Indiana Special Session Considers IRC Conformity

Indiana began a special session on May 14. The session is considering an income tax bill addressing:

  • IRC conformity;
  • IRC Sec. 965 income;
  • carry forward of tax credits; and
  • the 529 education savings plan tax credit.

IRC Conformity

Indiana’s income tax IRC conformity date would update to February 11, 2018. The current conformity date is January 1, 2016.

The updated conformity date would be effective retroactive to January 1, 2018. The update incorporates the federal Tax Cuts and Jobs Act of 2017 and the Bipartisan Budget Act of 2018.

Personal Income Calculation

The bill’s changes specific to personal income taxpayers include:

  • making the conformity date for IRC Sec. 151(c), about additional exemptions for dependents, January 1, 2017;
  • removing the addition for domestic production activities under IRC Sec. 199;
  • requiring the addition of an amount equal to the deduction for deferred foreign income claimed under IRC Sec. 965(c);
  • requiring the subtraction of any interest expense paid or accrued but not deducted because of the limitation under IRC Sec. 163(j)(1);
  • requiring the addition of interest expenses paid or accrued in previous tax years allowed as deductions under IRC Sec. 163;
  • requiring the subtraction of amounts included in the taxpayer’s income under IRC Sec. 118(b)(2) for tax years after December 22, 2017; and
  • specifying net operating losses can be carried over for 20 years.

Corporate Income Calculation

Corporate income calculation changes include:

  • removing the addition for domestic production activities under IRC Sec. 199;
  • requiring the addition of certain directly related interest expenses that reduced the taxpayer’s adjusted gross income;
  • requiring the addition of an amount equal to the amount reported by the taxpayer on IRC 965 Transition Tax Statement, line 1;
  • requiring an addition for amounts deducted under IRC Sec. 250(a)(1)(B)(i) and (ii);
  • taxpayers must subtract any interest expense paid or accrued but not deducted because of the limitation under IRC Sec. 163(j)(1);
  • adding interest expenses paid or accrued in previous tax years allowed as deductions under IRC Sec. 163; and
  • specifying net operating losses can be carried over for 20 years.

The bill is available on the Indiana General Assembly website.

H.B. 1316 as introduced in the Indiana House on May 14, 2018

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