b)(2)(E), or Section
108(b)(2)(F) of the Internal Revenue Code or was applied
for federal tax purposes under Section 108(b)(5) of the
Internal Revenue Code.
(2) Any reduction in an Indiana net operating loss shall be
first applied to the Indiana net operating loss for the taxable
year of the discharge, and then to any Indiana net operating
loss carryovers.
(3) The provisions of Section 108(d)(6) and Section 108(d)(7)
of the Internal Revenue Code shall apply to any discharge of
indebtedness for purposes of determining the reduction of net
operating losses under this section.
(k) If a taxpayer has an ownership change for which the
limitations of net operating losses under Section 382 of the Internal
Revenue Code apply, the following shall apply:
(1) The amount a taxpayer may claim as an Indiana net
operating loss deduction for a taxable year beginning after
December 31, 2022, shall not exceed the limitation imposed by
Section 382(b)(1) of the Internal Revenue Code multiplied by
the apportionment percentage determined under section 2 of
this chapter for the year in which the net operating loss is
being claimed, unless otherwise provided by this subsection.
The following apply:
(A) The limitation under this subdivision does not apply to
adjusted gross income accrued in the portion of the taxable
year on or before the change date (as defined in Section
382(j) of the Internal Revenue Code). For purposes of this
subdivision, the adjusted gross income of the taxpayer
shall be multiplied by the number of days in the taxable
year on or before the change date to the number of days in
the taxable year.
(B) For the portion of the taxable year after the change
date (as defined in Section 382(j) of the Internal Revenue
Code), the limitation under this subdivision shall be the
limitation otherwise computed in this subdivision
multiplied by the number of days in the taxable year after
the change date to the number of days in the taxable year.
(2) If a taxpayer's Indiana net operating loss determined
under this subsection is not fully deductible as a result of
SEA 419 — CC 1 51
subsection (e) for a taxable year, the limitation under this
subsection for the following taxable year shall be increased by
the net operating loss determined but not allowable as a
deduction for the taxable year.
(3) If the continuity of business requirements under Section
382(c) of the Internal Revenue Code are not met, the Indiana
net operating loss available for carryforward shall be zero (0)
except to the extent of recognized built in gains derived from
Indiana sources and amounts allowable under subdivision (2).
(4) If the limitation under Section 382(b) of the Internal
Revenue Code is increased for a taxable year under Section
382(h) of the Internal Revenue Code, the limitation under
subdivision (1) for that taxable year shall be increased by the
federal increase in the net operating loss limitation for the
taxable year multiplied by the Indiana apportionment
percentage for that taxable year.
(5) For purposes of any other matters not provided for in
subdivisions (1) through (4), the taxpayer and the department
are required to apply the limitations and rules under Section
382 of the Internal Revenue Code in a manner consistent with
this subsection.
(6) This subsection applies to a taxpayer regardless of
whether the taxpayer actually has a federal net operating loss
subject to Section 382 of the Internal Revenue Code or
whether any federal net operating losses have been exhausted.
(l) If two (2) or more corporations file a consolidated return
under IC 6-3-4-14 or a combined return under this chapter and
have an Indiana net operating loss on a consolidated or combined
basis for a taxable year:
(1) the Indiana net operating loss attributable to each
corporation included in the consolidated or combined return
shall be determined in a manner consistent with the
attribution of federal net operating losses for consolidated
groups as provided under the Internal Revenue Code and
regulations promulgated thereunder;
(2) the application of Indiana net operating losses and
reduction of losses attributable to each member shall be in a
manner consistent with the application and reduction of
federal net operating losses for consolidated groups as
provided under the Internal Revenue Code and regulations
promulgated thereunder; and
(3) the availability of net operating losses to each corporation
SEA 419 — CC 1 52
upon an ownership change or change in filing status shall be
in a manner consistent with the availability and use of federal
net operating losses for consolidated groups as provided
under the Internal Revenue Code and regulations
promulgated thereunder.
(m) The following apply for purposes of calculating an Indiana
net operating loss under subsection (c):
(1) An itemized deduction shall be applied first under
subsection (c)(1), and any amount not applied under
subsection (c)(1) to make the net operating loss equal to zero
(0) shall be applied under subsection (c)(2).
(2) In the case of a modification under IC 6-3-1-3.5 required
to modify a separately stated net operating loss or a
preliminary federal net operating loss, the amount of the
modification may not exceed the amount prescribed under
IC 6-3-1-3.5 and must be applied in the following order:
(A) Against a separately stated net operating loss under
subsection (c)(1)(B), but only to the extent necessary to
increase the separately stated net operating loss, after
application of subsection (c)(1)(A) and (c)(1)(B), to an
amount not greater than zero (0).
(B) Against a separately stated net operating loss under
subsection (c)(1)(C), but only to the extent necessary to
increase the separately stated net operating loss to an
amount not greater than zero (0).
(C) To compute a modification to a preliminary federal net
operating loss under subsection (c)(2).
SECTION 14. IC 6-3-2-2.8, AS AMENDED BY P.L.1-2023,
SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 2.8. Notwithstanding any
provision of IC 6-3-1 through IC 6-3-7, there shall be no tax on the
adjusted gross income of the following:
(1) Any organization described in Section 501(a) of the Internal
Revenue Code, except that any income of such organization
which is subject to income tax under the Internal Revenue Code
shall be subject to the tax under IC 6-3-1 through IC 6-3-7.
(2) Any corporation which is exempt from income tax under
Section 1363 of the Internal Revenue Code and which complies
with the requirements of IC 6-3-4-13. However, income of a
corporation described under this subdivision that is subject to
income tax under the Internal Revenue Code is subject to the tax
under IC 6-3-1 through IC 6-3-7. A corporation will not lose its
SEA 419 — CC 1 53
exemption under this section because it fails to comply with
IC 6-3-4-13 but it will be subject to the penalties provided by
IC 6-8.1-10. Any corporation that is exempt from income tax
under Section 1363 of the Internal Revenue Code and that makes
an election under IC 6-3-2.1 for a taxable year shall be subject to
tax as provided in IC 6-3-2.1 for the taxable year of the election.
(3) Banks and trust companies, national banking associations,
savings banks, building and loan associations, and savings and
loan associations.
(4) Insurance companies or organizations offering nonprofit
agricultural organization insurance coverage subject to tax
under any of the following:
(A) IC 27-1-18-2, including a domestic insurance company
that elects to be taxed under IC 27-1-18-2.
(B) IC 27-1-2-2.3.
(C) IC 6-8-15, unless a nonprofit agricultural organization:
(i) files a notice of election with the insurance
commissioner and the commissioner of the department
on or before November 30 of a taxable year; and
(ii) states in the notice of election that the organization
elects to be subject to the tax imposed under IC 6-3-1
through IC 6-3-7 for the taxable year.
(5) International banking facilities (as defined in Regulation D of
the Board of Governors of the Federal Reserve System (12 CFR
204)).
SECTION 15. IC 6-3-2-21.7, AS AMENDED BY P.L.130-2018,
SECTION 24, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 21.7. (a) This section
applies to a qualified patent issued to a taxpayer after December 31,
2007.
(b) As used in this section, "invention" has the meaning set forth in
35 U.S.C. 100(a).
(c) As used in this section, "qualified patent" means:
(1) a utility patent issued under 35 U.S.C. 101; or
(2) a plant patent issued under 35 U.S.C. 161;
after December 31, 2007, for an invention resulting from a
development process conducted in Indiana. The term does not include
a design patent issued under 35 U.S.C. 171.
(d) As used in this section, "qualified taxpayer" means a taxpayer
that on the effective filing date of the claimed invention:
(1) is: either:
(A) an individual, or corporation, if the number of employees
SEA 419 — CC 1 54
of the individual, or corporation, including affiliates as
specified in 13 CFR 121.103, does not exceed five hundred
(500) persons; or
(B) a corporation, if the number of employees of the
corporation, including affiliates as specified in 13 CFR
121.103, does not exceed five hundred (500) persons; or
(B) (C) a nonprofit organization or nonprofit corporation as
specified in:
(i) 37 CFR 1.27(a)(3)(ii)(A) or 37 CFR 1.27(a)(3)(ii)(B); or
(ii) IC 23-17; and
(2) is domiciled in Indiana.
For purposes of subdivision (1)(A), an individual shall not be
considered to meet the requirements under subdivision (1)(A) as a
result of the individual's interest in a partnership, S corporation,
trust, estate, or other entity. For purposes of subdivision (1)(B), a
corporation includes a corporation described in section 2.8(2) of
this chapter.
(e) Subject to subsections (g) and (h), in determining adjusted gross
income or taxable income under IC 6-3-1-3.5 or IC 6-5.5-1-2, a
qualified taxpayer is entitled to an exemption from taxation under
IC 6-3-1 through IC 6-3-7 for the following:
(1) Licensing fees or other income received for the use of a
qualified patent.
(2) Royalties received for the infringement of a qualified patent.
(3) Receipts from the sale of a qualified patent.
(4) Subject to subsection (f), income from the taxpayer's own use
of the taxpayer's qualified patent to produce the claimed
invention.
(f) The exemption provided by subsection (e)(4) may not exceed the
fair market value of the licensing fees or other income that would be
received by allowing use of the qualified taxpayer's qualified patent by
someone other than the taxpayer. The fair market value referred to in
this subsection must be determined in each taxable year in which the
qualified taxpayer claims an exemption under subsection (e)(4).
(g) The total amount of exemptions claimed under this section by a
qualified taxpayer in a taxable year may not exceed five million dollars
($5,000,000).
(h) A taxpayer may not claim an exemption under this section with
respect to a particular qualified patent for more than ten (10) taxable
years. Subject to the provisions of this section, the following amount of
the income, royalties, or receipts described in subsection (e) from a
particular qualified patent is exempt:
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(1) Fifty percent (50%) for each of the first five (5) taxable years
in which the exemption is claimed for the qualified patent.
(2) Forty percent (40%) for the sixth taxable year in which the
exemption is claimed for the qualified patent.
(3) Thirty percent (30%) for the seventh taxable year in which the
exemption is claimed for the qualified patent.
(4) Twenty percent (20%) for the eighth taxable year in which the
exemption is claimed for the qualified patent.
(5) Ten percent (10%) each year for the ninth and tenth taxable
year in which the exemption is claimed for the qualified patent.
(6) No exemption under this section for the particular qualified
patent after the eleventh taxable year in which the exemption is
claimed for the qualified patent.
