INDIANA 2 02 2 IT-65 Partnership Return Booklet
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SP 262
(R26 / 8-22)
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INDIANA IT-65
Partnership Return Booklet Year 2022
Contents
What’s New for 2022 ..............................................................................................................................................................4
General Information ..............................................................................................................................................................4
General Filing Instructions ...................................................................................................................................................5
Instructions for Completing Form IT-65 ...........................................................................................................................7
Summary of Calculations for Form IT-65.........................................................................................................................10
Certification of Signatures and Authorization Section ...................................................................................................12
Mailing Options ....................................................................................................................................................................14
Instructions for Schedule IN K-1 ......................................................................................................................................14
Instructions for Schedule E, Apportionment of Income for Indiana ...........................................................................16
Instructions for Schedule Composite/Schedule Composite-COR ................................................................................17
Reminders ............................................................................................................................................................................23
Additional Information .......................................................................................................................................................24
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INTIME e-Services Portal Available Schedule IN-EL
INTIME, DOR’s e-services tax portal available at intime.dor.in.gov, Two new entity codes added to be reported in Column A. In
provides the following functionalities for IT-65 customers: addition, a new Line 15 has been added to add disallowed credits
• Make payments using a bank account or credit card or subtract additional allowed credits.
• View and respond to correspondence from DOR
• Request and print return transcripts on-demand Schedule Composite/Composite-COR
• Electronic delivery of correspondence A new form, IN-COMPA, has been added to permit partners to
• Online customer service support through secure messaging claim an exemption from withholding or to reduce withholding.
In addition, a new series of exemption codes has been added.
Increased Online Support for Tax Preparers
In addition to the functionality listed above, INTIME provides
increased access and functionality for tax preparers. INTIME
General Information
provides the following functionality for tax preparers:
• Gain access to view and manage multiple customers under Annual Public Hearing
one login In accordance with the Indiana Taxpayer Bill of Rights, the
• Ability to file returns, make payments, and view file and pay Indiana Department of Revenue will conduct an annual public
history for clients hearing in Indianapolis in June of 2023. Event details will be listed
• Request electronic power of attorney (ePOA) authorization to at www.in.gov/dor/news-media-and-publications/dor-public-
view customer accounts events/annual-public-hearings. Please come and share feedback
• View and respond to correspondence for clients or comments about how DOR can better administer Indiana tax
laws. If not able to attend, please submit feedback or comments
We strongly encourage all taxpayers to make payments and file in writing to: Indiana Department of Revenue, Commissioner’s
returns electronically whenever possible. INTIME allows customers Office, MS# 101, 100 N. Senate Avenue, Indianapolis, IN 46204.
to make estimated payments electronically with just a few clicks.
Our homepage provides access to forms, information bulletins
and directives, tax publications, email, and various filing options.
What’s New for 2022 Visit www.in.gov/dor.
References to the Internal Revenue Code Who Must File and When
The definition of adjusted gross income (AGI) is updated to Partnerships conducting business within Indiana must file an
correspond to the federal definition of adjusted gross income annual return (Form IT-65) and information returns (Schedule
contained in the Internal Revenue Code (IRC). Any reference to IN K-1) with DOR. These forms must disclose each partner’s
the IRC and subsequent regulations means the Internal Revenue distributive share of the partnership income distributed or
Code of 1986, as amended and in effect on March 31, 2021. For a undistributed. These forms are due on or before the 15th day of
complete summary of new legislation regarding taxation, please see the 4th month following the close of the partnership’s tax year.
the Synopsis of 2022 Legislation Affecting the Indiana Department of
Revenue at www.in.gov/dor/files/2022-legislative-synopsis.pdf. Enclose with Form IT-65 the first five pages of the U.S.
Partnership Return of Income, Form 1065 or 1065B. Also enclose
Add-Backs Schedule M-3. Federal Schedule K-1s should not be enclosed but
• The portion of wagering taxes required to be added back as a must be made available for inspection upon request by DOR.
tax based on or measured by income is being phased out. See
instructions. Any partnership doing business in Indiana or deriving gross income
from sources within Indiana is required to file a return. In addition,
Credits any partnership that has partners residing in Indiana is required to file
• School Scholarship Tax Credit Contribution ceiling a return, even if the partnership is not doing business in Indiana. For
increased. The total of allowable net contributions to the Indiana adjusted gross income (AGI) tax purposes, the term doing
program has increased to $18.5 million for the program’s business generally means the operation of any business enterprise or
fiscal year of July 1, 2022 through June 30, 2023. activity in Indiana, including but not limited to the following:
• A new credit (867) is available for qualifying donations to • The maintenance of an office, a warehouse, a construction
approved foster care organizations. See page 21 for more site, or another place of business in Indiana;
details. • The maintenance of an inventory of merchandise or material
• A new credit (868) is available for the venture capital for sale, distribution, or manufacture, or consigned goods;
investment credit for amounts provided to a Qualified • The sale or distribution of merchandise to customers directly
Indiana Investment Fund. See page 23 for more from company-owned or -operated vehicles when the title of
information. merchandise is transferred from the seller or distributor to
• A new credit (869) is available for qualified film and media the customer at the time of sale or distribution;
productions. See page 20 for more information. • The rendering of a service to customers in Indiana;
• Beginning in 2022, the Headquarters Relocation Credit • The ownership, rental, or operation of a business or property
(818) must be reported on Schedule IN-OCC. (real or personal) in Indiana;
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• The acceptance of orders in Indiana with no right of approval bonuses, and commissions that are subject to Indiana state and/
or rejection in another state; or county income taxes and are required by the IRC to withhold
• Interstate transportation; or federal taxes on those types of payments are also required to
• The maintenance of a public utility. withhold for Indiana tax purposes.
