Computation of franchise tax

# (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 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.

(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 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).
As added by P.L.347-1989(ss), SEC.1. Amended by P.L.21-1990, SEC.21; P.L.68-1991, SEC.4; P.L.1-1992, SEC.19; P.L.6-2000, SEC.1; P.L.93-2013, SEC.5; P.L.80-2014, SEC.10; P.L.194-2023, SEC.26.