Schedule In-Pat (State Form 54084) - Qualified Patents Exemption Schedule

Instructions for Schedule IN-PAT

Qualifi ed Patents Exemption

PL 223-2007 SECTIONS 1, 2, and 11 amends IC 6-3-1-3.5 and adds

Th is exemption applies only to utility patents issued under 35 U.S.C.

101 and plant patents issued under 35 U.S.C. 161 for inventions result-

IC 6-3-2-21.7, eff ective Jan. 1, 2008. Income from qualifi ed patents

included in federal taxable income is exempt from the adjusted gross

ing from development processes conducted in Indiana. Th e exemption

income of individuals, corporations, and insurance companies for

does not include design patents issued under 35 U.S.C. 171.

taxable years beginning aft er Dec. 31, 2007.

PART 2

• A qualifi ed patent is a utility patent or a plant patent issued

Enter the name and fi ling date of the patent. Enter a description of the

aft er Dec. 31, 2007, for an invention resulting from a develop-

patent. Enter the number of employees the entity had on the patent

ment process conducted in Indiana. Th e term does not

fi ling date. To qualify for this exemption, the entity must have fewer

include a design patent.

than 500 employees.

• Th e exemption from income includes licensing fees or other

PART 3

income received for the use of the patent, royalties received

Column 1. Fill in the tax years for which you are taking the qualifi ed

for the infringement, receipts from the sale of a qualifi ed

patents income exemption. Th e exemption can be claimed for up to

patent, or income from the taxpayer’s own use of the patent

to produce the claimed invention.

10 years.

Column 2. Enter the amount of income earned from the patent. Th e

Who Should File Schedule IN-PAT?

total amount of exemptions claimed in a taxable year may not exceed

Any individual Indiana resident, any corporation (including affi li-

$5 million.

ates) that has fewer than 500 employees and is domiciled in Indiana,

and any nonprofi t organization that is domiciled in Indiana should

Column 3. Multiply the amount of income earned from the patent by

complete Schedule IN-PAT if they are subject to the adjusted gross

the corresponding percentage. For the fi rst 5 years, 50 percent of the

income tax and they have income from a qualifi ed patent. Schedule

amount of income received from the patent is exempt; the percentage

IN-PAT should be enclosed with your Indiana tax return (Form

declines by 10 percent each year starting in the sixth year that the

IT-40, Form IT-20, or Form IT-20NP).

exemption is claimed.

Carryforward Years

Column 4. Enter the amount of the exemption you are claiming

Th e exemption may not be claimed for more than 10 years. For the

(Column 2 multiplied by Column 3). Enter this amount on Form

IT-20 (line 10), Form IT-20NP (line 4), Form IT-40 Schedule 2

fi rst 5 years, 50 percent of the amount of income received from the

patent is exempt; the percentage declines by 10 percent each year

(under line 11), or Form IT-40PNR Schedule C (under line 11).

starting in the sixth year that the exemption is claimed. Th e total

amount of exemptions a taxpayer can claim in a taxable year may not

Enclose this schedule with your Indiana tax return.

exceed $5 million.

If you have any questions regarding Indiana’s treatment of the qualifi ed

For more information, get Income Tax Information Bulletin #104 at

patents income exemption, contact:

Indiana Department of Revenue

PART 1

Tax Administration

PO Box 7206

Enter the name of the individual, corporation, or nonprofi t organiza-

Indianapolis, IN 46207

tion claiming the exemption.

(317) 232-0129

Enter the Social Security number, federal ID number, or personal tax

identifi cation number.

Enter the North American Industry Classifi cation System (NAICS)

business code for the patent. You can fi nd a listing of all the NAICS

codes at



24100000000

Schedule In-Pat (State Form 54084) - Qualified Patents Exemption Schedule - 2011 Page 2

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