The term “partnership” means an entity treated as a partnership Withholding on the compensation of nonresident team members
for federal income tax purposes. Banks with common trust of certain professional sports organizations or race team members
funds filing U.S. Form 1065 must file partnership Form IT-65 is based on duty days performed in Indiana. Refer to Income Tax
and comply with the provisions of Treas. Reg. 1.6032-1 when Information Bulletin #88 at www.in.gov/dor/files/reference/ib88.
reporting for Indiana purposes. pdf, or Income Tax Information Bulletin #88B at www.in.gov/
dor/files/ib88b.pdf. If an employee resides in a state that has a
Calculating Corporate Income Tax Rate reciprocal agreement with Indiana, the employee is exempt from
The corporate AGI tax rate is 4.9% Indiana state income tax but is subject to the relevant county
tax. A partnership with an employee withholding liability must
register as an Indiana withholding agent. DOR assigns an Indiana
Taxpayer Identification Number (TID).
General Filing Instructions
Liability of the Partnership The partnership has two options in registering as a withholding agent:
Partnerships as entities are not subject to income taxes unless the • Register with DOR online using INBiz (inbiz.in.gov); or
partnership makes a special election to be subject to income tax. • Visit either DOR’s downtown Indianapolis office or one of the
However, publicly traded partnerships treated as corporations district offices located throughout the state.
pursuant to IRC Section 7704 are classified for Indiana tax
purposes in the same manner as they are classified for federal tax Payments of amounts withheld must be remitted to DOR via
purposes. A limited liability company classified as a corporation electronic method by the due date. If a filing and/or payment of the
for federal tax purposes should file Form IT-20. proper amount of tax withheld is not made by the due date, penalty
and interest will be added. A person responsible for remitting
Partnerships are considered to be the taxpayer with respect to the payments may be personally subject to criminal prosecution if the
payment of amounts required to be withheld at source. See the failure to pay and/or file a withholding return is due to fraud or tax
section titled “Withholding Tax Liabilities of Partnerships.” evasion. All entities are required to remit withholding statements
electronically by using either a third-party vendor or via INTIME,
Partnerships are subject to use tax. Use tax is due on the storage, DOR’s e-services portal at intime.dor.in.gov.
use, or consumption of tangible personal property purchased in
a transaction in Indiana or elsewhere. This does not apply if the Withholding on Partners
transaction is exempt from the sales and use tax by law or the A partnership must withhold state income tax at the appropriate
sales tax due and paid on the transaction equals the use tax due. income tax rate on the amount it pays or credits to any of its
nonresident partners on the partner’s distributive share of the
See the instructions for the Sales/Use Tax Worksheet on page 11. partnership’s income derived from Indiana sources regardless
of whether distributions of property are made to partner and
An apportionment schedule must be enclosed with the return regardless of what of activities the partners may have in Indiana.
if the partnership is doing business both within and outside All withholding will be remitted by using Form IT-6WTH. If a
Indiana and has any partners not domiciled in Indiana. See the partnership fails to withhold, it will be assessed a penalty. This
instructions for Schedule E or Schedule E-7 on page 16. penalty is 20% plus interest, in addition to the amount withheld
or required to be withheld and paid to DOR. If a distribution to
Any partnership that has nonresident partners must also file a nonresident partners is made with property other than money, or
composite return for all its nonresidents. Any partnership that a gain is realized without the payment of money, the partnership
fails to file a composite return that includes all its nonresident may not release the property or credit the gain until it has funds
partners will be assessed a penalty of $500. sufficient to pay the withholding tax due.
