§ 6-3-2-29 — Specified research or experimental expenditures; deduction; computation

Indiana § 6-3-2-29

• Jurisdiction: Indiana
• Art. 3: STATE INCOME TAXES
• Ch. 2: Imposition of Tax and Deductions

Text

(a) As used in this section, "specified research
or experimental expenditures" means specified research or
experimental expenditures (as defined in Section 174(b) of the Internal
Revenue Code) that the taxpayer is required to charge to capital
account under Section 174(a)(2) of the Internal Revenue Code. The
term does not include expenditures for which a deduction is disallowed
as a result of Section 280C(c) of the Internal Revenue Code.
(b) Except as otherwise provided in this section, for taxable years
beginning after December 31, 2021, a taxpayer, in determining the
taxpayer's adjusted gross income for a particular taxable year, shall:
(1) deduct from the taxpayer's adjusted gross income an amount
equal to the specified research or experimental expenditures
charged to capital account under Section 174(a)(2)(A) of the
Internal Revenue Code for the taxable year; and
(2) add to the taxpayer's adjusted gross income the amount
deducted under Section 174(a)(2)(B) of the Internal Revenue
Code for the taxable year.
(c) In the case of a taxpayer that owns an interest in a partnership or
corporation described in section 2.8(2) of this chapter, the amount that
must be deducted under subsection (b)(1) for a particular taxable year
may not exceed the sum of:
(1) the taxpayer's adjusted basis in the partnership or corporation
for federal tax purposes, as determined at the end of the taxpayer's
taxable year and after application of any expenses, deductions, or
losses; plus
(2) the amount of any specified research or experimental
expenditures claimed as a deduction under Section 174 of the
Internal Revenue Code in determining the taxpayer's federal
adjusted gross income for the taxable year.
(d) A deduction or part of a deduction that is disallowed under
subsection (c) must be:
(1) carried forward to the subsequent taxable year;
(2) treated as a specified research or experimental expenditure
that is paid or incurred in the subsequent taxable year; and
(3) applied under subsection (c) against the adjusted basis of the
partnership or corporation for the subsequent taxable year.
(e) If a taxpayer is eligible for a deduction under subsection (b)(1),
but the deduction would be treated as a passive deduction under
Section 469 of the Internal Revenue Code, the amount that may be
deducted under subsection (b)(1) for a particular taxable year may not
exceed the sum of:
(1) the amount of the taxpayer's passive income, as determined for
federal tax purposes, after application of any passive losses or
deductions for the taxable year and after application of any
passive loss carryovers for the taxable year, but not less than zero
(0); plus
(2) the amount of any specified research or experimental
expenditures claimed as a deduction under Section 174 of the
Internal Revenue Code in determining the taxpayer's federal
adjusted gross income for the taxable year.
The requirements under this subsection must be applied after
application of subsections (c) and (d). Any deduction or part of a
deduction that is disallowed under this subsection must be carried
forward to the subsequent taxable year and treated as a specified
research or experimental expenditure that is paid or incurred in the
subsequent taxable year from a trade or business that is a passive
activity for the taxpayer.
(f) If, before the effective date of this section, a taxpayer:
(1) is a pass through entity; and
(2) filed a return either:
(A) for a taxable year beginning before January 1, 2023, that
reported tax under IC 6-3-2.1 as an electing entity; or
(B) for a taxable year beginning before January 1, 2023, passing
through the tax paid under IC 6-3-2.1 by another entity on the
taxpayer's behalf as pass through entity to its owners;
the taxpayer shall report the adjusted gross income subject to pass
through entity tax for purposes of IC 6-3-2.1 as if the modification
under this section was not in effect for taxable years beginning before
January 1, 2023. The taxpayer shall report the modifications otherwise
required under this section to its partners, shareholders, or beneficiaries
for the taxable year in the manner prescribed under this article.
(g) The modifications required under this section are not applicable
if a taxpayer is not required under federal law to charge specified
research or experimental expenditures to capital account in determining
federal adjusted gross income, regardless of whether the taxpayer elects
to charge research or experimental expenditures to capital account.

Legislative History

As added by P.L.194-2023, SEC.18.