(i) For purposes of subsection (h):
(1) a taxpayer is not required to claim the exemption under
this section in the first year after which the patent was issued;
(2) the years in which the exemption under this section is
claimed are not required to be consecutive taxable years;
(3) if a qualified taxpayer claims an exemption under this
section on the taxpayer's return for a taxable year, the
taxpayer may not file an amended return to reverse the
claimed exemption unless the correct amount of the claimed
exemption would have been zero (0);
(4) if a qualified taxpayer does not claim an exemption under
this section on the taxpayer's return for a taxable year, the
taxpayer may not file an amended return to claim an
exemption; and
 (5) if a qualified taxpayer files returns claiming an exemption
under this section with regard to a particular qualified patent
for more than ten (10) years, the statute of limitations for
assessment of the qualified taxpayer and any entities claiming
an exemption through a qualified taxpayer for taxable years
after the tenth taxable year for which the exemption is
claimed for the qualified patent shall not expire with regard
to any claimed exemption.
(i) (j) To receive the exemption provided by this section, a qualified
taxpayer must claim the exemption on the qualified taxpayer's annual
state tax return or returns in the manner prescribed by the department.
The qualified taxpayer shall submit to the department all information
that the department determines is necessary for the determination of the
exemption provided by this section.
(j) (k) The department shall determine, record, and retain the North
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American Industry Classification System code for each taxpayer
claiming an exemption under this section.
(l) In the case of a corporation described in section 2.8(2) of this
chapter that is a qualified taxpayer, the corporation may pass
through the exemption under this section to its shareholders in
proportion with their ownership of the corporation. For purposes
of applying this subsection to a corporation described in section
2.8(2) of this chapter and its shareholders:
(1) the limitation on the exemption for qualified patent income
shall be applied at the corporation level; and
(2) the period in which the exemption can be claimed and the
years for which the exemption is claimed shall be determined
at the corporation level.
SECTION 16. IC 6-3-2-27.5 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2024]: Sec. 27.5. (a) As used in this section,
"compensation" means any wages, salaries, tips, or similar income
that is subject to the withholding requirements under IC 6-3-4-8,
or would otherwise be subject to the withholding requirements
under IC 6-3-4-8 if not for the application of:
(1) IC 6-3-4-8(d);
(2) IC 6-3-5; or
(3) this section.
(b) As used in this section, "professional athlete" means:
(1) an athlete, other than a team member (as defined in
section 2.7(a)(4) of this chapter) or a race team member (as
defined in section 3.2(a)(4) of this chapter), who performs
services in a professional athletic event for compensation;
(2) a team member (as defined in section 2.7(a)(4) of this
chapter) who has at least one (1) duty day in Indiana during
a taxable year; or
(3) a race team member (as defined in section 3.2(a)(4) of this
chapter) who has at least one (1) duty day in Indiana during
a taxable year.
(c) As used in this section, "professional entertainer" means a
person who performs services in the professional performing arts
for compensation on a per-event basis.
(d) As used in this section, "public figure" means a person of
prominence who performs services at discrete events, including
speeches, public appearances, and similar events, for compensation
on a per-event basis.
(e) As used in this section, "time and attendance system" means
SEA 419 — CC 1 57
a system:
(1) through which an employee is required, on a
contemporaneous basis, to record the employee's work
location for each day worked outside the state in which the
employee's employment duties are primarily performed; and
(2) which is designed to allow the employer to allocate the
employee's compensation for income tax purposes among all
states in which the employee performs employment duties.
(f) Except as provided in subsection (j), compensation is exempt
from the adjusted gross income tax imposed under this article and
IC 6-3.6 if all of the following conditions are met:
(1) The individual is not a resident of Indiana at any time
during the calendar year in which the employee performs
employment duties.
(2) The individual receives compensation for employment
duties performed by the individual in Indiana for thirty (30)
days or less during the calendar year.
(3) The compensation is not paid for employment duties
performed by the individual in the individual's capacity as a
professional athlete, professional entertainer, or public figure.
(g) Except as otherwise provided in this section, an employer is
not required to withhold taxes imposed under this article or
IC 6-3.6 from compensation paid to an employee described in
subsection (f). However, if the number of days that an employee
performs employment duties in Indiana exceeds thirty (30) days,
the employer shall withhold and remit tax to the state of Indiana
from all compensation paid to the employee for every day on which
the employee performed employment duties in Indiana, including
the first thirty (30) days.
(h) The department may not require payment of any penalties
otherwise applicable for a failure to deduct and withhold income
taxes under IC 6-3-4-8, if, when making the determination of
whether withholding was required, either of the following applied:
(1) The employer relied on a time and attendance system
maintained by the employer specifically designed to allocate
employee wages for income tax purposes among all taxing
jurisdictions in which the employee performs employment
duties for the employer.
(2) The employer did not maintain a time and attendance
system and the employer relied on the employee's annual
determination of the time the employee expected to spend
performing employment duties in Indiana, if:
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(A) the employer did not have actual knowledge of fraud
on the part of the employee in making the determination;
and
(B) the employer and the employee did not collude to evade
taxation in making the determination.
An employer's maintaining of records as described in subdivision
(1) does not preclude an employer's ability to rely on an employee's
determination of the time the employee expected to spend
performing employment duties in Indiana as described in
subdivision (2) when making the determination of whether
withholding is required.
(i) For purposes of this section:
(1) subject to subdivision (3), an employee shall be considered
present and performing employment duties within Indiana if
the employee performs more of the employee's employment
duties within Indiana than in any other state during a
particular day;
(2) any portion of the day during which an employee is in
transit may not be considered in determining the location of
the employee's performance of employment duties; and
(3) if an employee performs employment duties in the
employee's state of residence and in only one (1) nonresident
state during a particular day, the employee shall be
considered to have performed more of the employee's
employment duties in the nonresident state than in the state
of residence for that day.
(j) The following apply for purposes of this section:
(1) If an individual receives compensation for employment
duties performed by the individual both:
(A) in the individual's capacity as a professional athlete,
professional entertainer, or public figure; and
(B) in some capacity other than the individual's capacity as
a professional athlete, professional entertainer, or public
figure;
the exemption under this section may not be applied to the
portion of compensation described in clause (B).
(2) If an employee is working at a location other than a
physical location of the employer, the employee shall be
considered to be working in the state or states in which the
services for the employer are performed, regardless of the
physical location of the employer.
(3) If an individual performs employment duties in Indiana
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for more than thirty (30) days during a calendar year,
compensation received by the individual is not eligible for the
exemption under this section.
(4) If an individual performs substantially similar job duties
for an employer both while designated as an employee and in
some capacity other than as an employee during a calendar
year, the number of days for which the individual shall be
considered to have worked in Indiana with regard to that
employer must be determined by aggregating the days for
which the individual performed duties for the employer,
whether designated as an employee or not.
(5) If an employer or individual reasonably believes that an
individual is an employee for a calendar year but the
individual is later determined to not be an employee, the
individual:
(A) is subject to tax under this article and IC 6-3.6 on any
income that otherwise would have been exempt under this
section; and
(B) is not subject to penalties under IC 6-3-4-4.1 or
IC 6-8.1-10-2.1 based on the inclusion of amounts claimed
as exempt under this section as income.
(6) If an individual is not a resident of Indiana, amounts paid
for vacation, sick, personal, or any other type of leave may not
be considered as compensation in Indiana, and any day for
which a type of leave is used may not be considered as a day
for which the individual performed services for an employer
unless the individual performed services for the employer in
Indiana on that day and the day would otherwise be counted
as a day of services performed in Indiana under this section.
(7) The exemption provided under this section shall not apply
to an individual's compensation that is deferred or delayed
from a previous calendar year to a subsequent calendar year
unless:
(A) the individual was exempt from taxation under this
section on the compensation for the calendar year in which
the compensation was earned; and
(B) the individual is not a resident of Indiana when the
individual includes the compensation in the individual's
federal gross income.
(k) Nothing in this section may be construed to prevent an
individual from being considered a local taxpayer (as defined in
IC 6-3.6-2-13(2)), regardless of whether the individual's
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compensation is exempt under this section.
SECTION 17. IC 6-3-2-28 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2024]: Sec. 28. (a) The following definitions apply
throughout this section:
(1) "Health care sharing ministry" has the meaning set forth
in IC 27-1-2.1-1.
(2) "Qualified health care sharing expenses" means the
amount paid by a qualified individual for membership in a
health care sharing ministry.
(3) "Qualified individual" means an individual who is:
(A) a resident of Indiana; and
(B) a member of a health care sharing ministry for at least
one (1) month during a taxable year for which the qualified
individual claims a deduction under this section.
(b) Each taxable year, a qualified individual is entitled to a
deduction from the qualified individual's adjusted gross income for
the taxable year equal to the total amount of qualified health care
sharing expenses paid by the qualified individual during the
taxable year.
(c) To receive the deduction allowed by this section, a qualified
individual must claim the deduction on the qualified individual's
annual state tax return or returns in the manner prescribed by the
department. The qualified individual shall submit to the
department any information that the department determines is
necessary to calculate the amount of the deduction allowed by this
section.
SECTION 18. IC 6-3-2-29 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2022 (RETROACTIVE)]: Sec. 29. (a) As used in this
section, "specified research or experimental expenditures" means
specified research or experimental expenditures (as defined in
Section 174(b) of the Internal Revenue Code) that the taxpayer is
required to charge to capital account under Section 174(a)(2) of the
Internal Revenue Code. The term does not include expenditures for
which a deduction is disallowed as a result of Section 280C(c) of the
Internal Revenue Code.
(b) Except as otherwise provided in this section, for taxable
years beginning after December 31, 2021, a taxpayer, in
determining the taxpayer's adjusted gross income for a particular
taxable year, shall:
(1) deduct from the taxpayer's adjusted gross income an
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amount equal to the specified research or experimental
expenditures charged to capital account under Section
174(a)(2)(A) of the Internal Revenue Code for the taxable
year; and
(2) add to the taxpayer's adjusted gross income the amount
deducted under Section 174(a)(2)(B) of the Internal Revenue
Code for the taxable year.
(c) In the case of a taxpayer that owns an interest in a
partnership or corporation described in section 2.8(2) of this
chapter, the amount that must be deducted under subsection (b)(1)
for a particular taxable year may not exceed the sum of:
(1) the taxpayer's adjusted basis in the partnership or
corporation for federal tax purposes, as determined at the end
of the taxpayer's taxable year and after application of any
expenses, deductions, or losses; plus
(2) the amount of any specified research or experimental
expenditures claimed as a deduction under Section 174 of the
Internal Revenue Code in determining the taxpayer's federal
adjusted gross income for the taxable year.
(d) A deduction or part of a deduction that is disallowed under
subsection (c) must be:
(1) carried forward to the subsequent taxable year;
(2) treated as a specified research or experimental
expenditure that is paid or incurred in the subsequent taxable
year; and
(3) applied under subsection (c) against the adjusted basis of
the partnership or corporation for the subsequent taxable
year.
