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is no base of operations, the place where the service is directed

Instructions for IT-20S Schedule E

or controlled is in Indiana; or (2) the base of operations or the

Apportionment of Income for Indiana

place where the service is directed or controlled is not in any

Complete the apportionment of income schedule

state in which some part of the service is performed, but the

whenever the corporation has income derived from sources

individual’s residence is in Indiana. Payments to independent

both within and outside Indiana and has any nonresident

contractors and others not classified as employees are not

shareholders.

included in the factor. That portion of an employee’s salary

The income attributed to Indiana must be determined by a

directly contributed to a Section 401K plan should be included

three-factor apportionment formula. The Department will not

in the factor; however, the employer’s matching contribution

accept returns filed for adjusted gross income tax purposes

should not be included.

on the separate accounting method. This apportionment

formula must be used unless written permission from the

Total Payroll Value

Department is granted.

Enter payroll values on lines 2A and 2B. Divide the total

on line 2A by the total from line 2B. Multiply by 100 and

Note: Interstate transportation corporations should consult

enter the percent on line 2C. Round the percentage to the

Schedule E-7 for details concerning apportionment of income.

nearest second decimal place.

Contact the Department to obtain this schedule.

3. Receipts Factor: The receipts factor is a fraction. The

Part I - Apportionment of Adjusted Gross Income

numerator is the total receipts of the corporation in Indiana

1. Property Factor: The property factor is a fraction. The

during the tax year. The denominator is the total receipts of

numerator is the average value during the tax year of real and

the corporation everywhere during the tax year. This factor

tangible personal property used within Indiana, plus the value

is double-weighted in the apportionment formula.

All

of rented property, and the denominator is the average value

gross receipts of the corporation which are not subject to

during the tax year of such property everywhere.

allocation are to be included in this factor. Do not include

The average value of property shall be determined by

any previously apportioned income or any partnership

averaging the values of the beginning and the end of the tax

distribution. The numerator of the receipts factor must include

period. (Beginning value plus ending value divided by 2 =

all sales made in Indiana, sales made from Indiana to the

“average value.”) If the values have fluctuated, the averaging of

U.S. Government, and sales made from Indiana to a state

monthly values may be necessary to reflect the average value

not having jurisdiction to tax the activities of the seller. The

of the property for the tax period. If, in the calculation of the

numerator will also contain intangible income attributed to

property factor, the average values of properties are composed

Indiana, including interest from consumer and commercial

of a combination of values, attach a schedule showing how

loans, installment sales contracts, and credit and debit cards

these average values were calculated. For example, the use

as prescribed under IC 6-3-2-2.2.

of original cost for owned properties plus the value of rental or

Total receipts include gross sales of real and tangible

leased facilities based upon a capitalization of rents paid, which

personal property less returns and allowances. Sales of

cannot be checked against the balance sheet or the profit and

tangible personal property are in Indiana if the property is

loss statement, must be supported. Property owned by the

delivered or shipped to a purchaser within Indiana, regardless

taxpayer is valued at its original cost. Property rented by the

of the f.o.b. point or other conditions of sale, or the property

taxpayer is valued at eight (8) times the net annual rental rate.

is shipped from an office, store, warehouse, factory, or other

place of storage in Indiana, and the corporation is not subject

Total Property Values

to tax in the state of the purchaser.

Complete appropriate lines for both within Indiana and

Sales or receipts not specifically assigned above shall

everywhere. Add lines (a) through (e) in columns A and B.

be assigned as follows: (1) gross receipts from the sale, rental,

Divide sum on line 1A by the sum from line 1B. Multiply by

or lease of real property are in Indiana if the real property is

100 and enter the percent on line 1C. Round the percentage

located in Indiana; (2) gross receipts from the rental, lease,

to the nearest second decimal place (e.g., 16.02%).

or licensing the use of tangible personal property are in Indiana

if the property is in Indiana. If property was both within and

2. Payroll Factor: The payroll factor is a fraction. The

outside Indiana during the tax year, the gross receipts are

numerator is the total wages, salaries, and other compensation

considered in Indiana to the extent the property was used in

paid to employees in Indiana, and the denominator is the total

Indiana; (3) gross receipts from intangible personal property

of such compensation for services rendered for the business

are in Indiana if the corporation has economic presence in

everywhere. Normally, the Indiana payroll will match the

this state and such property has not acquired a business

unemployment compensation reports filed with the state as

situs elsewhere. Interest income and other receipts from

determined under the Model Unemployment Compensation

loans or installment sales contracts that are primarily secured

Act. Compensation is paid in Indiana if: (a) the individual’s

by or deal with real or tangible personal property are

service is performed entirely within Indiana; (b) the individual’s

attributable to Indiana if the security or sale property is located

service is performed both within and outside Indiana, but the

in Indiana; consumer loans not secured by real or tangible

service performed outside Indiana is incidental to the

personal property are attributable to Indiana if the loan is made

individual’s service within Indiana; or (c) some of the service is

to an Indiana resident; and commercial loans and installment

performed in Indiana and (1) the base of operations, or if there

obligations not secured by real or tangible personal property

Form It-20s - S Corporation Income Tax Booklet - Indiana Department Of Revenue - 2005 Page 13

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