Form It-40 - Indiana Full-Year Resident Individual Income Tax Booklet - 2013 Page 14
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60•
Qualified restaurant property expense*
A simple illustration:
•
Qualified retail improvement property expense*
•
Qualified transportation fringe expense
Asset – acquired January, 2009 – qualified restaurant property – pur-
•
Tuition and fees deduction
chase price $120,000. This normally would have a 39-year recovery
period; IRC Sec. 168 allows for a 15-year recovery period.
*Important. With regard to depreciation add-back for property quali-
fying under IRC Sec. 168, the add-back is eliminated retroactive to
Asset acquired Jan. 2009
Federal
Add-
Indiana
2012 only for property placed in service in 2012.
$120,000 purchase price
Depreciation
Back
Depreciation
Year 1 (2009)
8,000
4,924
3,076
If you reported any of the above-listed eight add-backs on your 2012
Year 2 (2010)
8,000
4,924
3,076
state tax return, you may be eligible for a refund or a reduction of any
tax otherwise owed. See which of the two possible filing options works
Year 3 (2011)
8,000
4,924
3,076
best for you.
Year 4 (2012)
8,000
4,924
3,076
Year 5 (2013)
8,000
8,000
0
Option 1 File an amended (corrected) 2012 state tax return and make
Accumulated Depreciation
40,000
20,304
an adjustment to reverse the reporting of that add-back.
Year 6 – 15
80,000
80,000
Accumulated Depreciation
120,000
100,304
Example. Sherman reported a $590 tuition and fees deduction add-
Year 15 Add-back
back on his 2012 state tax return. He has decided to file an amended
-19,696
2012 state tax return (Form IT-40X) to eliminate the $590 amount
Tax year 2012 is the last year Grant reported an add-back until the end
initially added back, and will get a refund.
of the 15-year recovery period (2023). Had this asset been sold before
being fully depreciated, the catch-up modification would be reflected
Download the online version of Form IT-40X from
in the year of the sale. If this property is held through 2023 (the 15th
if choosing this option.
year of depreciation), Grant will report a negative $19,696 catch-up
add-back on his 2023 state tax return.
Option 2 You are not required to file an amended 2012 state tax
return to eliminate the reporting of the add-back. Instead, you may
General instructions
report the amount to be adjusted on Schedule 1 of the current 2013
state tax return using a special 3-digit code indicator.
Some amounts reported on your federal tax return may require dif-
ferent treatment for Indiana income tax purposes. Listed in this area
Example. Mr. Peabody added back a $1,200 IRA charitable distribu-
are those items that may need to be added back on your Indiana tax
tion on his 2012 state tax return. Instead of filing an amended 2012
return. Please review the list carefully. When reporting these add-
tax return, he has chosen to report the $1,200 amount as a negative
backs, maintain with your records the corresponding federal tax forms
amount on the add-back schedule (Schedule 1). He will identify the
and schedules as the department can require you to provide them at a
entry with a special 3-digit code number issued specifically for this
later date.
purpose for this one year. Read about the IRA charitable distribution
add-back on page 16 for more information.
Important information about possible year-end
federal legislation.
Certain discontinued add-backs: How and when to
This publication was finalized before all year-end federal legislative
report a difference.
changes were complete. Therefore, some of these add-backs may need
Several of the discontinued add-backs were created as a result of
to be adjusted. You may wish to periodically check the department’s
timing differences between federal and Indiana allowable expenses.
homepage at
for updates about any impact of late
Following is an example of how to figure/report a difference.
federal legislation.
Example. Grant has qualified restaurant equipment. For federal tax
Line 1 – Tax add-back
purposes he uses the accelerated 15-year recovery period for an asset
If you did not complete Federal Schedules C, C-EZ, E, or F, which
placed in service since 2009. Since 2009 Grant has been adding back
include sole proprietorship income, farm income, rental, partner-
the depreciation expense taken for federal purposes that exceeded the
ship, S corporation, and trust and estate income (or loss), then do not
amount allowable for Indiana purposes. The accumulated deprecia-
complete this line.
tion on such an asset through 2012 is, therefore, different for federal
and state purposes. This difference will remain until the asset is fully
On those schedules you are allowed to claim a deduction for taxes paid
depreciated or until the time of its disposition.
which are:
•
based on, or
•
measured by income, and
•
levied at a state level by any state in the United States.
Page 14
IT-40 Booklet 2013
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