(e) If a taxpayer is eligible for a deduction under subsection
(b)(1), but the deduction would be treated as a passive deduction
under Section 469 of the Internal Revenue Code, the amount that
may be deducted under subsection (b)(1) for a particular taxable
year may not exceed the sum of:
(1) the amount of the taxpayer's passive income, as
determined for federal tax purposes, after application of any
passive losses or deductions for the taxable year and after
application of any passive loss carryovers for the taxable year,
but not less than zero (0); plus
(2) the amount of any specified research or experimental
expenditures claimed as a deduction under Section 174 of the
Internal Revenue Code in determining the taxpayer's federal
adjusted gross income for the taxable year.
SEA 419 — CC 1 62
The requirements under this subsection must be applied after
application of subsections (c) and (d). Any deduction or part of a
deduction that is disallowed under this subsection must be carried
forward to the subsequent taxable year and treated as a specified
research or experimental expenditure that is paid or incurred in
the subsequent taxable year from a trade or business that is a
passive activity for the taxpayer.
(f) If, before the effective date of this section, a taxpayer:
(1) is a pass through entity; and
(2) filed a return either:
(A) for a taxable year beginning before January 1, 2023,
that reported tax under IC 6-3-2.1 as an electing entity; or
(B) for a taxable year beginning before January 1, 2023,
passing through the tax paid under IC 6-3-2.1 by another
entity on the taxpayer's behalf as pass through entity to its
owners;
the taxpayer shall report the adjusted gross income subject to pass
through entity tax for purposes of IC 6-3-2.1 as if the modification
under this section was not in effect for taxable years beginning
before January 1, 2023. The taxpayer shall report the
modifications otherwise required under this section to its partners,
shareholders, or beneficiaries for the taxable year in the manner
prescribed under this article.
(g) The modifications required under this section are not
applicable if a taxpayer is not required under federal law to charge
specified research or experimental expenditures to capital account
in determining federal adjusted gross income, regardless of
whether the taxpayer elects to charge research or experimental
expenditures to capital account.
SECTION 19. IC 6-3-2.1-2, AS ADDED BY P.L.1-2023, SECTION
5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY
1, 2022 (RETROACTIVE)]: Sec. 2. The following definitions apply
throughout this chapter:
(1) "Electing entity" means a pass through entity described in
IC 6-3-1-35 that is subject to Subchapter K or Subchapter S of the
Internal Revenue Code and makes the election under this chapter.
(2) "Entity owner" means the direct or indirect owners of an
electing entity that are ultimately taxable on the entity's income
under Subchapter K or Subchapter S of the Internal Revenue
Code, except an owner described in subdivision (4)(A) through
(4)(C).
(3) "Nonresident" means:
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(A) a nonresident partner as defined by IC 6-3-4-12(n);
(B) a nonresident shareholder as defined by IC 6-3-4-13(n); or
(C) a nonresident beneficiary as defined by IC 6-3-4-15(i); or
(D) in the case of a shareholder of a corporation described
in IC 6-3-2-2.8(2), a corporation described in Section
501(c)(3) of the Internal Revenue Code that is exempt from
taxation under Section 501(a) of the Internal Revenue
Code and that is not domiciled in Indiana;
whichever is applicable.
(4) "Owner" means a direct or indirect owner of an electing entity
and includes a beneficiary of an estate or trust. However an owner
shall not include:
(A) an entity described in IC 6-3-2-2.8(3) that is not a
partnership, a trust, or a corporation described in
IC 6-3-2-2.8(2);
(B) an entity described in IC 6-3-2-2.8(5); or
(C) any other entity as determined by the department and listed
in instructions or guidance issued by the department.
(5) "Resident" means a partner, shareholder, or beneficiary:
(A) that, in the case of an individual, estate, or trust, is a
resident of Indiana as defined in IC 6-3-1-12; or
(B) that is a partnership or corporation, including a
corporation described in IC 6-3-2-2.8(1) or IC 6-3-2-2.8(2),
that is domiciled in Indiana.
SECTION 20. IC 6-3-4-8, AS AMENDED BY P.L.159-2021,
SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2024]: Sec. 8. (a) Except as provided in IC 6-3-2-27.5
and subsection (d), every employer making payments of wages subject
to tax under this article, regardless of the place where such payment is
made, who is required under the provisions of the Internal Revenue
Code to withhold, collect, and pay over income tax on wages paid by
such employer to such employee, shall, at the time of payment of such
wages, deduct and retain therefrom the amount prescribed in
withholding instructions issued by the department. The department
shall base its withholding instructions on the adjusted gross income tax
rate for persons, on the total local income tax rate that the taxpayer is
subject to under IC 6-3.6, and on the total amount of exclusions the
taxpayer is entitled to under IC 6-3-1-3.5(a)(3) and IC 6-3-1-3.5(a)(4).
However, the withholding instructions on the adjusted gross income of
a nonresident alien (as defined in Section 7701 of the Internal Revenue
Code) are to be based on applying not more than one (1) withholding
exclusion, regardless of the total number of exclusions that
SEA 419 — CC 1 64
IC 6-3-1-3.5(a)(3) and IC 6-3-1-3.5(a)(4) permit the taxpayer to apply
on the taxpayer's final return for the taxable year. Such employer
making payments of any wages:
(1) shall be liable to the state of Indiana for the payment of the tax
required to be deducted and withheld under this section and shall
not be liable to any individual for the amount deducted from the
individual's wages and paid over in compliance or intended
compliance with this section; and
(2) shall make return of and payment to the department monthly
of the amount of tax which under this article and IC 6-3.6 the
employer is required to withhold.
(b) An employer shall pay taxes withheld under subsection (a)
during a particular month to the department no later than thirty (30)
days after the end of that month. However, in place of monthly
reporting periods, the department may permit an employer to report and
pay the tax for a calendar year reporting period, if the average monthly
amount of all tax required to be withheld by the employer in the
previous calendar year does not exceed one thousand dollars ($1,000).
An employer using a reporting period (other than a monthly reporting
period) must file the employer's return and pay the tax for a reporting
period no later than the last day of the month immediately following
the close of the reporting period.
(c) For purposes of determining whether an employee is subject to
taxation under IC 6-3.6, an employer is entitled to rely on the statement
of an employee as to the employee's county of residence as represented
by the statement of address in forms claiming exemptions for purposes
of withholding, regardless of when the employee supplied the forms.
Every employee shall notify the employee's employer within five (5)
days after any change in the employee's county of residence.
(d) A county that makes payments of wages subject to tax under this
article:
(1) to a precinct election officer (as defined in IC 3-5-2-40.1); and
(2) for the performance of the duties of the precinct election
officer imposed by IC 3 that are performed on election day;
is not required, at the time of payment of the wages, to deduct and
retain from the wages the amount prescribed in withholding
instructions issued by the department.
(e) Every employer shall, at the time of each payment made by the
employer to the department, deliver to the department a return upon the
form prescribed by the department showing, with regard to wages paid
to the employer's employees:
(1) the amount of adjusted gross income tax deducted therefrom
SEA 419 — CC 1 65
in accordance with the provisions of this section;
(2) the amount of income tax, if any, imposed under IC 6-3.6 and
deducted therefrom in accordance with this section; and
(3) any other information the department may require.
Every employer making a declaration of withholding as provided in this
section shall furnish the employer's employees annually, but not later
than thirty (30) days after the end of the calendar year, a record of the
total amount of adjusted gross income tax and the amount of each
income tax, if any, imposed under IC 6-3.6, withheld from the
employees, on the forms prescribed by the department. In addition, the
employer shall file Form WH-3 annual withholding tax reports with the
department not later than thirty-one (31) days after the end of the
calendar year.
(f) All money deducted and withheld by an employer shall
immediately upon such deduction be the money of the state, and every
employer who deducts and retains any amount of money under the
provisions of this article shall hold the same in trust for the state of
Indiana and for payment thereof to the department in the manner and
at the times provided in this article. Any employer may be required to
post a surety bond in the sum the department determines to be
appropriate to protect the state with respect to money withheld pursuant
to this section.
(g) The provisions of IC 6-8.1 relating to additions to tax in case of
delinquency and penalties shall apply to employers subject to the
provisions of this section, and for these purposes any amount deducted
or required to be deducted and remitted to the department under this
section shall be considered to be the tax of the employer, and with
respect to such amount the employer shall be considered the taxpayer.
In the case of a corporate or partnership employer, every officer,
employee, or member of such employer, who, as such officer,
employee, or member is under a duty to deduct and remit such taxes,
shall be personally liable for such taxes, penalties, and interest.
(h) Amounts deducted from wages of an employee during any
calendar year in accordance with the provisions of this section shall be
considered to be in part payment of the tax imposed on such employee
for the employee's taxable year which begins in such calendar year, and
a return made by the employer under subsection (b) shall be accepted
by the department as evidence in favor of the employee of the amount
so deducted from the employee's wages. Where the total amount so
deducted exceeds the amount of tax on the employee as computed
under this article and IC 6-3.6, the department shall, after examining
the return or returns filed by the employee in accordance with this
SEA 419 — CC 1 66
article and IC 6-3.6, refund the amount of the excess deduction.
However, under rules promulgated by the department, the excess or any
part thereof may be applied to any taxes or other claim due from the
taxpayer to the state of Indiana or any subdivision thereof. In the event
that the excess tax deducted is less than one dollar ($1), no refund shall
be made.
(i) This section shall in no way relieve any taxpayer from the
taxpayer's obligation of filing a return or returns at the time required
under this article and IC 6-3.6, and, should the amount withheld under
the provisions of this section be insufficient to pay the total tax of such
taxpayer, such unpaid tax shall be paid at the time prescribed by
section 5 of this chapter.
(j) Notwithstanding subsection (b), an employer of a domestic
service employee that enters into an agreement with the domestic
service employee to withhold federal income tax under Section 3402
of the Internal Revenue Code may withhold Indiana income tax on the
domestic service employee's wages on the employer's Indiana
individual income tax return in the same manner as allowed by Section
3510 of the Internal Revenue Code.
(k) To the extent allowed by Section 1137 of the Social Security
Act, an employer of a domestic service employee may report and remit
state unemployment insurance contributions on the employee's wages
on the employer's Indiana individual income tax return in the same
manner as allowed by Section 3510 of the Internal Revenue Code.
(l) A person who knowingly fails to remit trust fund money as set
forth in this section commits a Level 6 felony.
SECTION 21. IC 6-3-7-3, AS AMENDED BY P.L.146-2008,
SECTION 323, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2023]: Sec. 3. (a) All revenues derived from
collection of the adjusted gross income tax imposed on corporations
shall be deposited in the state general fund.
(b) All revenues derived from collection of the adjusted gross
income tax imposed on persons shall be deposited in the state general
fund.
(c) All revenues derived from adjusted gross income tax
computed from a partnership that has made an election to be
subjected to tax directly at the partnership level under IC 6-3-4.5
shall be deposited in the state general fund. For purposes of this
subsection, "adjusted gross income tax" means any tax for which
the partnership is directly subject to as the result of an election
under IC 6-3-4.5, regardless of the provision under which the tax
is computed.