To avoid penalty and interest charges for delinquent filing of IC 6-3-4-12 provides that all nonresident partners must be
returns, a partnership should verify its tax status and withholding included in a composite return schedule, and the partnership
responsibilities before commencing business in Indiana. must continue to withhold Indiana adjusted gross income tax for
all nonresident partners. Unless the partner completes a Schedule
Withholding Tax Liabilities of Partnerships IN-COMPA or the partnership obtains department consent prior
The following instances obligate the partnership to register with to the partnership’s filing deadline, there is no provision for opting
DOR and become an Indiana withholding agent on behalf of each out of withholding. Each nonresident partner’s composite tax is
of the following. calculated at the relevant tax rate unless the partnership provides
an exception code on the Schedule Composite or Schedule
Withholding on Employees Composite-COR. DOR has streamlined the procedure for making
Partnerships making payments of salaries, wages, tips, fees, withholding payments for nonresidents.
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See page 4 for information about using INTIME, DOR’s FIT must be withheld on the respective nonresident corporate
e-service portal at intime.dor.in.gov, for making withholding partner’s share of partnership income as computed under IC 6-5.5-
remittances. Credit for the withholding/composite tax will 4. However, if a written declaration that the partner is not subject
be reflected on Schedule IN K-1 for each partner. For further to the FIT exists, the FIT withholding is not required. Instead,
information, consult Income Tax Information Bulletin #72, which corporate AGI tax must be withheld from the nonresident corporate
is available at www.in.gov/dor/files/reference/ib72.pdf. partner’s distributive share of income apportioned to Indiana.
Individual Partners. A partnership must withhold state adjusted Withholding Amounts on Tiered Partnerships/S Corporations.
gross income (AGI) tax at the individual income tax rate on the A partnership must withhold state income tax at the individual
apportioned distributive shares of partnership income (on income tax rate on the apportioned distributive shares of
current-year earnings derived from Indiana sources) and any partnership income (on current-year earnings derived from
other guaranteed payments attributable to Indiana. It must do this Indiana sources) paid or credited to another nonresident
each time it pays or credits any of its nonresident partners and partnership or nonresident S corporation. It must do this
part-year resident individual partners. The withholding rate for each time it pays or credits any of its nonresident partners or
individuals is 3.23% (.0323). nonresident S corporations.
The withholding requirement does not apply to individual Note. Partnerships and S Corporations not domiciled in Indiana
partners who are residents of reverse credit states and who are must meet annual filing requirements and remit all unpaid tax,
subject to and pay income taxes at rates equal to or greater than penalties, and interest.
Indiana’s individual income tax rate to the resident states. The
relevant reverse credit states are: Accounting Periods and Methods
• Arizona; The accounting periods for Form IT-65 and the method of accounting
• Oregon; and adopted must be the same as used for federal income tax purposes.
• Washington, D.C.
Composite Withholding Payments (Form IT-6WTH)
A partnership must withhold county income tax at the county’s A partnership that files a composite return must withhold Indiana
relevant tax rate on each Indiana nonresident partner whose state and/or county income taxes from all nonresident partners into
principal place of business or employment on January 1 is located the corporate account using Form IT-6WTH. Payment is due the
in an Indiana county. See Schedule CT-40PNR, page 2, at www. 15th day of the 4th month following the close of the partnership’s
in.gov/dor/tax-forms/2022-individual-income-tax-forms to get tax period. To make additional payments, please visit INTIME
the county’s tax rate. at intime.dor.in.gov. Payments for form IT-6WTH also may be
made electronically. Check our website for updates. For further
Trusts and Estates. A partnership must withhold on the amount information, consult Income Tax Information Bulletin #72 available
it pays or credits for the partner’s distributive share derived at www.in.gov/dor/files/reference/ib72.pdf and www.in.gov/dor.
from Indiana sources for partners that are trusts and estates not The total payments are claimed as a credit on line 9 of Form IT-65.
domiciled in Indiana.
Extended Filing Due Date
Note. The withholding provisions do not apply to nonresident The initial due date for filing is the 15th day of the 4th month
partners who are nontaxable trust or estate entities. following the close of the partnership’s tax year. DOR accepts the
federal extension of time application (Form 7004) or the federal
A partnership must withhold tax on the amount it pays or credits electronic extension. If a taxpayer has an extension, there is no
for the partner’s distributive share derived from Indiana sources need to contact DOR prior to filing the annual return. Returns
to a fiduciary. Then the trust or estate must also withhold state postmarked within one month after the last date indicated on the
income taxes for all its nonresident beneficiaries. federal extension form are considered timely filed.
Corporate Partners. Partnerships must withhold AGI tax at Do not file a separate copy of the federal extension form with
the corporate tax rate on the amount it pays or credits for the DOR to request an Indiana extension at the time of requesting the
partner’s distributive share derived from Indiana sources to extension. Instead, enclose a copy of the federal extension of time
all nonresident corporate partners. This withholding must be with the state return filing and check the box to question Q on the
an amount reflecting the ultimate Indiana tax liability due by front of Form IT-65.
respective partners because of the partnership’s activities.
If a federal extension is not needed, a partnership can request an
A partnership must withhold and remit the Indiana Financial Indiana extension of time to file via INTIME, DOR’s e-service
Institution Tax (FIT) if: portal at intime.dor.in.gov, or by submitting a request in writing
• The partnership conducts the business of a financial to: Indiana Department of Revenue, Corporate Income Tax, Tax
institution; Administration, P.O. Box 7206, Indianapolis, IN 46207-7206.
