Form It-65 - Indiana Partnership Return Booklet - 2014 Page 10
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32Use the Worksheet for Partnership Distributive Share Income,
Addback for Bonus Depreciation (3-digit code: 104) – An
Deductions, and Credits to help you calculate this figure. You must
amount attributable to bonus depreciation in excess of any regular
use the income worksheet if this partnership received any distributive
depreciation that would be allowed if an election under IRC
income from one of the following:
Section 168(k) had not been made as applied to property in the
•
An owned partnership interest;
year that it was placed into service. Taxpayers that own property
•
An estate; or
for which additional first-year special depreciation for qualified
•
A trust.
property was allowed in the current taxable year or in an earlier
taxable year must add or subtract an amount necessary to make
See instructions on page 17 and worksheet on page 15.
their AGI equal the amount computed without applying any bonus
depreciation. The first-year special depreciation includes 50 percent
If filing federal Form 1065B by an electing large partnership, use the
bonus depreciation. The subsequent depreciation allowance must
amounts from line 1 through 8 of Schedule K. Convert distributive
be calculated on the state’s stepped-up basis until the property is
share of income items into a Form 1065 Schedule K format. Carry
disposed. Enclose a statement to explain your adjustment.
the figures to IT-65 and Schedule IN K-1.
Example: If the IRC Section 179 deduction was elected on business
equipment acquired during 2014 costing $200,000, the capital
Required Indiana State Modifications - Lines
expensing deduction was $100,000. Also, it had a remaining basis of
2a through 2f
$100,000. An additional 50 percent bonus depreciation of $50,000
Lines 2a through 2e. Enter any addbacks and deductions here. Enter
was elected. This left a basis of $50,000 for a 5-year Modified
the name of the addback/deduction, its 3-digit code, and its amount.
Accelerated Cost Recovery System (MACRS) property (half-year
Use a negative sign for negative amounts (-). Attach additional sheets
convention) depreciation deduction of 20% ($10,000). The total
if necessary.
amount of federal deduction was $160,000.
For state purposes, the bonus depreciation of $50,000 was not
Adding Back Depreciation Expenses
allowed and must be added back. The IRC Section 179 deduction
was capped at $25,000. So the $75,000 excess amount must be added
Several of the discontinued addbacks were created by timing
back. These adjustments result in a stepped-up basis of $175,000 for
differences between federal and Indiana allowable expenses.
the state return. This is the amount on which you figure the allowable
Following is an example of how to report a difference.
first-year MACRS property depreciation deduction of 20% ($35,000)
for 2014. This was a total state deduction of $25,000 more than was
Example. ABC Company has qualified restaurant equipment. For
already deducted under the General Depreciation System (GDS).
federal tax purposes, they use the accelerated 15-year recovery
The additional depreciation may be excluded in subsequent years
period for an asset placed in service in 2009. Since 2009, ABC
from the amounts to be added back when excess IRC Section 179
Company has been adding back the depreciation expense taken for
deduction or bonus depreciation was elected.
federal purposes that exceeded the amount allowable for Indiana
purposes. The accumulated depreciation on such an asset through
Commissioner’s Directive #19 ( ) explains
2012 is, therefore, different for federal and state purposes. This
this initial required modification on the allowance of depreciation for
difference will remain until the asset is fully depreciated or until the
state tax purposes.
time of its disposition.
Addback for Section 179 Expense Excess (3-digit code: 105) – Your
So, in this example, the asset was acquired in January 2009 at a
share of the IRC Section 179 adjustment claimed for federal tax
purchase price of $120,000. This normally would have a 25-year
purposes that exceeds the amount recognized for state tax purposes.
recovery period, but IRC Sec. 168 allows for a 15-year recovery
period. Tax year 2012 is the last year ABC Company will have
Indiana adopted the former expensing limit provided by the Jobs
reported a qualified restaurant equipment addback until the end of
Creation and Workers Assistance Act of 2002. Indiana has since
the 15-year recovery period.
specified an expensing cap of $25,000. This modification affects
the basis of the property if a higher Section 179 limit was applied.
If this asset was sold before being fully depreciated, the catch-up
The increase to a $100,000 deduction was not allowed for purposes
modification would be reflected in the year of the sale. However, if
of calculating Indiana AGI. However, the beginning $400,000
this property is held through 2023 (the 15th year of depreciation),
[CURRENTLY $2,000,000] was allowed for purposes of calculating
ABC Company will report a negative $9,600 catch-up addback on
Indiana AGI. The depreciation allowances in the year of purchase
their 2023 state tax return.
and in later years must be adjusted to reflect the additional first-year
depreciation deduction until the property is sold. This first-year
The following addbacks and deductions should be entered on lines 2a
depreciation deduction includes the special depreciation allowance
through 2e:
for 50% bonus depreciation property.
Addback for Certain Taxes Deducted from Federal AGI (3-digit
If a taxpayer placed any IRC Section 179 property in service in the
code: 100) – The addback of all state taxes based on or measured by
current taxable year or in an earlier taxable year, you must add or
income, levied by any state, deducted on the federal return.
subtract an amount necessary to make the taxpayer’s AGI equal to
the amount of AGI that would have been computed if an election
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