Indiana Code 6-3-2-2.6. Corporations and nonresident persons; net operating losses
Sec. 2.6. (a) This section applies to a corporation or a nonresident person.
Terms Used In Indiana Code 6-3-2-2.6
- 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:
Indiana Code 6-3-1-3.5
- corporation: includes all corporations, associations, real estate investment trusts (as defined in the Internal Revenue Code), joint stock companies, whether organized for profit or not-for-profit, any receiver, trustee or conservator thereof, business trusts, Massachusetts trusts, any proprietorship or partnership taxable under Section 1361 of the Internal Revenue Code, and any publicly traded partnership that is treated as a corporation for federal income tax purposes under Section 7704 of the Internal Revenue Code. See Indiana Code 6-3-1-10
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Year: means a calendar year, unless otherwise expressed. See Indiana Code 1-1-4-5
(c) An Indiana net operating loss equals the sum of:
(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;
(2) 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 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);
(E) IC 6-3-1-3.5(b)(14);
(F) IC 6-3-1-3.5(b)(20);
(G) IC 6-3-1-3.5(d)(13);
(H) IC 6-3-1-3.5(d)(19);
(I) IC 6-3-1-3.5(e)(13);
(J) IC 6-3-1-3.5(e)(19);
(K) IC 6-3-1-3.5(f)(11); and
(L) IC 6-3-1-3.5(f)(18).
(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 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), 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 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.
(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 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).
As added by P.L.91-1987, SEC.4. Amended by P.L.192-2002(ss), SEC.73; P.L.81-2004, SEC.11; P.L.2-2005, SEC.21; P.L.182-2009(ss), SEC.193; P.L.113-2010, SEC.56; P.L.172-2011, SEC.57; P.L.239-2017, SEC.13; P.L.86-2018, SEC.71; P.L.214-2018(ss), SEC.6; P.L.234-2019, SEC.12; P.L.199-2021, SEC.5; P.L.165-2021, SEC.74; P.L.137-2022, SEC.36; P.L.1-2023, SEC.3.