SEA 419 — CC 1 67
SECTION 22. IC 6-3.1-35-2, AS ADDED BY P.L.137-2022,
SECTION 52, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2023]: Sec. 2. The following definitions apply throughout this
chapter:
(1) "Authority" refers to the Indiana housing and community
development authority created by IC 5-20-1-3.
(2) "Eligibility statement" refers to the statement issued by the
authority to an eligible applicant under section 7 of this chapter.
(3) "Eligible applicant" means a taxpayer who is:
(A) an owner of a qualified project; or
(B) a shareholder, member, or partner of an owner of a
qualified project that is designated by the owner in the manner
prescribed by the authority.
(4) "Federal tax credit" means a federal low income housing
credit under Section 42 of the Internal Revenue Code that is a
thirty percent (30%) present value credit. The term does not
include a seventy percent (70%) present value credit under
Section 42 of the Internal Revenue Code for certain new
buildings.
(5) "Holder of a state tax credit" for a taxable year in a qualified
project's state tax credit period means:
(A) the eligible applicant for the qualified project;
(B) a shareholder, member, or partner of the owner of the
qualified project; or
(C) a successor, assignee, or transferee of the eligible
applicant under section 6 of this chapter;
that has a right to claim all or part of the tax credit for the taxable
year.
(6) "Qualified basis" of a qualified project has the meaning set
forth in Section 42 of the Internal Revenue Code.
(7) "Qualified project" means a qualified low income building (as
defined in Section 42(c) of the Internal Revenue Code):
(A) that is located in Indiana;
(B) for which a federal affordable housing tax credit was
awarded using a thirty percent (30%) present value of the
qualified basis of the building; and
(C) that is financed by tax exempt bonds that are subject to the
private activity bond volume cap (under Section 42(h)(4) of
the Internal Revenue Code).
(8) "State tax credit" means the tax credit provided by this
chapter.
(9) "State tax credit period" for a qualified project means the
SEA 419 — CC 1 68
period of five (5) taxable years beginning with the taxable year in
which any amount of the federal tax credit for the qualified
project is first claimed by a taxpayer. a building in the project is
placed into service.
(10) "State tax liability" means a taxpayer's total tax liability
incurred under:
(A) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(B) IC 6-5.5 (the financial institutions tax);
(C) IC 27-1-18-2 (the insurance premiums tax); and
(D) IC 27-1-20-12 (the insurance premiums retaliatory tax);
as computed after the application of the credits that under
IC 6-3.1-1-2 are to be applied before the credit provided by this
chapter.
(11) "Tax credit application" means an application submitted by
an eligible applicant to the authority under section 7 of this
chapter.
(12) "Taxpayer" means an individual, a corporation, an S
corporation, a partnership, a limited partnership, a limited liability
partnership, a limited liability company, or a joint venture.
SECTION 23. IC 6-3.1-35-3, AS ADDED BY P.L.137-2022,
SECTION 52, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2023]: Sec. 3. (a) Except as otherwise provided in this
chapter, for each taxable year in the state tax credit period of a
qualified project, the holder of a state tax credit awarded under this
chapter for the qualified project is entitled to a credit against the
holder's state tax liability for the taxable year in an amount equal to:
(1) the percentage of the state tax credit for the taxable year that
the holder retains at the end of the last day of the taxable year, as
determined under subsection (c); multiplied by
(2) the amount of the state tax credit for the qualified project for
the taxable year, as determined under subsections (d) and (e).
(b) At the time an eligibility statement is issued to an eligible
applicant, the eligible applicant is considered to have acquired one
hundred percent (100%) of the state tax credit for each taxable year in
the state tax credit period of the qualified project.
(c) The percentage of a state tax credit for a taxable year that a
holder retains at the end of the last day of a taxable year under
subsection (a)(1) is equal to:
(1) the sum of the percentages of the state tax credit for the
taxable year that the holder acquires before the end of the last day
of the taxable year; minus
(2) the sum of the percentages of the state tax credit for the
SEA 419 — CC 1 69
taxable year that the holder transfers before the end of the last day
of the taxable year.
(d) The amount of a state tax credit for a taxable year in the state tax
credit period of a qualified project under subsection (a)(2) is equal to:
(1) a factor equal to:
(A) one (1); divided by
(B) the number of taxable years in the state tax credit period
for the qualified project; multiplied by
(2) the lesser of:
(A) the amount of the total federal credit allowed for the
qualified project over the credit period as defined by
Section 42(f) of the Internal Revenue Code (based as shown
on Internal Revenue Service Form 8609, Line 1(b) (annual
amount multiplied by ten (10) years)), if available, for the
qualified project; or
(B) the maximum aggregate amount of state tax credits
awarded for the qualified project, as stated in the eligibility
statement issued under section 7 of this chapter.
(e) The department shall determine the amounts of the state tax
credits specified under subsection (d) for each taxable year in the state
tax credit period of each qualified project as those amounts are able to
be computed and promptly publish the amounts on the department's
Internet web site website to assist holders in claiming the state tax
credit provided by this chapter.
SECTION 24. IC 6-3.1-35-7, AS ADDED BY P.L.137-2022,
SECTION 52, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2023]: Sec. 7. (a) An eligible applicant who wishes to obtain
the state tax credit provided by this chapter for a qualified project must
submit an application to the authority after June 30, 2023, and before
January 1, 2028, in the manner prescribed by the authority.
(b) An application submitted under subsection (a) must include:
(1) the name and address of the qualified project;
(2) the name and address of the owner of the qualified project;
and
(3) any other information required by the authority.
(c) Subject to section 8 of this chapter, the authority may approve a
tax credit application if:
(1) the applicant is an eligible applicant;
(2) the project identified in the application is a qualified project;
and
(3) the tax credit application meets any other requirements for
receipt of state tax credits established by the authority.
SEA 419 — CC 1 70
(d) If the authority approves a tax credit application for a qualified
project, for each taxable year in the tax credit period the authority may
approve a maximum amount of state tax credits. The maximum
aggregate amount of state tax credits awarded by the authority for the
state tax credit period of a qualified project is an amount that is the
product of:
(1) a percentage determined by the authority, which must be
(A) greater than or equal to forty percent (40%); and
(B) less than or equal to one hundred percent (100%);
multiplied by
(2) the anticipated aggregate federal tax credits over the credit
period as defined by Section 42(f) of the Internal Revenue
Code and specified in a letter issued by the authority for the
qualified project under Section 42(m) of the Internal Revenue
Code (annual amount multiplied by ten (10) years).
(e) If the authority approves a tax credit application for a qualified
project, the authority shall issue an eligibility statement to the eligible
applicant. The eligibility statement must specify at least the following:
(1) A unique identification code for the eligibility statement,
determined by the authority.
(2) The name of the qualified project.
(3) For each taxable year in the state tax credit period of the
qualified project, the maximum amount of state tax credit that the
authority is awarding to the eligible applicant for the qualified
project.
(f) The authority shall transmit a copy of each eligibility statement
issued under subsection (e) to the department.
SECTION 25. IC 6-5.5-1-2, AS AMENDED BY P.L.137-2022,
SECTION 55, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 2. (a) Except as provided
in subsections (b) through (d), "adjusted gross income" means taxable
income as defined in Section 63 of the Internal Revenue Code, adjusted
as follows:
(1) Add the following amounts:
(A) An amount equal to a deduction allowed or allowable
under Section 166, Section 585, or Section 593 of the Internal
Revenue Code.
(B) An amount equal to a deduction allowed or allowable
under Section 170 of the Internal Revenue Code.
(C) An amount equal to a deduction or deductions allowed or
allowable under Section 63 of the Internal Revenue Code for
taxes based on or measured by income and levied at the state
SEA 419 — CC 1 71
level by a state of the United States or levied at the local level
by any subdivision of a state of the United States.
(D) The amount of interest excluded under Section 103 of the
Internal Revenue Code or under any other federal law, minus
the associated expenses disallowed in the computation of
taxable income under Section 265 of the Internal Revenue
Code.
(E) An amount equal to the deduction allowed under Section
172 or 1212 of the Internal Revenue Code for net operating
losses or net capital losses.
(F) For a taxpayer that is not a large bank (as defined in
Section 585(c)(2) of the Internal Revenue Code), an amount
equal to the recovery of a debt, or part of a debt, that becomes
worthless to the extent a deduction was allowed from gross
income in a prior taxable year under Section 166(a) of the
Internal Revenue Code.
(G) Add the amount necessary to make the adjusted gross
income of any taxpayer that owns property for which bonus
depreciation was allowed in the current taxable year or in an
earlier taxable year equal to the amount of adjusted gross
income that would have been computed had an election not
been made under Section 168(k) of the Internal Revenue Code
to apply bonus depreciation to the property in the year that it
was placed in service.
(H) Add the amount necessary to make the adjusted gross
income of any taxpayer that placed Section 179 property (as
defined in Section 179 of the Internal Revenue Code) in
service in the current taxable year or in an earlier taxable year
equal to the amount of adjusted gross income that would have
been computed had an election for federal income tax
purposes not been made for the year in which the property was
placed in service to take deductions under Section 179 of the
Internal Revenue Code in a total amount exceeding the sum of:
(i) twenty-five thousand dollars ($25,000) to the extent
deductions under Section 179 of the Internal Revenue Code
were not elected as provided in item (ii); and
(ii) for taxable years beginning after December 31, 2017, the
deductions elected under Section 179 of the Internal
Revenue Code on property acquired in an exchange if the
exchange would have been eligible for nonrecognition of
gain or loss under Section 1031 of the Internal Revenue
Code in effect on January 1, 2017, the exchange is not
SEA 419 — CC 1 72
eligible for nonrecognition of gain or loss under Section
1031 of the Internal Revenue Code, and the taxpayer made
an election to take deductions under Section 179 of the
Internal Revenue Code with regard to the acquired property
in the year that the property was placed into service. The
amount of deductions allowable for an item of property
under this item may not exceed the amount of adjusted gross
income realized on the property that would have been
deferred under the Internal Revenue Code in effect on
January 1, 2017.
(I) Add an amount equal to any income not included in gross
income as a result of the deferral of income arising from
business indebtedness discharged in connection with the
reacquisition after December 31, 2008, and before January 1,
2011, of an applicable debt instrument, as provided in Section
108(i) of the Internal Revenue Code. Subtract from the
adjusted gross income of any taxpayer that added an amount
to adjusted gross income in a previous year the amount
necessary to offset the amount included in federal gross
income as a result of the deferral of income arising from
business indebtedness discharged in connection with the
reacquisition after December 31, 2008, and before January 1,
2011, of an applicable debt instrument, as provided in Section
108(i) of the Internal Revenue Code.
(J) Add an amount equal to any exempt insurance income
under Section 953(e) of the Internal Revenue Code for active
financing income under Subpart F, Subtitle A, Chapter 1,
Subchapter N of the Internal Revenue Code.
