CHAPTER 2. IMPOSITION OF TAX
IC 6-5.5-2
Chapter 2. Imposition of Tax
IC 6-5.5-2-1
Computation of franchise tax
Sec. 1. (a) There is imposed on each taxpayer a franchise taxmeasured by the taxpayer's apportioned income for the privilege ofexercising its franchise or the corporate privilege of transacting thebusiness of a financial institution in Indiana. The amount of the taxfor a taxable year shall be determined by multiplying eight andone-half percent (8.5%) times the remainder of:
(1) the taxpayer's apportioned income; minus
(2) the taxpayer's deductible Indiana net operating losses asdetermined under this section; minus
(3) the taxpayer's net capital losses minus the taxpayer's netcapital gains computed under the Internal Revenue Code foreach taxable year or part of a taxable year beginning afterDecember 31, 1989, multiplied by the apportionmentpercentage applicable to the taxpayer under IC 6-5.5-2 for thetaxable year of the loss.
A net capital loss for a taxable year is a net capital loss carryover toeach of the five (5) taxable years that follow the taxable year inwhich the loss occurred.
(b) The amount of net operating losses deductible undersubsection (a) is an amount equal to the net operating lossescomputed under the Internal Revenue Code, adjusted for the itemsset forth in IC 6-5.5-1-2, that are:
(1) incurred in each taxable year, or part of a year, beginningafter December 31, 1989; and
(2) attributable to Indiana.
(c) The following apply to determining the amount of netoperating losses that may be deducted under subsection (a):
(1) The amount of net operating losses that is attributable toIndiana is the taxpayer's total net operating losses under theInternal Revenue Code for the taxable year of the loss, adjustedfor the items set forth in IC 6-5.5-1-2, multiplied by theapportionment percentage applicable to the taxpayer underIC 6-5.5-2 for the taxable year of the loss.
(2) A net operating loss for any taxable year is a net operatingloss carryover to each of the fifteen (15) taxable years thatfollow the taxable year in which the loss occurred.
(d) The following provisions apply to a combined returncomputing the tax on the basis of the income of the unitary groupwhen the return is filed for more than one (1) taxpayer member of theunitary group for any taxable year:
(1) Any net capital loss or net operating loss attributable toIndiana in the combined return shall be prorated between eachtaxpayer member of the unitary group by the quotient of:
(A) the receipts of that taxpayer member attributable toIndiana under section 4 of this chapter; divided by (B) the receipts of all taxpayer members of the unitary groupattributable to Indiana.
(2) The net capital loss or net operating loss for that year, ifany, to be carried forward to any subsequent year shall belimited to the capital gains or apportioned income for thesubsequent year of that taxpayer, determined by the samereceipts formula set out in subdivision (1).
As added by P.L.347-1989(ss), SEC.1. Amended by P.L.21-1990,SEC.21; P.L.68-1991, SEC.4; P.L.1-1992, SEC.19; P.L.6-2000,SEC.1.
IC 6-5.5-2-2
Repealed
(Repealed by P.L.6-2000, SEC.5.)
IC 6-5.5-2-3
Apportioned income of taxpayer not filing combined return
Sec. 3. For a taxpayer that is not filing a combined return, thetaxpayer's apportioned income consists of the taxpayer's adjustedgross income for that year multiplied by the quotient of:
(1) the taxpayer's total receipts attributable to transactingbusiness in Indiana, as determined under IC 6-5.5-4; divided by
(2) the taxpayer's total receipts from transacting business in alltaxing jurisdictions, as determined under IC 6-5.5-4.
As added by P.L.347-1989(ss), SEC.1. Amended by P.L.6-2000,SEC.2.
IC 6-5.5-2-4
Apportioned income of taxpayer filing combined return for unitarygroup
Sec. 4. For a taxpayer filing a combined return for its unitarygroup, the group's apportioned income for a taxable year consists of:
(1) the aggregate adjusted gross income, from whatever sourcederived, of the members of the unitary group; multiplied by
(2) the quotient of:
(A) all the receipts of the taxpayer members of the unitarygroup that are attributable to transacting business in Indiana;divided by
(B) the receipts of all the members of the unitary group fromtransacting business in all taxing jurisdictions.
As added by P.L.347-1989(ss), SEC.1. Amended by P.L.68-1991,SEC.5; P.L.6-2000, SEC.3.
IC 6-5.5-2-5
Repealed
(Repealed by P.L.6-2000, SEC.5.)
IC 6-5.5-2-5.3
(Repealed by P.L.6-2000, SEC.5.)
IC 6-5.5-2-6
Credit for nonresident taxpayer
Sec. 6. (a) A nonresident taxpayer is entitled to a credit against thetax due under this article for the amount of net income tax, franchisetax, or other tax measured by net income that is due to thenonresident taxpayer's domiciliary state for a taxable year if:
(1) the receipt of interest or other income from a loan or loantransaction is attributed both to the taxpayer's domiciliary stateunder that state's laws and also to Indiana under IC 6-5.5-4; and
(2) the principal amount of the loan is at least two milliondollars ($2,000,000).