• The partnership has nonresident corporate partners; and
• The partners conduct the business of a financial institution. Extensions are applicable to the time for filing the return only and
not to any tax liability due. Any payments made after the original
due date must include penalty and interest.
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Amended Returns Enter the principal business activity code, from the North
The partnership must file an amended Indiana return within 180 American Industry Classification System (NAICS), in the
days after the filing of the amended federal return if: designated block of the return. Use the six-digit activity code
• The partnership files an amended federal return; and reported on the federal partnership income tax return.
• The change(s) affects the Indiana income or the Indiana tax
reportable by the partners. Questions K through U and Other Fill-in Lines
All partnerships filing an Indiana partnership income tax
An adjustment made by the Internal Revenue Service affecting the return must complete the top portion of the form. This includes
reportable Indiana income must be reported to Indiana with an questions K through U. Check or complete all the boxes that apply
amended partnership return. This must be done within 180 days to the return:
after the adjustment becomes final.
K. Indicate the date and place the partnership was organized
Important. Check the box at the top of Form IT-65 if filing an
amended return. L. Indicate the partnership’s state of commercial domicile.
Partners generally have 90 days from the date the partnership M. Indicate the year the initial Indiana return was filed.
is required to file amended returns after the deadline for the
partnership. Tiered partners and indirect partners have special N. Indicate the accounting method used.
timetables. For further information, see Income Tax Information
Bulletin #72 available at www.in.gov/dor/files/reference/ib72.pdf. O. Check the “final return” box only if the partnership is
dissolved, liquidated, or has withdrawn from the state. In the
event of bankruptcy, Form BC-100 must be timely filed to
close out any sales and withholding accounts. Go to www.
Instructions for Completing Form IT-65
in.gov/dor/tax-forms/business-tax-forms/ to complete this
form online.
Filing Period and Identification
Use Form IT-65 to file: • Select the Composite Return box if filing a composite
• A 2022 partnership return for a tax year ending on Dec. 31, return for nonresident partners.
2022; • Submit a Schedule Composite for nonresident individual/
• A short tax year beginning in 2022; or non-corporate entities or a Schedule Composite-COR for
• A fiscal year beginning in 2022 and ending in 2023. corporate entities domiciled outside of Indiana.
For a fiscal or short tax year, fill in both the beginning month, day, P. Enter the total number of partners in the partnership in field
and year and the ending month, day, and year at the top of the form. one of question P. Enter in the number of all partners who are
nonresidents of Indiana in field two of question P.
Identification Section
Check the box at the top of the form if filing an amended return. Q. Check the box if the partnership has a valid extension of time
For a name change, check the box at the top of the return. The or an electronic federal extension of time to file the return. If
copies of amended articles filed with the Indiana Secretary of applicable, enclose a copy of federal Form 7004 when filing
State must be enclosed. the state return.
The federal employer identification number (FEIN) shown in R. Check this box if you are a partnership that is electing or has
the box at the upper-right corner of the return must be the same elected to be taxed at the partnership level. This box should
as the number used on the U.S. Return of Partnership Income. only be checked on an amended return. You must have an
Please use the correct legal name of the partnership and its election on file with DOR or provide a valid election with the
current mailing address. amended return in order to check this box.
County Code Number. List the two-digit county code number S. Check the box if this partnership is a member of any other
of the county in Indiana where the partnership has a primary partnership.
business location. See Departmental Notice #1 located at www.
in.gov/dor/files/reference/dn01.pdf for a list of the county code T. Check this box if income is reported from disregarded
numbers. Enter “00” (two zeroes) in the county box located to entities. If this box is checked, please enclose a list of the
the immediate right of the number and street if the partnership disregarded entities with the return.
address lies outside of Indiana.
U. Check this box if claiming a qualified research expense credit
For foreign addresses, please note the following: and attach the supporting schedule.
• The name of the city, town, or village in the box labeled City;
• The name of the state or province in the box labeled State; and Aggregate Partnership Distributive Share Income
• Enter the postal code in the box labeled ZIP Code; and Note. Round all entries to the nearest whole dollar amount and
• Enter the 2-digit country code. do not use a comma in dollar amounts of four digits or more. For
example, instead of entering “3,455” enter “3455.”
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Line 1. Enter the amount from the U.S. partnership return reported a qualified restaurant equipment add-back until the end
Schedule K: of the 15-year recovery period.
• Net ordinary business income;
• Net income from real estate activities from Form 8825; If this asset was sold before being fully depreciated, the catch-up
• Other rental income activities; modification would be reflected in the year of the sale. However, if
• Portfolio income and deductions; this property is held through 2023 (the 15th year of depreciation),
• Royalties; ABC Company will report a negative $12,800 catch-up add-back
• Capital gains and losses; on the 2023 state tax return.