(K) Add an amount equal to the remainder of:
(i) the amount allowable as a deduction under Section
274(n) of the Internal Revenue Code; minus
(ii) the amount otherwise allowable as a deduction under
Section 274(n) of the Internal Revenue Code, if Section
274(n)(2)(D) of the Internal Revenue Code was not in effect
for amounts paid or incurred after December 31, 2020.
(2) Subtract the following amounts:
(A) Income that the United States Constitution or any statute
of the United States prohibits from being used to measure the
tax imposed by this chapter.
(B) Income that is derived from sources outside the United
States, as defined by the Internal Revenue Code.
(C) An amount equal to a debt or part of a debt that becomes
SEA 419 — CC 1 73
worthless, as permitted under Section 166(a) of the Internal
Revenue Code.
(D) An amount equal to any bad debt reserves that are
included in federal income because of accounting method
changes required by Section 585(c)(3)(A) or Section 593 of
the Internal Revenue Code.
(E) The amount necessary to make the adjusted gross income
of any taxpayer that owns property for which bonus
depreciation was allowed in the current taxable year or in an
earlier taxable year equal to the amount of adjusted gross
income that would have been computed had an election not
been made under Section 168(k) of the Internal Revenue Code
to apply bonus depreciation.
(F) The amount necessary to make the adjusted gross income
of any taxpayer that placed Section 179 property (as defined
in Section 179 of the Internal Revenue Code) in service in the
current taxable year or in an earlier taxable year equal to the
amount of adjusted gross income that would have been
computed had an election for federal income tax purposes not
been made for the year in which the property was placed in
service to take deductions under Section 179 of the Internal
Revenue Code in a total amount exceeding the sum of:
(i) twenty-five thousand dollars ($25,000) to the extent
deductions under Section 179 of the Internal Revenue Code
were not elected as provided in item (ii); and
(ii) for taxable years beginning after December 31, 2017, the
deductions elected under Section 179 of the Internal
Revenue Code on property acquired in an exchange if the
exchange would have been eligible for nonrecognition of
gain or loss under Section 1031 of the Internal Revenue
Code in effect on January 1, 2017, the exchange is not
eligible for nonrecognition of gain or loss under Section
1031 of the Internal Revenue Code, and the taxpayer made
an election to take deductions under Section 179 of the
Internal Revenue Code with regard to the acquired property
in the year that the property was placed into service. The
amount of deductions allowable for an item of property
under this item may not exceed the amount of adjusted gross
income realized on the property that would have been
deferred under the Internal Revenue Code in effect on
January 1, 2017.
(G) Income that is:
SEA 419 — CC 1 74
(i) exempt from taxation under IC 6-3-2-21.7; and
(ii) included in the taxpayer's taxable income under the
Internal Revenue Code.
(H) The amount that would have been excluded from gross
income but for the enactment of Section 118(b)(2) of the
Internal Revenue Code for taxable years ending after
December 22, 2017.
(I) For taxable years ending after March 12, 2020, an amount
equal to the deduction disallowed pursuant to:
(i) Section 2301(e) of the CARES Act (Public Law
116-136), as modified by Sections 206 and 207 of the
Taxpayer Certainty and Disaster Relief Tax Act (Division
EE of Public Law 116-260); and
(ii) Section 3134(e) of the Internal Revenue Code.
(J) Subtract an amount equal to the deduction disallowed
under Section 280C(h) of the Internal Revenue Code.
(3) Make the following adjustments:
(A) Subtract the amount of any interest expense paid or
accrued in the current taxable year but not deducted as a result
of the limitation imposed under Section 163(j)(1) of the
Internal Revenue Code.
(B) Add any interest expense paid or accrued in a previous
taxable year but allowed as a deduction under Section 163 of
the Internal Revenue Code in the current taxable year.
(C) For taxable years beginning after December 31, 2021,
add or subtract amounts related to specified research or
experimental procedures as required under IC 6-3-2-29.
For purposes of this subdivision, an interest expense is considered
paid or accrued only in the first taxable year the deduction would
have been allowable under Section 163 of the Internal Revenue
Code if the limitation under Section 163(j)(1) of the Internal
Revenue Code did not exist.
(b) In the case of a credit union, "adjusted gross income" for a
taxable year means the total transfers to undivided earnings minus
dividends for that taxable year after statutory reserves are set aside
under IC 28-7-1-24.
(c) In the case of an investment company, "adjusted gross income"
means the company's federal taxable income adjusted as follows:
(1) Add the amount excluded from federal gross income under
Section 103 of the Internal Revenue Code for interest received on
an obligation of a state other than Indiana, or a political
subdivision of such a state, that is acquired by the taxpayer after
SEA 419 — CC 1 75
December 31, 2011.
(2) Make the following adjustments:
(A) Subtract the amount of any interest expense paid or
accrued in the current taxable year but not deducted as a result
of the limitation imposed under Section 163(j)(1) of the
Internal Revenue Code.
(B) Add any interest expense paid or accrued in a previous
taxable year but allowed as a deduction under Section 163 of
the Internal Revenue Code in the current taxable year.
For purposes of this subdivision, an interest expense is considered
paid or accrued only in the first taxable year the deduction would
have been allowable under Section 163 of the Internal Revenue
Code if the limitation under Section 163(j)(1) of the Internal
Revenue Code did not exist.
(3) Multiply the amount determined after the adjustments in
subdivisions (1) and (2) by the quotient of:
(A) the aggregate of the gross payments collected by the
company during the taxable year from old and new business
upon investment contracts issued by the company and held by
residents of Indiana; divided by
(B) the total amount of gross payments collected during the
taxable year by the company from the business upon
investment contracts issued by the company and held by
persons residing within Indiana and elsewhere.
(d) As used in subsection (c), "investment company" means a
person, copartnership, association, limited liability company, or
corporation, whether domestic or foreign, that:
(1) is registered under the Investment Company Act of 1940 (15
U.S.C. 80a-1 et seq.); and
(2) solicits or receives a payment to be made to itself and issues
in exchange for the payment:
(A) a so-called bond;
(B) a share;
(C) a coupon;
(D) a certificate of membership;
(E) an agreement;
(F) a pretended agreement; or
(G) other evidences of obligation;
entitling the holder to anything of value at some future date, if the
gross payments received by the company during the taxable year
on outstanding investment contracts, plus interest and dividends
earned on those contracts (by prorating the interest and dividends
SEA 419 — CC 1 76
earned on investment contracts by the same proportion that
certificate reserves (as defined by the Investment Company Act
of 1940) is to the company's total assets) is at least fifty percent
(50%) of the company's gross payments upon investment
contracts plus gross income from all other sources except
dividends from subsidiaries for the taxable year. The term
"investment contract" means an instrument listed in clauses (A)
through (G).
(e) If a partner is required to include an item of income, a deduction,
or another tax attribute in the partner's adjusted gross income tax return
pursuant to IC 6-3-4.5, such item shall be considered to be includible
in the partner's federal adjusted gross income or federal taxable
income, regardless of whether such item is actually required to be
reported by the partner for federal income tax purposes. For purposes
of this subsection:
(1) items for which a valid election is made under IC 6-3-4.5-6,
IC 6-3-4.5-8, or IC 6-3-4.5-9 shall not be required to be included
in the partner's adjusted gross income or taxable income; and
(2) items for which the partnership did not make an election under
IC 6-3-4.5-6, IC 6-3-4.5-8, or IC 6-3-4.5-9, but for which the
partnership is required to remit tax pursuant to IC 6-3-4.5-18,
shall be included in the partner's adjusted gross income or taxable
income.
SECTION 26. IC 6-5.5-2-1, AS AMENDED BY P.L.80-2014,
SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 1. (a) There is imposed
on each taxpayer a franchise tax measured by the taxpayer's
apportioned income for the privilege of exercising its franchise or the
corporate privilege of transacting the business of a financial institution
in Indiana. The amount of the tax for a taxable year shall be determined
by multiplying the applicable rate under subsection (b) times the
remainder of:
(1) the taxpayer's apportioned income; minus
(2) the taxpayer's deductible Indiana net operating losses as
determined under this section; minus
(3) the taxpayer's net capital losses minus the taxpayer's net
capital gains computed under the Internal Revenue Code for each
taxable year or part of a taxable year beginning after December
31, 1989, multiplied by the apportionment percentage applicable
to the taxpayer under this chapter for the taxable year of the loss.
A net capital loss for a taxable year is a net capital loss carryover to
each of the five (5) taxable years that follow the taxable year in which
SEA 419 — CC 1 77
the loss occurred.
(b) The following are the applicable tax rates to be used under
subsection (a):
(1) For taxable years beginning before January 1, 2014, eight and
five-tenths percent (8.5%).
(2) For taxable years beginning after December 31, 2013, and
before January 1, 2015, eight percent (8.0%).
(3) For taxable years beginning after December 31, 2014, and
before January 1, 2016, seven and five-tenths percent (7.5%).
(4) For taxable years beginning after December 31, 2015, and
before January 1, 2017, seven percent (7.0%).
(5) For taxable years beginning after December 31, 2016, and
before January 1, 2019, six and five-tenths percent (6.5%).
(6) For taxable years beginning after December 31, 2018, and
before January 1, 2020, six and twenty-five hundredths percent
(6.25%).
(7) For taxable years beginning after December 31, 2019, and
before January 1, 2021, six percent (6.0%).
(8) For taxable years beginning after December 31, 2020, and
before January 1, 2022, five and five-tenths percent (5.5%).
(9) For taxable years beginning after December 31, 2021, and
before January 1, 2023, five percent (5.0%).
(10) For taxable years beginning after December 31, 2022, four
and nine-tenths percent (4.9%).
(c) The amount of net operating losses deductible under subsection
(a) is an amount equal to the net operating losses computed under the
Internal Revenue Code, adjusted for the items set forth in IC 6-5.5-1-2,
that are:
(1) incurred in each taxable year, or part of a year, beginning after
December 31, 1989; and
(2) attributable to Indiana.
(d) The following apply to determining the amount of net operating
losses that may be deducted under subsection (a):
(1) The amount of net operating losses that is attributable to
Indiana is the taxpayer's total net operating losses under the
Internal Revenue Code for the taxable year of the loss, adjusted
for the items set forth in IC 6-5.5-1-2, multiplied by the
apportionment percentage applicable to the taxpayer under this
chapter for the taxable year of the loss.
(2) A net operating loss for any taxable year is a net operating loss
carryover to each of the fifteen (15) taxable years that follow the
taxable year in which the loss occurred.
