Form It-20np - Nonprofit Organization Unrelated Business Income Tax Booklet

Line 1. Enter unrelated business taxable income (before net

computed had an election not been made for the year

operating loss deduction and speciﬁc deductions) from federal

in which the property was placed in service to take

Form 990T, Exempt Organization Business Income Tax Return.

deductions (as deﬁned in IRC Section 179) in a total

amount exceeding $25,000.

Line 2. In computing unrelated business taxable income, a

speciﬁc deduction of $1,000 is allowed. However, the $1,000

The depreciation allowances in the year of purchase

speciﬁc deduction is not allowed in computing a net operating

and in later years must be adjusted to reﬂect the

loss (NOL) deduction. Generally, the deduction is limited to

additional ﬁrst-year depreciation deduction, including

$1,000 regardless of the number of unrelated businesses in which

the special depreciation allowance for 50 percent bonus

the organization is engaged. An exception is provided in the case

depreciation property, until the property is sold.

of a diocese, a province of a religious order, or a convention or an

association of churches that may claim a speciﬁc deduction for

Indiana adopted the former expensing limit provided by

each parish, individual church, district, or other local unit, to the

The Jobs Creation and Workers Assistance Act of 2002

extent these unrelated businesses are not separate legal entities. In

and has since speciﬁed an expensing cap of $25,000. The

these cases, the speciﬁc deduction is limited to the lower of $1,000

additional depreciation may be excluded in subsequent

or the gross income derived from an unrelated trade or business

years from the amounts to be added back on line 7 when

regularly carried on by the local unit.

excess IRC Section179 deduction or bonus depreciation

was elected.

Line 3. Enter interest, after deducting all related expenses, on

United States government obligations included on the federal

•

Domestic Product Deduction – Enter an amount equal

income tax return, Form 990T. Refer to Income Tax Information

to the amount claimed as a deduction for qualiﬁed

Bulletin #19 at for a listing of eligible

domestic production activities under IRC Section 199

items.

for federal income tax purposes.

Line 4. Enter the amount of income from qualified utility and

•

Deduction for Lottery Prize Money – A portion of

plant patents. Enclose Schedule IN-PAT with your return.

prize money received from the purchase of a winning

Indiana lottery game or ticket included in federal taxable

Line 7. Enter all other adjustments and modiﬁcations to unrelated

income should be excluded. Beginning after June 30,

business income:

2002, the proceeds of up to $1,200 are deductible from

each winning lottery game or ticket paid through the

•

Charitable Contributions – Enter an amount equal to

Hoosier State Lottery Commission.

any IRC 170 deduction deducted on the federal return.

•

Deduction for Deferral of Business Indebtedness

•

State Income Taxes – Enter all income taxes (based on

Discharge and Reacquisition – Enter an amount equal

or measured by income levied at the state level) deducted

to the amount claimed as a deduction for the discharge

on the federal return.

of debt on a qualified principal residence and for the

deferral of income arising from business indebtedness

Bonus Depreciation – Add or subtract an amount to

•

discharged in connection with the reacquisition after

bonus depreciation in excess of any regular depreciation

Dec. 31, 2008, and before Jan. 1, 2011, of an applicable

that would be allowed had not an election under IRC

debt instrument (as provided in Section 108(i) of the

Section 168(k) been made as applied to property in

IRC), for federal income tax purposes.

the year that it was placed into service. Taxpayers that

Deduction for Qualified Restaurant Property – Enter

own property for which additional ﬁrst year special

•

depreciation for qualiﬁed property, including 50 percent

an amount equal to the amount claimed as a deduction

bonus depreciation, was allowed in the current taxable

for federal income tax purposes for qualified restaurant

year or in an earlier taxable year must add or subtract

property. The property must have been placed in service

an amount necessary to make their adjusted gross

during the taxable year and have been classified as 15-

income equal to the amount computed without applying

year property under Section 168(e)(3)(E)(v) of the IRC.

any bonus depreciation. The subsequent depreciation

•

Deduction for Qualified Retail Improvement Property –

allowance is to be calculated on the state’s stepped-up

basis until the property is disposed. Commissioner’s

Enter an amount equal to the amount claimed as a

Directive #19 ( ) explains

deduction for federal income tax purposes for qualified

this initial required modification on the allowance of

retail improvement property. The property must have

depreciation for state tax purposes.

been placed in service during the taxable year and have

been classified as 15-year property under Section 168(e)

Add or subtract the amount necessary to make the

(3)(E)(ix) of the IRC.

adjusted gross income of the organization that placed

any IRC Section 179 property in service in the current

•

Deduction for Qualified Disaster Assistance Property –

taxable year or in an earlier taxable year equal to the

Add or subtract an amount equal to the amount claimed

amount of adjusted gross income that would have been

as a deduction for the special allowance for qualified

Form It-20np - Nonprofit Organization Unrelated Business Income Tax Booklet - 2012 Page 8

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