• Guaranteed payments; and
• Other income. The following add-backs and deductions should
be entered on lines 2a through 2d.
Total net income (loss) from Schedule K, line 1 through line 11
less line 12, and a portion of line 13 related to investment income Conformity Add-Back
(see instructions below). Before this publication was finalized Indiana had not conformed
to any changes to the Internal Revenue Code (IRC) that may
The Section 179 deduction and that portion of investment have become law after March 31, 2021. Therefore, the IRC used
expenses included in federal Schedule K, part of line 12, and line to figure Indiana income may not wind up being the same as the
17 relating to investment portfolio (royalty) income, flowing IRC used to figure federal income.
through to federal Schedule E, may be tentatively deducted.
This add-back is specific to these annual current year conformity
Use the Worksheet for Partnership Distributive Share Income, issues. If uncertainty exists as to whether or not Indiana will adopt
Deductions, and Credits to help you calculate this figure. The some or all of the federal legislation passed after March 31, 2021,
income worksheet must be used if this partnership received any that acts to modify federal AGI, you may add back those items
distributive income from one of the following: as an “other” add-back. In the event those items are adopted, an
• An owned partnership interest; amended return should be filed to recoup the add-back(s).
• An estate; or
• A trust. Conformity Add-Back – Positive Entry (3-digit code: 120)
This add-back is only for current year conformity issues.
See the worksheet and instructions on page 13. Conformity issues for preceding tax years must be addressed on
the add-back line specific to the item in question.
If filing federal Form 1065B by an electing large partnership,
use the amounts from line 1 through 8 of Schedule K. Convert If the state legislature does not conform to federal code changes
distributive share of income items into a Form 1065 Schedule K enacted after March 31, 2021, you may have to amend your return
format. Carry the figures to Form IT-65 and Schedule IN K-1. at a later date to reflect any differences between Indiana and
federal law. You may wish to periodically check DOR’s homepage
Required Indiana State Modifications, Lines 2a at www.in.gov/dor for updates.
through 2d
Lines 2a through 2d. Enter any add-backs here. Enter the name of Conformity Add-Back – Negative Entry (3-digit code: 147)
the add-back, its 3-digit code, and its amount. Use a negative sign This add-back generally is based on conformity issues arising
for negative amounts (-). Attach additional sheets if necessary. from a previous year. However, in rare cases this can arise from
conformity issues arising in the current year where the IRC treats
Adding Back Depreciation Expenses an item as taxable or nondeductible that was previously exempt or
Several of the discontinued add-backs were created by timing deductible.
differences between federal and Indiana allowable expenses.
Following is an example of how to report a difference. One example that occurs periodically is when there is a federal
disaster. Congress will amend the IRC to permit IRA withdrawals
Example. ABC Company has qualified restaurant equipment. For to be included over three years (e.g., a 2022 withdrawal would
federal tax purposes, they use the accelerated 15-year recovery be included one-third in 2022, one-third in 2023, and one-third
period for an asset placed in service in 2009. Since 2009, ABC in 2024). If Indiana decoupled from the IRC, the whole amount
Company has been adding back the depreciation expense taken would be included in 2022, none in 2023, and none in 2024. The
for federal purposes that exceeded the amount allowable for Code 120 would be for the two-thirds add-back in 2022, the Code
Indiana purposes. The accumulated depreciation on such an asset 147 would be for the one-third deduction in 2023 and 2024. These
through 2012 is, therefore, different for federal and state purposes. have occurred from time to time but (1) did not affect Indiana
This difference will remain until the asset is fully depreciated or because of the specific disaster and (2) the IRC conformity date
until the time of its disposition. was updated in time.
In this example, the asset was acquired in January 2009 at a Tax Add-Back (3-digit code: 100)
purchase price of $120,000. This normally would have a 25-year Add back all state taxes based on or measured by income, levied
recovery period, but IRC Sec. 168 allows for a 15-year recovery by any state, which were deducted on the federal tax return.
period. Tax year 2012 is the last year ABC Company will have
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Wagering taxes fall within this category to be added back. $2,500,000 threshold for phase-out (adjusted for inflation) is
However, the amount to be added back is being phased out. See allowed for purposes of calculating Indiana AGI. The depreciation
the following instructions. allowances in the year of purchase and in later years must
be adjusted to reflect the additional first-year depreciation
• Wagering taxes. The portion of wagering taxes required to be deduction, including the special depreciation allowance for 100%
added back as a tax based on or measured by income is being bonus depreciation property, until the property is sold or fully
reduced (phased out). The percentage of taxes required to be depreciated for Indiana purposes.
added back is determined by the first date of the taxpayer’s
taxable year, and is determined as follows: 2019 – 87.5% ; Note. The net amount determined for the net bonus depreciation
2020 – 75%; 2021 – 62.5%; 2022 – 50%; 2023 – 37.5% 2024 – or the IRC Section 179 add-back might be a negative figure
25.0%; 2025 – 12.5%; 2026 and later – no add back required. (because of a higher depreciation basis in subsequent years). If
it is, use a minus sign to denote that. (If the taxable income is a
For example, Casino X remits $10,000,000 in riverboat loss, this adjustment increases a loss when added back.) Enclose a
wagering taxes in 2022. Individual owns 10% of Casino X. statement to explain the adjustment.
