Net operating losses
Sec. 2.6. (a) This section applies to a corporation or a nonresident
person.
(b) Corporations and nonresident persons are entitled to a net
operating loss deduction. The amount of the deduction taken in a
taxable year may not exceed the taxpayer's unused Indiana net
operating losses carried back or carried over to that year.
(c) An Indiana net operating loss equals the taxpayer's federal net
operating loss for a taxable year as calculated under Section 172 of
the Internal Revenue Code, derived from sources within Indiana and
adjusted for the modifications required by IC 6-3-1-3.5.
(d) The following provisions apply for purposes of subsection (c):
(1) The modifications that are to be applied are those
modifications required under IC 6-3-1-3.5 for the same taxable
year in which each net operating loss was incurred.
(2) The amount of the taxpayer's net operating loss that is
derived from sources within Indiana shall be determined in the
same manner that the amount of the taxpayer's adjusted income
derived from sources within Indiana is determined under section
2 of this chapter for the same taxable year during which each
loss was incurred.
(3) An Indiana net operating loss includes a net operating loss
that arises when the modifications required by IC 6-3-1-3.5
exceed the taxpayer's federal taxable income (as defined in
Section 63 of the Internal Revenue Code), if the taxpayer is a
corporation, or when the modifications required by IC 6-3-1-3.5
exceed the taxpayer's federal adjusted gross income (as defined
by Section 62 of the Internal Revenue Code), if the taxpayer is
a nonresident person, for the taxable year in which the Indiana
net operating loss is determined.
(e) Subject to the limitations contained in subsection (g), an
Indiana net operating loss carryback or carryover shall be available
as a deduction from the taxpayer's adjusted gross income derived
from sources within Indiana (as defined in section 2 of this chapter)
in the carryback or carryover year provided in subsection (f).
(f) Carrybacks and carryovers shall be determined under this
subsection as follows:
(1) An Indiana net operating loss shall be an Indiana net
operating loss carryback to each of the carryback years
preceding the taxable year of the loss.
(2) An Indiana net operating loss shall be an Indiana net
operating loss carryover to each of the carryover years
following the taxable year of the loss.
(3) Carryback years shall be determined by reference to the
number of years allowed for carrying back a net operating loss
under Section 172(b) of the Internal Revenue Code.
(4) Carryover years shall be determined by reference to the
number of years allowed for carrying over net operating losses
under Section 172(b) of the Internal Revenue Code.
(5) A taxpayer who makes an election under Section 172(b)(3)
of the Internal Revenue Code to relinquish the carryback period
with respect to a net operating loss for any taxable year shall be
considered to have also relinquished the carryback of the
Indiana net operating loss for purposes of this section.
(g) The entire amount of the Indiana net operating loss for any
taxable year shall be carried to the earliest of the taxable years to
which (as determined under subsection (f)) the loss may be carried.
The amount of the Indiana net operating loss remaining after the
deduction is taken under this section in a taxable year may be carried
back or carried over as provided in subsection (f). The amount of the
Indiana net operating loss carried back or carried over from year to
year shall be reduced to the extent that the Indiana net operating loss
carryback or carryover is used by the taxpayer to obtain a deduction
in a taxable year until the occurrence of the earlier of the following:
(1) The entire amount of the Indiana net operating loss has been
used as a deduction.
(2) The Indiana net operating loss has been carried over to each
of the carryover years provided by subsection (f).
(h) An Indiana net operating loss deduction determined under this
section shall be allowed notwithstanding the fact that in the year the
taxpayer incurred the net operating loss the taxpayer was not subject
to the tax imposed under section 1 of this chapter because the
taxpayer was:
(1) a life insurance company (as defined in Section 816(a) of
the Internal Revenue Code); or
(2) an insurance company subject to tax under Section 831 of
the Internal Revenue Code.
(i) In the case of a life insurance company that claims an
operations loss deduction under Section 810 of the Internal Revenue
Code, this section shall be applied by:
(1) substituting the corresponding provisions of Section 810 of
the Internal Revenue Code in place of references to Section 172
of the Internal Revenue Code; and
(2) substituting life insurance company taxable income (as
defined in Section 801 the Internal Revenue Code) in place of
references to taxable income (as defined in Section 63 of the
Internal Revenue Code).
(j) For purposes of an amended return filed to carry back an
Indiana net operating loss:
(1) the term "due date of the return", as used in
IC 6-8.1-9-1(a)(1), means the due date of the return for the
taxable year in which the net operating loss was incurred; and
(2) the term "date the payment was due", as used in
IC 6-8.1-9-2(c), means the due date of the return for the taxable
year in which the net operating loss was incurred.
As added by P.L.91-1987, SEC.4. Amended by P.L.192-2002(ss),
SEC.73; P.L.81-2004, SEC.11; P.L.2-2005, SEC.21.
Last modified: May 28, 2006