Form It-40 - Indiana Full-Year Resident Individual Income Tax Booklet - 2013 Page 15
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60If you claimed this kind of deduction on any of these schedules, then
Line 6 – Section 179 expense add-back
you must add it back to your Indiana income.
You may have figured an IRC Section 179 expense using a ceiling of
more than $25,000 for federal tax purposes. Indiana allows you to fig-
Do not add back property taxes on this line.
ure IRC Section 179 expense using a ceiling of no more than $25,000.
If you figured IRC Section 179 expense using a ceiling amount of more
Note. Income, losses and/or expenses from other schedules and
than $25,000, you’ll need to add back the difference between it and
forms may flow through to federal Schedules C, E and F. For example,
$25,000 on line 6.
partnership income from federal Schedule K-1 (Form 1065) may be
included on federal Schedule E, while expenses from federal Form
Line 7 – Other Add-Backs
8829 may be included on federal Schedule C. Make sure to check these
Each of the following add-backs has been assigned a 3-digit code
schedules and forms for any deduction that needs to be added back.
number. When reporting the add-back, write its name, the associated
3-digit number and the amount.
Line 2 – Net operating loss add-back
Any net operating loss (NOL) deduction taken on line 21 of your fed-
Example. Enter the following information on line 7a to report a $700
eral Form 1040 must be added back on this line. Write the amount of
qualified disaster assistance property add-back.
the net operating loss as a positive figure. (You will claim an Indiana
net operating loss deduction on Schedule 2, under line 11.)
7a. Qualified disaster assistance property
code no. 110
$700
Note. If your federal adjusted gross income this year is a loss, and you
Certain trade or business deductions based on
have not included a net operating loss as a deduction on line 21 of
employment of unauthorized alien 132
your 2013 federal Form 1040, then leave this line blank.
Add the amount of any trade or business deductions allowed under
the Internal Revenue Code for wages, reimbursements, or other pay-
Line 3 – Lump sum distribution
ments made for services provided in Indiana by an individual for
If you completed federal Form 4972, add any capital gains reported on
services as an employee, if the individual was, during the period of
Part II and any ordinary income reported on Part III of federal Form
service, prohibited from being hired as an employee under 8 U.S.C.
4972. Enter the total here as a positive amount.
1324a.
Line 4 – Domestic production activities add-back
Important. This add-back requirement does not apply to payments
If you claimed a domestic production activities deduction on your
made for services provided to a business that was enrolled and partici-
federal Form 1040, line 35, enter that amount here.
pated in the E-Verify program (as defined in IC 22-5-1.7-3) during the
time the taxpayer conducted business in Indiana in the taxable year.
Line 5 – Bonus depreciation add-back
Enter code 132 on Schedule 1 under line 7 if reporting this add-back.
You must make an exception for any bonus depreciation deduction
used for property placed in service after Sept. 11, 2001. Bonus de-
Deferral of business indebtedness discharge and
preciation is the additional first-year special depreciation deduction
allowed under Section 168(k) of the Internal Revenue Code (IRC).
reacquisition add-back
107
Add an amount equal to any income not included as a result of the
Figure the net income (or loss) that would have been included in
deferral of income arising from business indebtedness discharged in
federal adjusted gross income had the bonus depreciation method not
connection with the reacquisition of a debt instrument (as provided in
been used. Then, enter the difference, which may be a positive or nega-
Section 108(i) of the IRC). Subtract the amount added to income in a
tive amount, on line 5.
previous year to offset the amount included in federal gross income as
a result of the deferral of income arising from business indebtedness
Example. Mack used the bonus depreciation method for federal in-
discharged in connection with the reacquisition after Dec. 31, 2008,
come tax purposes. After refiguring the depreciation without using the
and before Jan. 1, 2011, of an applicable debt instrument.
bonus method, he has to add back $1,500 on his Indiana tax return.
Enter code 107 on Schedule 1 under line 7 if reporting this add-back.
Note. After making an initial adjustment for bonus depreciation you’ll
need to refigure the amount of depreciation available for state tax
Discharge of debt of a principal residence add-back
purposes for subsequent years.
117
You may have to add back some or all of the amount of debt not re-
Example. Ann made an initial adjustment for bonus depreciation on
ported on your federal tax return due to the discharge of indebtedness
last year’s Indiana tax return. This year she figures she is entitled to
of your principal residence (mortgage forgiveness).
a $150 additional depreciation amount for state tax purposes. She
should enter that amount as a negative entry, or (150), on line 5.
For additional information see Commissioner’s Directive #19 at
Page 15
IT-40 Booklet 2013
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