Instructions For It-65 Schedule E - Apportionment Of Income For Indiana printable pdf download

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

Instructions for IT-65 Schedule E

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

Apportionment of Income for Indiana

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

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

Complete the apportionment of income schedule whenever

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

the partnership has income derived from sources both within

but the individual’s residence is in this state. Payments to

and outside Indiana and has any nonresident or corporate

independent contractors and others not classified as

partners.The income attributed to Indiana must be determined

employees are not included in the factor. That portion of an

by a three-factor apportionment formula. The Department will

employee’s salary directly contributed to a Section 401K plan

not accept returns filed for adjusted gross income tax purposes

should be in the factor; however, the employer’s matching

on the separate accounting method.

contribution should not be included.

This apportionment formula must be used unless written

permission from the Department is granted. Also see 45 IAC

Total Payroll Value

3.1-1-153, adjusted gross tax treatment for unitary corporate

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

partners.

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

Note: Interstate transportation companies 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.

Part I - Apportionment of Adjusted Gross Income

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

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

numerator is the total receipts of the partnership in Indiana

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

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

tangible personal property used within Indiana (plus value of

the partnership everywhere during the tax year. This factor is

rented property), and the denominator is the average value

double-weighted in the apportionment formula. All gross

during the tax year of such property everywhere.

receipts of the partnership which are not subject to allocation

The average value of property shall be determined by

are to be included in this factor. Do not include any previously

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

apportioned income or any partnership distribution. The

period. (Beginning value + ending value divided by 2 = “average

numerator of the receipts factor must include all sales made

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

in Indiana, sales made from Indiana to the U.S. Government,

values may be necessary to reflect the average value of the

and sales made from Indiana to a state not having jurisdiction

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

to tax the activities of the seller. The numerator will also contain

factor, the average values of properties are composed of a

intangible income attributed to Indiana including interest from

combination of values, attach a schedule showing how these

consumer and commercial loans, installment sales contracts

average values were calculated. For example, the use of original

and credit and debit cards as prescribed under IC 6-3-2-2.2.

cost for owned properties plus the value of rental or leased

Total receipts include gross sales of real and tangible

facilities based upon a capitalization of rents paid, which cannot

personal property less returns and allowances. Sales of

be checked against the balance sheet or the profit and loss

tangible personal property are in Indiana if the property is

statement, must be supported. Property owned by the taxpayer

delivered or shipped to a purchaser within Indiana regardless

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

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

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 partnership 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 be

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

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, or

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

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 partnership has economic presence in

everywhere. Normally, the Indiana payroll will match the

Indiana and such property has not acquired a business situs

unemployment compensation reports filed with the state as

elsewhere. Interest income and other receipts from loans or

determined under the Model Unemployment Compensation

installment sales contracts that are primarily secured by or

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

deal with real or tangible personal property are attributable to

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

Indiana if the security or sale property is located in Indiana;

service is performed both within and outside Indiana, but the

consumer loans not secured by real or tangible personal

service performed outside the state is incidental to the

property are attributable to this state if the loan is made to an

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

Instructions For It-65 Schedule E - Apportionment Of Income For Indiana

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