Individual’s share of Casino X’s income taxes is $1,000,000.
Instead of Individual adding back the full $1,000,000, Note. Special rules may apply if the Section 179 expensing is
Individual will add back $500,000. taken against property acquired in a like-kind exchange. See
Income Tax Information Bulletin #118 at www.in.gov/dor/files/
Note. Income, losses and/or expenses from other schedules reference/ib118.pdf for additional information.
and forms may flow through to federal Schedules C, E and
F. For example, partnership income from federal Schedule Deduction for Interest on U.S. Government Obligations
K-1 may be included on federal Schedule E, while expenses (3-digit code: 610)
from federal Form 8829 may be included on federal Schedule Deduct interest income, less related expenses, from certain
C. Make sure to check these schedules and forms for any obligations of the U.S. government included as income on the
deduction that needs to be added back. federal return. See Income Tax Information Bulletin #19 available at
www.in.gov/dor/files/reference/ib19.pdf for a list of eligible items.
Add-back for Bonus Depreciation (3-digit code: 104)
An amount attributable to bonus depreciation in excess of any Add-back of OOS Municipal Obligation Interest
regular depreciation that would be allowed if an election under (3-digit code: 137)
Internal Revenue Code (IRC) Section 168(k) had not been made Interest earned from a direct obligation of a state or political
as applied to property in the year that it was placed into service. subdivision other than Indiana (out of state, or OOS) is taxable by
Taxpayers that own property for which additional first-year special Indiana if the obligation is acquired after Dec. 31, 2011. Interest
depreciation for qualified property was allowed in the current earned from obligations held or acquired before Jan. 1, 2012, is
taxable year or in an earlier taxable year must add or subtract an not subject to Indiana income tax and should not be reported as
amount necessary to make the AGI equal the amount computed an add-back.
without applying any bonus depreciation. The first-year special
depreciation includes 100% bonus depreciation. The subsequent Note. Interest earned from obligations of Puerto Rico, Guam,
depreciation allowance must be calculated as if the bonus Virgin Islands, American Samoa, or Northern Mariana is not
depreciation had not been permitted until the property is disposed included in federal gross income and is exempt under federal
or fully depreciated for Indiana purposes. Enclose a statement to law. There is no add-back for interest earned on these obligations.
explain the adjustment. Income Tax Information Bulletin #118 at For more information, see Income Tax Information Bulletin #19
www.in.gov/dor/files/reference/ib118.pdf explains the required available at www.in.gov/dor/files/reference/ib19.pdf.
modification on the allowance of depreciation for state tax purposes.
Federal Repatriated Dividend Deduction Add-Back
Note. Special rules may apply if the bonus depreciation is taken (3-digit code: 139)
against property acquired in a like-kind exchange. See Income Tax Add back the deduction for income under IRC Section 965
Information Bulletin #118 at www.in.gov/dor/files/reference/ib118. reported to partners. Report the add-back to the partners using
pdf for additional information. code 139 on Schedule IN K-1. For nonresident individuals,
include only the apportioned amount of the add-back.
Add-back for Section 179 Expense Excess (3-digit code: 105)
Add or subtract the amount necessary to make the adjusted gross Excess Federal Interest Deduction Modification
income of the taxpayer that placed any IRC Section 179 property (3-digit code: 142)
in service in the current taxable year or in an earlier taxable year IRC Section 163(j) limits the federal interest deduction for most
equal to the amount of adjusted gross income that would have been business interest to a portion of adjusted taxable income plus
computed as if the federal limit for expensing under IRC section business interest income. However, Indiana decoupled from this
179 was $25,000 as opposed to $1,000,000 (adjusted for inflation). provision. Subtract an amount equal to the amount disallowed as a
federal deduction for excess business interest in the year in which
Indiana has adopted an expensing cap of $25,000. The federal the interest was first paid or accrued. Add back any amount of
increase to a $1,000,000 deduction was not allowed for purposes interest previously deducted for Indiana and allowable for federal
of calculating Indiana adjusted gross income. However, the purposes in the current taxable year. For partners, the partner
IT-65 Partnership Booklet 2022 Page 9
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will be required to compute any add-back at the partner level. For 2022, this deduction should only be claimed if it is the result
For purposes of reporting this modification and determining of expenses incurred by a pass-through entity that had a fiscal
composite tax, compute any add-back as if the partnership is the year beginning before October 1, 2021 (before January 1, 2022, in
only source of the partner’s interest income/deduction. the case of a recovery startup business).
