Introduced Version
SENATE BILL No. 316
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3.
Synopsis: Investment partnership tax. Provides certain sourcing rules
for the adjusted gross income of an investment partnership. Defines
"investment partnership".
Effective: January 1, 2026.
Baldwin
January 13, 2025, read first time and referred to Committee on Tax and Fiscal Policy.
2025 IN 316—LS 7436/DI 120 Introduced
First Regular Session of the 124th General Assembly (2025)
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 2024 Regular Session of the General Assembly.
SENATE BILL No. 316
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 6-3-1-41 IS ADDED TO THE INDIANA CODE
2 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2026]: Sec. 41. The term "investment partnership"
4 means a partnership for federal income tax purposes that meets
5 the following requirements:
6 (1) Not less than ninety percent (90%) of the partnership's
7 cost of its total assets consists of qualifying investment
8 securities, deposits at banks or other financial institutions,
9 and office space and equipment reasonably necessary to carry
10 on its activities as an investment partnership.
11 (2) Not less than ninety percent (90%) of the partnership's
12 gross income consists of interest, dividends, gains from the
13 sale or exchange of qualifying investment securities, and the
14 distributive share of partnership income from lower-tier
15 partnership interests meeting the definition of qualifying
16 investment security. For purposes of this subdivision, gross
17 income does not include income from partnerships that are
2025 IN 316—LS 7436/DI 120 2
1 operating at a federal taxable loss.
2 (3) The partnership is not a dealer in qualifying investment
3 securities.
4 SECTION 2. IC 6-3-1-42 IS ADDED TO THE INDIANA CODE
5 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
6 JANUARY 1, 2026]: Sec. 42. The term "qualifying investment
7 securities" includes the following:
8 (1) Common stock, including preferred or debt securities
9 convertible into common stock, and preferred stock.
10 (2) Bonds, debentures, and other debt securities.
11 (3) Foreign and domestic currency deposits secured by
12 federal, state, or local governmental agencies.
13 (4) Mortgage or asset-backed securities secured by federal,
14 state, or local governmental agencies.
15 (5) Repurchase agreements and loan participations.
16 (6) Foreign currency exchange contracts and forward and
17 futures contracts on foreign currencies.
18 (7) Stock and bond index securities and futures contracts and
19 other similar financial securities and futures contracts on
20 those securities.
21 (8) Options for the purchase or sale of any of the securities,
22 currencies, contracts, or financial instruments described in
23 subdivisions (1) through (7).
24 (9) Regulated futures contracts.
25 (10) Commodities (not described in Section 1221(a)(1) of the
26 Internal Revenue Code) or futures, forwards, and options
27 with respect to such commodities, provided, however, that any
28 item of a physical commodity to which title is actually
29 acquired in the partnership's capacity as a dealer in such
30 commodity shall not be a qualifying investment security.
31 (11) Derivatives.
32 (12) A partnership interest in another partnership that is an
33 investment partnership.
34 (13) A partnership interest that, in the hands of the
35 partnership, qualifies as a security within the meaning of 15
36 U.S.C. 77b(a)(1).
37 SECTION 3. IC 6-3-1-43 IS ADDED TO THE INDIANA CODE
38 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
39 JANUARY 1, 2026]: Sec. 43. The term "qualifying investment
40 partnership income" means the adjusted gross income from
41 qualifying investment securities, excluding any income or loss from
42 an asset described in section 42(13) of this chapter.
2025 IN 316—LS 7436/DI 120 3
1 SECTION 4. IC 6-3-4-12.5 IS ADDED TO THE INDIANA CODE
2 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2026]: Sec. 12.5. For all taxable years beginning after
4 December 31, 2025, in the case of an investment partnership:
5 (1) any qualifying investment partnership income that is
6 distributable to a nonresident partner shall be allocated to the
7 partner's state of residence (in the case of an individual) or
8 commercial domicile (in the case of any other person); and
9 (2) any qualifying investment partnership income that is
10 distributable to a nonresident partner shall be treated as
11 business income and apportioned as if such income had been
12 received directly by the partner if such income is from
13 investment activity:
14 (A) that is directly or integrally related to any other
15 business activity conducted in this state by the nonresident
16 partner (or a member filing a combined return in this state
17 that includes the partner);
18 (B) that serves an operational function to any other
19 business activity of the nonresident partner (or a member
20 filing a combined return in this state that includes the
21 partner); or
22 (C) where assets of the investment partnership were
23 acquired with working capital from a trade or business
24 activity conducted in this state in which the nonresident
25 partner (or a member filing a combined return in this state
26 that includes the partner) owns an interest.
2025 IN 316—LS 7436/DI 120