SEA 419 — CC 1 78
(3) If the taxpayer has discharge of indebtedness excluded
from federal gross income under Section 108(a)(1)(A), Section
108(a)(1)(B), or Section 108(a)(1)(C) of the Internal Revenue
Code, the Indiana net operating loss available for use or
carryover shall be reduced by the remainder of:
(A) the amount of discharge of indebtedness excluded from
federal gross income, multiplied by the apportionment
percentage applicable to the taxpayer under this chapter
or IC 6-3 for the year of discharge; minus
(B) the amount of discharge of indebtedness excluded from
federal gross income that reduced the tax attributes under
Section 108(b)(2)(D), Section 108(b)(2)(E), or Section
108(b)(2)(F) of the Internal Revenue Code or was applied
for federal tax purposes under Section 108(b)(5) of the
Internal Revenue Code, multiplied by the apportionment
percentage applicable to the taxpayer under this chapter
or IC 6-3 for the year of discharge.
(4) For purposes of applying this subsection, the amount of
the reduction computed under subdivision (3) shall be
applied:
(A) first, as if the discharge of indebtedness was a
modification of an item set forth in IC 6-5.5-1-2 that
increased the taxpayer's adjusted gross income for the
taxable year to zero (0), but only if the amount determined
after modifications under IC 6-5.5-1-2 was less than zero
(0); and
(B) after the application required under clause (A), as if
the discharge of indebtedness was part of the taxpayer's
apportioned income under subsection (a)(1), and prorated
for the taxable year of discharge between taxpayer
members of a unitary group as provided in subsection
(e)(1). However, if the application of this clause results in
a net operating loss of a member being reduced to zero (0),
the excess shall not be considered income of the taxpayer
nor shall it reduce the net operating loss of any other
taxpayer member of a unitary group.
(5) For purposes of subdivisions (3) and (4), the provisions of
Section 108(d)(6) and Section 108(d)(7) of the Internal
Revenue Code shall apply.
(e) The following provisions apply to a combined return computing
the tax on the basis of the income of the unitary group when the return
is filed for more than one (1) taxpayer member of the unitary group for
SEA 419 — CC 1 79
any taxable year:
(1) Any net capital loss or net operating loss attributable to
Indiana in the combined return shall be prorated between each
taxpayer member of the unitary group by the quotient of:
(A) the receipts of that taxpayer member attributable to
Indiana under section 4 of this chapter; divided by
(B) the receipts of all taxpayer members of the unitary group
attributable to Indiana.
(2) The net capital loss or net operating loss for that year, if any,
to be carried forward to any subsequent year shall be limited to
the capital gains or apportioned income for the subsequent year
of that taxpayer, determined by the same receipts formula set out
in subdivision (1).
SECTION 27. IC 6-5.5-2-7, AS AMENDED BY P.L.129-2014,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 7. Notwithstanding any
other provision of this article, there is no tax imposed on the adjusted
gross income or apportioned income of the following:
(1) Insurance companies or organizations offering nonprofit
agricultural organization insurance coverage subject to the tax
under any of the following:
(A) IC 27-1-18-2.
(B) IC 27-1-2-2.3.
(C) IC 6-3.
(D) IC 6-8-15.
(2) International banking facilities (as defined in Regulation D of
the Board of Governors of the Federal Reserve System).
(3) Any corporation that is exempt from income tax under Section
1363 of the Internal Revenue Code.
(4) Any corporation exempt from federal income taxation under
the Internal Revenue Code, except for the corporation's unrelated
business income. However, this exemption does not apply to a
corporation exempt from federal income taxation under Section
501(c)(14) of the Internal Revenue Code.
SECTION 28. IC 6-6-6.5-1, AS AMENDED BY P.L.245-2015,
SECTION 22, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 1. As used in this chapter, unless the context
clearly indicates otherwise:
(a) "Aircraft" means a device which is designed to provide air
transportation for one (1) or more individuals or for cargo.
(b) "State" means the state of Indiana.
(c) "Department" refers to the department of state revenue.
SEA 419 — CC 1 80
(d) "Person" includes an individual, a partnership, a firm, a
corporation, a limited liability company, an association, a trust, or an
estate, or a legal representative of such.
(e) "Owner" means a person who holds or is required to obtain a
certificate of registration from the Federal Aviation Administration for
a specific aircraft. In the event an aircraft is the subject of an agreement
for the conditional sale or lease with the right of purchase upon the
performance of the conditions stated in the agreement and with an
immediate right of possession of the aircraft vested in the conditional
vendee or lessee, or in the event the mortgagor of an aircraft is entitled
to possession, then the conditional vendee or lessee or mortgagor shall
be deemed to be the owner for purposes of this chapter.
(f) "Dealer" means a person who has an established place of
business in this state, is required to obtain a certificate under
IC 6-2.5-8-1 or IC 6-2.5-8-3 (before its repeal), and is engaged in the
business of manufacturing, buying, selling, or exchanging new or used
aircraft.
(g) "Maximum landing weight" means the maximum weight of the
aircraft, accessories, fuel, pilot, passengers, and cargo that is permitted
on landing under the best conditions, as determined for an aircraft by
the appropriate federal agency or the certified allowable gross weight
published by the manufacturer of the aircraft.
(h) "Resident" means an individual or a fiduciary who resides or is
domiciled within Indiana or any corporation or business association
which maintains a fixed and established place of business within
Indiana for a period of more than sixty (60) days in any one (1) year.
(i) "Taxable aircraft" means an aircraft required to be registered
with the department by this chapter.
(j) "Regular annual registration date" means the last day of
December of each year.
(k) "Taxing district" means a geographic area within which property
is taxed by the same taxing units and at the same total rate.
(l) "Taxing unit" means an entity which has the power to impose ad
valorem property taxes.
(m) "Base" means the location or place where the aircraft is
normally hangared, tied down, housed, parked, or kept, when not in
use.
(n) "Homebuilt aircraft" means an aircraft constructed primarily by
an individual for personal use. The term homebuilt aircraft does not
include an aircraft constructed primarily by a for-profit aircraft
manufacturing business.
(o) "Pressurized aircraft" means an aircraft equipped with a system
SEA 419 — CC 1 81
designed to control the atmospheric pressure in the crew or passenger
cabins.
(p) "Establishing a base" means renting or leasing a hangar or tie
down for a particular aircraft for at least thirty-one (31) days.
(q) "Inventory aircraft" means an aircraft held for resale by a
registered Indiana dealer.
(r) "Repair station" means a person who holds a repair station
certificate that was issued to the person by the Federal Aviation
Administration under 14 CFR Part 145.
SECTION 29. IC 6-7-4-8, AS ADDED BY P.L.165-2021,
SECTION 119, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2023]: Sec. 8. (a) Except as provided in
subsection (b), as used in this chapter, "vapor product" means any of
the following:
(1) A device, such as an electronic cigarette, that employs a
mechanical heating element, battery, or electronic circuit,
regardless of shape or size, that can be used to produce vapor
from consumable material that may or may not be sold with the
device.
(2) Any open system container of a consumable material in a
solution or other form that is intended to be used with or in a
device described in subdivision (1).
(3) Disposable vapor product devices that are attached to a closed
system cartridge and intended for single use.
(b) The term "vapor product" does not include closed system
cartridges (as defined in IC 6-7-2-0.5).
SECTION 30. IC 6-7-4-10, AS ADDED BY P.L.165-2021,
SECTION 119, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2023]: Sec. 10. (a) It is unlawful for any retail
dealer to sell consumable material or vapor products in Indiana unless
the retail dealer has a valid open system electronic cigarette retail
dealer's certificate issued by the department.
(b) The department shall issue certificates to applicants that qualify
under this section. A certificate issued under this section is valid for
one (1) year unless revoked or suspended by the department and is not
transferable. An open system electronic cigarette retail dealer's
certificate may be revoked or suspended by the department in the same
manner, for the same reasons, and is subject to the same procedures as
for the revocation or suspension of a retail merchant's certificate under
IC 6-2.5-8-7. If a retail dealer's retail merchant's certificate under
IC 6-2.5-8 expires or is revoked by the department, an open system
electronic cigarette retail dealer's certificate issued to the retail dealer
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under this subsection shall automatically be revoked without notice
otherwise required under IC 6-2.5-8.
(c) An applicant for a certificate under this section must submit
proof to the department of the appointment of an agent for service of
process in Indiana if the applicant is:
(1) an individual whose principal place of residence is outside
Indiana; or
(2) a person, other than an individual, that has its principal place
of business outside Indiana.
(d) To obtain or renew a certificate under this section, a person
must:
(1) submit, for each location where it intends to distribute
consumable material or vapor products, an application that
includes all information required by the department;
(2) pay a fee of twenty-five dollars ($25) at the time of
application; and
(3) at the time of application, post a bond, issued by a surety
company approved by the department, in an amount not less than
one thousand dollars ($1,000) and conditioned on the applicant's
compliance with this chapter.
(e) If business is transacted at two (2) or more places by one (1)
retail dealer, a separate certificate must be obtained for each place of
business.
(f) Each certificate must be numbered, show the name and address
of the retail dealer, and be posted in a conspicuous place at the place
of business for which it is issued.
(g) If the department determines that a bond provided by a
certificate is inadequate, the department may require a new bond in the
amount necessary to fully protect the state.
SECTION 31. IC 6-8-15-5, AS ADDED BY P.L.154-2020,
SECTION 38, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2023 (RETROACTIVE)]: Sec. 5. If an organization
provides nonprofit agricultural organization coverage in Indiana, the
organization is subject to a nonprofit agricultural organization health
coverage tax under this chapter unless the organization:
(1) files a notice of election with the insurance commissioner
and the commissioner of the department on or before
November 30 of a taxable year; and
(2) states in the notice of election that the organization elects
to be subject to the tax imposed under IC 6-3-1 through
IC 6-3-7 for the taxable year.
SECTION 32. IC 6-8.1-7-1, AS AMENDED BY P.L.137-2022,
SEA 419 — CC 1 83
SECTION 87, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 1. (a) This subsection does not apply to the
disclosure of information concerning a conviction on a tax evasion
charge. Unless in accordance with a judicial order or as otherwise
provided in this chapter, the department, its employees, former
employees, counsel, agents, or any other person may not divulge the
amount of tax paid by any taxpayer, terms of a settlement agreement
executed between a taxpayer and the department, investigation records,
investigation reports, or any other information disclosed by the reports
filed under the provisions of the law relating to any of the listed taxes,
including required information derived from a federal return, except to
any of the following when it is agreed that the information is to be
confidential and to be used solely for official purposes:
(1) Members and employees of the department.
(2) The governor.
(3) A member of the general assembly or an employee of the
house of representatives or the senate when acting on behalf of a
taxpayer located in the member's legislative district who has
provided sufficient information to the member or employee for
the department to determine that the member or employee is
acting on behalf of the taxpayer.
(4) An employee of the legislative services agency to carry out the
responsibilities of the legislative services agency under
IC 2-5-1.1-7 or another law.
(5) The attorney general or any other legal representative of the
state in any action in respect to the amount of tax due under the
provisions of the law relating to any of the listed taxes.
(6) Any authorized officers of the United States.