(b) The amount of the credit for each taxable year is the lesser of:
(1) the portion of the net income tax, franchise tax, or other taxmeasured by net income actually paid by the nonresidenttaxpayer to its domiciliary state that is attributable to the loanor loan transaction; or
(2) the portion of the franchise tax due to Indiana under thisarticle that is attributable to the loan or loan transaction.
The amount determined under subdivisions (1) and (2) shall bereduced by the amount of any credit for the tax due from thenonresident taxpayer under this article (calculated without theallowance for the credit provided under this section) and that may beused by the nonresident taxpayer in calculating the income tax dueunder the laws of the nonresident taxpayer's domiciliary state.
(c) As used in this section:
(1) "loan" or "loan transaction" refers to an obligation createdin a single transaction to pay or repay a sum of money attributedas provided in subsection (a)(1);
(2) the "principal amount" of a loan is limited to the principalamount specified in the loan documents at the time of makingthe loan and reasonably expected to be advanced during theterm of the loan, even though there is more than one (1)advancement. If the loan is a participation loan (as defined inIC 6-5.5-4-13), the principal amount must be calculatedseparately for each participant and is equal to that portion of theloan committed by each participant; and
(3) a "taxpayer's domiciliary state" is the taxing jurisdiction inwhich its commercial domicile is located.
(d) The amount of tax attributable to a loan or loan transaction,under the laws of the taxpayer's domiciliary state or under thisarticle, is the portion of the total tax due to each state in an amountequal to the same proportion as the receipts from the loan or loantransaction bear to the total of the taxpayer's receipts.
As added by P.L.347-1989(ss), SEC.1. Amended by P.L.21-1990,SEC.24; P.L.68-1991, SEC.7.
IC 6-5.5-2-7
Exemptions
Sec. 7. Notwithstanding any other provision of this article, thereis no tax imposed on the adjusted gross income or apportioned
income of the following:
(1) Insurance companies subject to the tax under IC 27-1-18-2or IC 6-3.
(2) International banking facilities (as defined in Regulation Dof the Board of Governors of the Federal Reserve System).
(3) Any corporation that is exempt from income tax underSection 1363 of the Internal Revenue Code.
(4) Any corporation exempt from federal income taxation underthe Internal Revenue Code, except for the corporation'sunrelated business income. However, this exemption does notapply to a corporation exempt from federal income taxationunder Section 501(c)(14) of the Internal Revenue Code.
As added by P.L.347-1989(ss), SEC.1. Amended by P.L.21-1990,SEC.25; P.L.68-1991, SEC.8; P.L.1-2003, SEC.47; P.L.269-2003,SEC.11.
IC 6-5.5-2-8
Partnerships; grantor or beneficiary of a trust; informationreturn; withholding
Sec. 8. (a) If a corporation is:
(1) transacting the business of a financial institution (as definedin IC 6-5.5-1-17(d)); and
(2) is a partner in a partnership or the grantor and beneficiary ofa trust transacting business in Indiana and the partnership ortrust is conducting in Indiana an activity or activities that wouldconstitute the business of a financial institution if transacted bya corporation;
the corporation is a taxpayer under this article and shall, incalculating the corporation's tax liability under this article, includein the corporation's adjusted or apportioned income the corporation'spercentage of the partnership or trust adjusted gross income orapportioned income.
(b) A partnership or trust covered by subsection (a):
(1) shall file an information return on an appropriate schedule,with capital and operating losses, modifications, and creditsrequired by this article and any other items specified in thereturn form by the department. If the taxpayer is a nonresident,or is a member of a unitary group with nonresident membersfiling a combined return, the return must show theapportionment percentage and supporting amounts necessary tocompute the tax under IC 6-5.5-4. A partner's percentage shareof the receipts of a taxpayer, for the purpose of apportionment,shall be calculated by using the partner's share of thepartnership adjusted gross income;
(2) is subject to the provisions of IC 6-5.5-7-3 relating totaxpayers and IC 6-5.5-7-4 relating to persons when filing theinformation return; and
(3) shall withhold from all nonresident corporate partners orbeneficiaries an amount prescribed in withholding instructionsissued by the department. The amount required to be withheld
shall be based upon the rate of tax prescribed in IC 6-5.5-2,unless the partner or beneficiary provides the partnership ortrust with a written declaration that the partner or beneficiary isnot subject to the tax. In such a case the amount withheld shallbe the amount prescribed in the withholding instructions issuedby the department based upon the Indiana adjusted grossincome tax rates. The department shall issue procedures anddirections for the withholding required by this subsection thatare similar to those contained in IC 6-3-4 concerning thewithholding of taxes.
As added by P.L.21-1990, SEC.26. Amended by P.L.68-1991, SEC.9.