Meal Deduction Add-Back (3-digit code: 149) Indiana-only Tax-exempt Bonds Deduction (3-digit code: 636)
If you: If you had interest from a bond issued by or in the name of certain
• claimed a deduction for meal expenses with regard to food Indiana government subdivisions or entities or amounts received
and beverages provided by a restaurant in computing your upon redemption or maturity of the bond, deduct any interest or
federal adjusted gross income; AND other income included in federal gross income. Do not deduct
• the deduction would have been limited to 50% of the meal any bond interest that is excluded from federal gross income.
expenses if the expenses had been incurred before Jan. 1, 2021, In addition, if you sell the bond, do not deduct any amounts for
add back the amount deducted for federal purposes in excess of which the bond is sold in excess of your purchase price. See IC
50% of the food or beverage expenses. 6-8-5-1 for further information regarding the deduction.
Do not add back any amount for which an exception to the 50% Line 2d. Enter the total amount of add-backs and subtractions from
limitation was in effect for amounts paid before Jan. 1, 2021. any additional sheets. If more than five modifications are needed,
attach additional sheets detailing them. Total the amounts from
Example. Creosote Wafer, LLC incurs $2,000 in meal expenses the additional sheets and enter the total here (use a negative sign to
during 2022 and deducts the entire $2,000 in computing Creosote denote a negative amount).
Wafer’s 2022 federal adjusted gross income. The meal expenses do
not qualify for a federal exception from the 50% limitation under Line 3. Add lines 1 through 2d.
pre-2021 IRC § 274. Creosote Wafer, LLC is required to add back
$1,000, and report the add-back on its partners’ Schedule IN K-1. Apportionment of Income
Partnerships deriving income from sources within and outside
Indiana Lottery Winnings Annuity Deduction Indiana and having non-Indiana-domiciled partners or non-
(3-digit code: 629) unitary corporate partners must complete line 4.
If a taxpayer receives proceeds from a winning Hoosier Lottery
ticket for a lottery held prior to July 1, 2002, those proceeds may Line 4. Enter the Indiana apportionment percentage if the
be deducted from the taxpayer’s Indiana adjusted gross income. partnership has any multistate business activities. If apportioning
This deduction applies only to prizes won from the Hoosier income, enter the Indiana percentage (rounded to two decimal
Lottery Commission; proceeds from other state lotteries or from places) from Schedule E or Schedule E-7. Do not enter 100%.
other gambling sources, such as casinos, are not deductible. In
addition, proceeds from winning Hoosier Lottery tickets for Before continuing to lines 5 through 14, complete Schedule IN
lotteries held after June 30, 2002, are not deductible. K-1 for each partner.
Note. Individuals or entities that have purchased Hoosier Lottery
prizes from a winning ticket holder for valuable consideration are
Summary of Calculations for Form IT-65
not eligible for this deduction.
Sales/Use Tax
Infrastructure Fund Gift Deduction (3-digit code: 631) IC 6-2.5-3-2 imposes a use tax on the use, storage, or consumption
Shareholders or partners may be eligible to claim a deduction if a of tangible personal property in Indiana that was purchased or
contribution has been made to a regional development infrastructure rented in a retail transaction, wherever located, and sales tax was
fund. Record the amount on Part 4, lines 5-7 of the IN K-1. not paid. This rate is 7%. Examples of taxable items include:
• Magazine subscriptions;
Filers should keep detailed records of the contribution as DOR • Office supplies;
can ask filers to provide this information at a later date. • Electronic components; and
• Rental equipment.
COVID-related Employee Retention Credit Disallowed
Expenses Deduction (3-digit code: 634) Any property purchased free of tax by use of an exemption
If you had a deduction that was disallowed for federal purposes certificate may be subject to the use tax. In addition, any property
because an employer claimed a federal COVID-related employee purchased out of state or exempt from Indiana sales or use tax and
retention credit, deduct the amount that was: converted to a nonexempt use by the business is subject to the use
• disallowed for federal purposes; and tax at the time of conversion. Complete the Sales/Use Tax Worksheet
• that otherwise would have been allowable in determining below to compute any sales/use tax liability. For more information
Indiana adjusted gross income. about use tax, visit www.in.gov/dor or call (317) 232-2240.
Do not deduct any amounts for amounts disallowed for non- Note. A registered retail sales merchant or out-of-state use tax
COVID related employee retention credits such as disaster-related agent for Indiana must report nonexempt purchases used in
employee retention credits.