(b) The information described in subsection (a) may be revealed
upon the receipt of a certified request of any designated officer of the
state tax department of any other state, district, territory, or possession
of the United States when:
(1) the state, district, territory, or possession permits the exchange
of like information with the taxing officials of the state; and
(2) it is agreed that the information is to be confidential and to be
used solely for tax collection purposes.
(c) The information described in subsection (a) relating to a person
on public welfare or a person who has made application for public
welfare may be revealed to the director of the division of family
resources, and to any director of a county office of the division of
family resources located in Indiana, upon receipt of a written request
from either director for the information. The information shall be
SEA 419 — CC 1 84
treated as confidential by the directors. In addition, the information
described in subsection (a) relating to a person who has been
designated as an absent parent by the state Title IV-D agency shall be
made available to the state Title IV-D agency upon request. The
information shall be subject to the information safeguarding provisions
of the state and federal Title IV-D programs.
(d) The name, address, Social Security number, and place of
employment relating to any individual who is delinquent in paying
educational loans owed to a postsecondary educational institution may
be revealed to that institution if it provides proof to the department that
the individual is delinquent in paying for educational loans. This
information shall be provided free of charge to approved postsecondary
educational institutions (as defined by IC 21-7-13-6(a)). The
department shall establish fees that all other institutions must pay to the
department to obtain information under this subsection. However, these
fees may not exceed the department's administrative costs in providing
the information to the institution.
(e) The information described in subsection (a) relating to reports
submitted under IC 6-6-1.1-502 concerning the number of gallons of
gasoline sold by a distributor and IC 6-6-2.5 concerning the number of
gallons of special fuel sold by a supplier and the number of gallons of
special fuel exported by a licensed exporter or imported by a licensed
transporter may be released by the commissioner upon receipt of a
written request for the information.
(f) The information described in subsection (a) may be revealed
upon the receipt of a written request from the administrative head of a
state agency of Indiana when:
(1) the state agency shows an official need for the information;
and
(2) the administrative head of the state agency agrees that any
information released will be kept confidential and will be used
solely for official purposes.
(g) The information described in subsection (a) may be revealed
upon the receipt of a written request from the chief law enforcement
officer of a state or local law enforcement agency in Indiana when it is
agreed that the information is to be confidential and to be used solely
for official purposes.
(h) The name and address of retail merchants, including township,
as specified in IC 6-2.5-8-1(k) may be released solely for tax collection
purposes to township assessors and county assessors.
(i) The department shall notify the appropriate innkeeper's tax
board, bureau, or commission that a taxpayer is delinquent in remitting
SEA 419 — CC 1 85
innkeepers' taxes under IC 6-9.
(j) All information relating to the delinquency or evasion of the
vehicle excise tax may be disclosed to the bureau of motor vehicles in
Indiana and may be disclosed to another state, if the information is
disclosed for the purpose of the enforcement and collection of the taxes
imposed by IC 6-6-5.
(k) All information relating to the delinquency or evasion of
commercial vehicle excise taxes payable to the bureau of motor
vehicles in Indiana may be disclosed to the bureau and may be
disclosed to another state, if the information is disclosed for the
purpose of the enforcement and collection of the taxes imposed by
IC 6-6-5.5.
(l) All information relating to the delinquency or evasion of
commercial vehicle excise taxes payable under the International
Registration Plan may be disclosed to another state, if the information
is disclosed for the purpose of the enforcement and collection of the
taxes imposed by IC 6-6-5.5.
(m) All information relating to the delinquency or evasion of the
excise taxes imposed on recreational vehicles and truck campers that
are payable to the bureau of motor vehicles in Indiana may be disclosed
to the bureau and may be disclosed to another state if the information
is disclosed for the purpose of the enforcement and collection of the
taxes imposed by IC 6-6-5.1.
(n) This section does not apply to:
(1) the beer excise tax, including brand and packaged type (IC
7.1-4-2);
(2) the liquor excise tax (IC 7.1-4-3);
(3) the wine excise tax (IC 7.1-4-4);
(4) the hard cider excise tax (IC 7.1-4-4.5);
(5) the vehicle excise tax (IC 6-6-5);
(6) the commercial vehicle excise tax (IC 6-6-5.5); and
(7) the fees under IC 13-23.
(o) The name and business address of retail merchants within each
county that sell tobacco products may be released to the division of
mental health and addiction and the alcohol and tobacco commission
solely for the purpose of the list prepared under IC 6-2.5-6-14.2.
(p) The name and business address of a person licensed by the
department under IC 6-6 or IC 6-7, or issued a registered retail
merchant's certificate under IC 6-2.5, may be released for the purpose
of reporting the status of the person's license or certificate.
(q) The department may release information concerning total
incremental tax amounts under:
SEA 419 — CC 1 86
(1) IC 5-28-26;
(2) IC 36-7-13;
(3) IC 36-7-26;
(4) IC 36-7-27;
(5) IC 36-7-31;
(6) IC 36-7-31.3; or
(7) any other statute providing for the calculation of incremental
state taxes that will be distributed to or retained by a political
subdivision or other entity;
to the fiscal officer of the political subdivision or other entity that
established the district or area from which the incremental taxes were
received if that fiscal officer enters into an agreement with the
department specifying that the political subdivision or other entity will
use the information solely for official purposes.
(r) The department may release the information as required in
IC 6-8.1-3-7.1 concerning:
(1) an innkeeper's tax, a food and beverage tax, or an admissions
tax under IC 6-9;
(2) the supplemental auto rental excise tax under IC 6-6-9.7; and
(3) the covered taxes allocated to a professional sports
development area fund, sports and convention facilities operating
fund, or other fund under IC 36-7-31 and IC 36-7-31.3.
(s) Information concerning state gross retail tax exemption
certificates that relate to a person who is exempt from the state gross
retail tax under IC 6-2.5-4-5 may be disclosed to a power subsidiary (as
defined in IC 6-2.5-1-22.5) or a person selling the services or
commodities listed in IC 6-2.5-4-5 for the purpose of enforcing and
collecting the state gross retail and use taxes under IC 6-2.5.
(t) The department may release a statement of tax withholding or
other tax information statement provided on behalf of a taxpayer to the
department to:
(1) the taxpayer on whose behalf the tax withholding or other tax
information statement was provided to the department;
(2) the taxpayer's spouse, if:
(A) the taxpayer is deceased or incapacitated; and
(B) the taxpayer's spouse is filing a joint income tax return
with the taxpayer; or
(3) an administrator, executor, trustee, or other fiduciary acting on
behalf of the taxpayer if the taxpayer is deceased.
(u) Information related to a listed tax regarding a taxpayer may be
disclosed to an individual without a power of attorney under
IC 6-8.1-3-8(a)(2) if:
SEA 419 — CC 1 87
(1) the individual is authorized to file returns and remit payments
for one (1) or more listed taxes on behalf of the taxpayer through
the department's online tax system before September 8, 2020;
(2) the information relates to a listed tax described in subdivision
(1) for which the individual is authorized to file returns and remit
payments;
(3) the taxpayer has been notified by the department of the
individual's ability to access the taxpayer's information for the
listed taxes described in subdivision (1) and the taxpayer has not
objected to the individual's access;
(4) the individual's authorization or right to access the taxpayer's
information for a listed tax described in subdivision (1) has not
been withdrawn by the taxpayer; and
(5) disclosure of the information to the individual is not
prohibited by federal law.
Except as otherwise provided by this article, this subsection does not
authorize the disclosure of any correspondence from the department
that is mailed or otherwise delivered to the taxpayer relating to the
specified listed taxes for which the individual was given authorization
by the taxpayer. The department shall establish a date, which may be
earlier but not later than September 1, 2023, after which a taxpayer's
information concerning returns and remittances for a listed tax may not
be disclosed to an individual without a power of attorney under
IC 6-8.1-3-8(a)(2) by providing notice to the affected taxpayers and
previously authorized individuals, including notification published on
the department's Internet web site. website. After the earlier of the date
established by the department or September 1, 2023, the department
may not disclose a taxpayer's information concerning returns and
remittances for a listed tax to an individual unless the individual has a
power of attorney under IC 6-8.1-3-8(a)(2) or the disclosure is
otherwise allowed under this article.
(v) The department may publish a list of persons, corporations,
or other entities that qualify or have qualified for an exemption for
sales tax under IC 6-2.5-5-16, IC 6-2.5-5-25, or IC 6-2.5-5-26, or
otherwise provide information regarding a person's, corporation's,
or entity's exemption status under IC 6-2.5-5-16, IC 6-2.5-5-25, or
IC 6-2.5-5-26. For purposes of this subsection, information that
may be disclosed includes:
(1) any federal identification number or other identification
number for the entity assigned by the department;
(2) any expiration date of an exemption under IC 6-2.5-5-25;
(3) whether any sales tax exemption has expired or has been
SEA 419 — CC 1 88
revoked by the department; and
(4) any other information reasonably necessary for a recipient
of an exemption certificate to determine if an exemption
certificate is valid.
SECTION 33. IC 6-8.1-10-9.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JANUARY 1, 2024]: Sec. 9.5. (a) As used in this
section, the following terms have the following meanings:
(1) "Successor in liability" means a person that directly or
indirectly purchases, acquires, is gifted, or succeeds to
ownership of more than one-half (1/2) of all tangible personal
property of a business, by value, including inventory, at all
locations combined, as measured by the value of the property
at the time of the transfer. "Successor in liability" does not
include a personal representative or beneficiary of an estate,
a trustee in bankruptcy, a debtor in possession, a receiver, a
secured party, a mortgagee, an assignee of rents, or any other
lienholder. A person shall only be considered a successor in
liability to the extent that:
(A) a department lien or liens exist on tangible personal
property transferred to the person;
(B) all tax due by the transferring business to the extent
that notice was not provided to the department as required
by subsection (b); or
(C) any tax due was included in the summary mailed to the
successor in liability by the department pursuant to
subsection (c).
(2) "Purchase price" means the consideration paid or to be
paid by the successor in liability to the transferring business
for the transfer of tangible personal property. "Purchase
price" also includes debts assumed or forgiven by the
successor in liability, or real or personal property conveyed or
to be conveyed by the successor in liability to the transferring
business.
(3) "Arm's-length transaction" means a transfer for adequate
consideration between independent parties both acting in
their own best interests. If the parties are related to each
other, a rebuttable presumption arises that the transaction is
not at arm's length.
(4) "Transfer" means every mode, direct or indirect, absolute
or conditional, voluntary or involuntary, of disposing of or
parting with a business or an interest in a business, or a stock
SEA 419 — CC 1 89
of goods, whether by gift or for consideration. "Transfer"
includes a change in the type of business entity or the name of
the business, where one (1) business is discontinued and a new
business is started. "Transfer" also includes the acquisition by
a new corporation of the assets of a prior business in exchange
for the stock of the new corporation. "Transfer" does not
include an assignment for the benefit of creditors, foreclosure
or enforcement of a mortgage, assignment of rents, security
interest or lien, sale or disposition in a bankruptcy
proceeding, or sale or disposition by a receiver.
