Indiana Issues IRC Conformity Guidance

first_imgIndiana has released a bulletin covering the most significant changes enacted in its IRC conformity law.  The bulletin discusses:inclusion of IRC Sec. 965 income;inclusion of global intangible low-taxed income (GILTI);modifications related to deductions for business interest; andnet operating losses.The law updated the IRC conformity date to February 11, 2018.Foreign Earnings or ProfitsThe bulletin informs corporate and individual income taxpayers on how to treat foreign earnings or profits.  Any return or schedule reporting an adjustment for IRC Sec. 965 income for 2016 and 2017 must be filed on paper. Indiana cannot accept electronically filed returns with the required codes at this time.Global Intangible Low-Taxed IncomeTaxpayers receiving global intangible low tax income (GILTI) under IRC Sec. 951A for tax years 2018 and later must include GILTI  on their federal tax retuns. An Indiana corporate taxpayer must add back the deduction taken under IRC Sec. 250(a)(1)(B).Any IRC Sec. 78 amount added back under IRC Sec. 250 can still be deducted as part of the existing IRC Sec. 78 deduction. The portions attributable to IRC Sec. 250(a)(1)(B)(i) and (ii) must be reported separately.S corporations, partnerships, and trusts will disregard GILTI as a receipt for apportionment purposes. However, the income reported as GILTI still must be reported.Interest DeductionIn 2018 and after, the deduction for business interest is allowed without regard to the limitation in IRC Sec. 163(j)(1). Thus, business interest expenses are allowed in the year the expense is paid or incurred. Any amount in excess of the allowable federal amount will be a deduction in determining Indiana adjusted gross income. If a taxpayer carries over an interest expense from one year to another, the carried over amount must be added back.Net Operating LossesIndiana will continue to allow net operating losses to be deducted up to 100% of Indiana adjusted gross income. Also, Indiana continues to have a 20 year carryforward for net operating losses.Information Bulletin #116, Indiana Department of Revenue, July 1, 2018, ¶402-913Login to read more tax news on CCH® AnswerConnect or CCH® Intelliconnect®.Not a subscriber? Sign up for a free trial or contact us for a representative.last_img

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