(5) "Transfer in bulk" means a transfer, other than in the
ordinary course of the transferor's trade or business, of more
than one-half (1/2) of all the tangible personal property of a
business, by value, including inventory, at all locations
combined, as measured by the value of the property at the
time of the transfer.
(6) "Tax" means the gross retail tax imposed by IC 6-2.5-2-1,
the use tax imposed by IC 6-2.5-3-2, and any county
innkeepers tax or food and beverage tax imposed by IC 6-9.
(7) "Good cause" means the inability to comply with the
statutory requirements of this section due to force majeure,
fraud, failure of delivery by a carrier, or similar
circumstances beyond the control of the successor. Lack of
knowledge by the successor in liability of the requirements of
this section shall not be considered good cause. Failure of a
transferee or third party to provide the notice required by
subsection (b) pursuant to a contractual obligation or
informal understanding shall not be considered to be good
cause.
(b) Whenever a business engages in a transfer in bulk, at least
forty-five (45) days before taking possession of the assets or paying
the purchase price, the potential successor in liability or the
transferring business shall notify the department of the transfer
and the terms and conditions related to the transfer on a form
prescribed by the department. The notice must include the tax
identification number of the transferring business and the potential
successor in liability.
(c) The following apply:
(1) If the notice is not provided to the department as required
in subsection (b), the potential successor in liability becomes
the successor in liability and becomes liable for any unpaid
taxes, interest, and penalties due from the transferring
SEA 419 — CC 1 90
business to the extent of the purchase price.
(2) If the notice is provided as required in subsection (b) and,
within twenty (20) days after receipt of the notice, the
department places a summary in the United States mail
addressed to the successor in liability specifying that tax
liabilities exist in addition to those subject to a department
lien or there are tax returns due but not filed, the successor in
liability is liable for all taxes, interest, and penalties as stated
in the department's summary to the extent of the purchase
price if the successor in liability pays the purchase price or
takes possession of the assets without withholding and
remitting the liability to the department. The successor in
liability is liable whether the purchase price is paid or the
assets are transferred prior to or after notification from the
department.
(3) If the department does not find any tax is due from the
transferring business or that the transferring business has
failed to file any returns that are due, the department must
place a tax clearance letter in the United States mail
addressed to the potential successor in liability within twenty
(20) days after receipt of the notice required by subsection (b)
specifying that no tax liabilities exist and that the transferee
is not a successor in liability. The department shall issue the
tax clearance letter even if the department determines that the
transfer at issue does not constitute a transfer in bulk
pursuant to subsection (a).
(d) If, based upon the information available, the department
determines that a transfer in bulk was not at arm's length or was
a gift, the successor's liability under this section equals the value of
the tangible personal property transferred. Upon such a
determination, the department may require that the successor in
liability provide a third party valuation of the tangible personal
property transferred.
(e) In the case of a gift resulting in successor liability under this
section, the return of the gifted property by the donee to the donor
releases the donee's successor liability.
(f) A potential successor in liability that complies with the
requirements of subsections (b) and (c) is not liable for any
assessments of taxes of the transferring business made after the
department provides a summary to the potential successor in
liability under subsection (c), except for taxes assessed on returns
filed to comply with the summary. If the department fails to place
SEA 419 — CC 1 91
the required summary in the United States mail within the twenty
(20) day period, the potential successor in liability is not liable for
any taxes of the transferring business, except with regard to
transfers subject to subsection (d), if the purchase price is paid and
the potential successor in liability takes possession of the assets
within sixty (60) days of the mailing date the notice required
pursuant to subsection (b). If the purchase price is not paid or the
potential successor in liability does not take possession of the assets
within sixty (60) days of the mailing date of the notice required
pursuant to subsection (b), the potential successor in liability or the
transferring business must submit a new notice pursuant to
subsection (b).
(g) If the required notice under subsection (b) is not filed or any
tax liability included in a summary mailed by the department
pursuant to subsection (c)(2) remains due after the purchase price
is paid or the successor in liability takes possession of the assets,
the department must issue a notice of proposed assessment to the
successor in liability for any such tax due.
(h) A successor in liability may protest the underlying tax unless
the transferring business has already exhausted its protest rights
with regard to the underlying tax. A successor in liability may also
protest whether they qualify as a successor in liability with regard
to the tax. In addition, the successor in liability may protest by
submitting evidence showing good cause for not submitting the
required notice or completing the purchase before receiving a
clearance letter from the department. In the event that the
transferring business has protested any taxes identified in the
department's notice mailed pursuant to subsection (c)(2), the
potential successor in liability shall not be considered a successor
in liability with respect to such taxes if the potential successor in
liability places an amount in escrow sufficient to satisfy such taxes
pending resolution of the transferring business's administrative
and legal process protesting such taxes.
(i) A transfer in bulk shall not constitute a retail transaction
except for any inventory, motor vehicles, watercraft, aircraft, or
rental property transferred.
(j) A transferor in bulk and any responsible officer thereof shall
not be relieved of liability for any tax, interest, or penalties when
a successor in interest also becomes liable for the tax, interest, and
penalties. No owner, shareholder, director, officer, or employee of
a successor in liability shall be considered to be a responsible
officer relative to any tax, interest or penalties owed by the
SEA 419 — CC 1 92
purchaser as a successor.
(k) The department has discretion in assessing and collecting the
tax due from any liable party, but the department cannot collect
more than the total tax, interest, and penalties imposed. The ability
of the department to impose collections fees on the liable parties as
otherwise allowed by this article shall not be impacted by this
section.
SECTION 34. IC 6-8.1-10-14 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2023]: Sec. 14. (a) Except as otherwise
provided in this section or by the provisions of a listed tax, any
penalties and interest resulting from a listed tax shall be deposited
as if it were the listed tax to which the penalty and interest are
associated.
(b) In the case of penalties or interest paid with regard to a tax
imposed under IC 6-3.5-1.1 (before its repeal), IC 6-3.5-6 (before
its repeal), IC 6-3.5-7 (before its repeal), or IC 6-3.6 (local income
tax), the penalties and interest shall be deposited in the state
general fund.
(c) In the case of penalties or interest associated with the late
payment of a tax imposed under IC 6-6-9, IC 6-6-9.5, IC 6-6-9.7, or
IC 6-6-16, or the taxes imposed under IC 6-9 by local units,
penalties and interest shall be distributed to the appropriate local
unit and shall be distributed, spent, or otherwise managed in the
same manner as the underlying tax.
(d) Amounts collected under IC 6-8.1-10-5 shall be deposited in
the state general fund.
SECTION 35. IC 35-43-5-4.8 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2023]: Sec. 4.8. (a) The following definitions
apply throughout this section:
(1) "Automated sales suppression device" means a software
program:
(A) carried on a memory stick or removable compact disc;
(B) accessed through an Internet link; or
(C) accessed through any other means;
that falsifies the electronic records of electronic cash registers
and other point of sale systems, including transaction data
and transaction reports.
(2) "Electronic cash register" means a device that keeps a
register or supporting documents through the means of an
electronic device or a computer system designed to record
SEA 419 — CC 1 93
transaction data for the purpose of computing, compiling, or
processing retail sales transaction data in any manner.
(3) "Phantom-ware" means a hidden, a preinstalled, or an
installed at a later time programming option embedded in the
operating system of an electronic cash register, or hardwired
into the electronic cash register that:
(A) can be used to create a virtual second till; or
(B) may eliminate or manipulate transaction records that
may or may not be preserved in digital formats to
represent the true or manipulated record of transactions
in the electronic cash register.
(4) "Transaction data" includes information regarding:
(A) items purchased by a customer;
(B) the price for each item;
(C) a taxability determination for each item;
(D) a segregated tax amount for each of the taxed items;
(E) the amount of cash or credit tendered;
(F) the net amount returned to the customer in change;
(G) the date and time of the purchase;
(H) the name, address, and identification number of the
vendor; and
(I) the receipt or invoice number of the transaction.
(5) "Transaction report" means:
(A) a report that includes:
(i) the sales;
(ii) taxes collected;
(iii) media totals; and
(iv) discount voids;
at an electronic cash register that is printed on cash
register tape at the end of a day or shift; or
(B) a report documenting every action at an electronic cash
register that is stored electronically.
(6) "Zapper" refers to an automated sales suppression device.
(b) A person who knowingly or intentionally sells, purchases,
installs, transfers, or possesses:
(1) an automated sales suppression device or a zapper; or
(2) phantom-ware;
after June 30, 2023, commits unlawful sale or possession of a
transaction manipulation device, a Class A misdemeanor, except
as provided in subsection (c).
(c) The offense under subsection (b) is:
(1) a Level 6 felony if:
SEA 419 — CC 1 94
(A) the pecuniary loss caused by the offense is at least
seven hundred fifty dollars ($750) and less than fifty
thousand dollars ($50,000); or
(B) the person has a prior unrelated conviction for:
(i) a violation of this section;
(ii) theft under IC 35-43-4-2;
(iii) criminal conversion under IC 35-43-4-3;
(iv) robbery under IC 35-42-5-1; or
(v) burglary under IC 35-43-2-1; and
(2) a Level 5 felony if the pecuniary loss caused by the offense
is at least fifty thousand dollars ($50,000).
SECTION 36. [EFFECTIVE UPON PASSAGE] (a) IC 6-3-1-3.5,
IC 6-3-2-2.5, IC 6-3-2-2.6, IC 6-3-2-21.7, and IC 6-5.5-2-1, all as
amended by this act, apply to taxable years beginning after
December 31, 2022.
(b) This SECTION expires January 1, 2025.
SECTION 37. [EFFECTIVE UPON PASSAGE] (a) This
SECTION applies to IC 6-8.1-10-9.5, as added by this act.
(b) No purchaser in bulk shall be considered to be a successor
in liability pursuant to IC 6-8.1-10-9.5, as added by this act, for
transactions that take place prior to February 14, 2024.
(c) IC 6-8.1-10-9.5(i) shall be considered a restatement of the
law.
(d) This SECTION expires January 1, 2025.
SECTION 38. [EFFECTIVE JANUARY 1, 2024] (a) IC 6-3-2-27.5
and IC 6-3-2-28, as added by this act, apply to taxable years
beginning after December 31, 2023.
(b) This SECTION expires July 1, 2026.
SECTION 39. [EFFECTIVE UPON PASSAGE] (a) IC 6-3-2-29, as
added by this act, applies to taxable years beginning after
December 31, 2021.
(b) This SECTION expires July 1, 2025.
SECTION 40. An emergency is declared for this act.
SEA 419 — CC 1 President of the Senate
President Pro Tempore
Speaker of the House of Representatives
Governor of the State of Indiana
Date: 	Time: 
SEA 419 — CC 1