Page 10 IT-65 Partnership Booklet 2022
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the Indiana business. This is reported on Form ST-103, Indiana If the partnership allocates any of those prize winnings and
Annual, or Monthly Sales and Use Tax Voucher. If use tax is not withholding amounts to the ultimate recipients (e.g., corporation,
paid by the original due date of the return, interest will be added partnership, individual, etc.), the partnership must issue form IN-
to the amount due. A 10% penalty or $5, whichever is greater, is MSID-A to the recipients to reflect the amounts passed through
charged on each unpaid use tax liability. (winnings and withholdings). If you did not allocate amounts
to other ultimate recipients, you should issue an IN-MSID-A to
Caution. Do not report totals from Form ST-103 on this yourself in order to claim the credit for these amounts.
worksheet or on Form IT-65.
A detailed explanation must be enclosed for any credits claimed
Line 5. Enter the use tax due from the Sales/Use Tax worksheet on this line.
below.
Line 11. Enter the amount of Economic Development for a
Line 6a. Enter the total tax liability of the nonresident members Growing Economy (EDGE) credit being claimed from line 19
from line 15G of Schedule Composite (column D plus column F). of Schedule IN-EDGE if not passing through to partners on
Enclose Schedule Composite. Schedule IN K-1. Complete Schedule IN-EDGE and enclose it
with the return. Otherwise, this credit will be denied.
Line 6b. Enter the total tax liability of the nonresident corporate
entity(ies) from line 29C of Schedule Composite-COR. Enclose Line 12. Enter the amount of EDGE-R credit being claimed from
Schedule Composite-COR. line 19 of Schedule IN-EDGE-R if not passing through to partners
on Schedule IN K-1. Complete Schedule IN-EDGE-R and enclose
Line 6c. Enter the total liability from Schedule IN-EL, Line 16. it with the return. Otherwise, this credit will be denied.
Line 8. Enter the total amount of pass-through withholding. Line 13. Enter the total amount of credits claimed from Schedule
Enclose Schedule IN K-1 from the paying entity. IN-OCC, and enclose Schedule IN-OCC with the return.
Otherwise, these credits will be denied. If filing this schedule
Line 9. Enter the total composite withholding payments from with Form IT-65, only reflect the credit amounts from Schedule
Form IT-6WTH. Amounts withheld from nonresident individual IN K-1s on behalf of the entity’s partners who are included on
partners included in the composite return must be remitted using the composite return. Do not include credits from the IN K-1s
Form IT-6WTH. that belong to partners who are not included on the composite
return. Enter the combined pro rata credits on one line of the
Note. Do not claim withholding with Form IT-6WTH until you IN-OCC; do not enter a line for each composite member. The
have remitted the withholding to DOR. total amount of credit for the members on the composite return
cannot exceed the entity’s total tax due. In addition, sales and use
Line 10. Enter any other payments and credits belonging to the tax cannot be offset by these nonrefundable credits if included in
partnership. the total tax due. If an individual income tax return is being filed
for a nonresident member included on the Schedule Composite,
Note. Certain Motorsports Investment District Income (prize the nonresident member should use the 4-digit code provided on
winnings) and IN state and Marion County withholding taxes Schedule IN K-1, not the 3 digit code utilized on the pass-through
may be reported on Form IN-MSID and/or Form IN-MSID-A. entity’s income tax return.
Sales/Use Tax Worksheet
List all purchases made during the tax year from out-of-state retailers.
Column A Column B Column C
Description of personal property purchased from out-of-state retailer Date of purchase(s) Purchase Price of
Property(s)
Magazine subscriptions:
Mail order purchases:
Internet purchases:
Other purchases:
1. Total purchase price of property subject to the sales/use tax: enter total of Columns C .............................. 1
2. Sales/use tax: Multiply line 1 by .07 (7%) ..................................................................................................... 2
3. Sales tax previously paid on the above items (up to 7% per item) ............................................................... 3
4. Total amount due: Subtract line 3 from line 2. Carry to Form IT-65, line 5. If the amount is negative, enter
zero and put no entry on line 5 of the IT-65 .................................................................................................. 4
IT-65 Partnership Booklet 2022 Page 11
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Line 14. Subtract lines 8 through 13 from line 7. If a balance due
remains, proceed to lines 15 through 17.
Certification of Signatures and
Line 15. Enter the total interest due. Authorization Section
See Departmental Notice #3 available at www.in.gov/dor/files/ Sign, date, and print the name on the return. If a paid preparer
reference/dn03.pdf for the current interest rate or contact DOR by completes the return, authorize DOR to discuss the tax return
calling (317) 232-2240. with the preparer by checking the authorization box above the
line for the name of the personal representative.
Line 16. Enter the total penalty due. The penalty for late payment
is 10% of the amount (but not less than $5) of any composite tax Personal Representative Information
due on line 14 paid after the 15th day of the 4th month following Typically, DOR contacts a taxpayer if we have any questions or
the end of the partnership’s taxable year. The penalty is still due on concerns about the tax return. If the taxpayer wants DOR to be able
use tax paid after the original due date of the return. to discuss the tax return with someone else (e.g., the person who
prepared it or a designated person), this area must be completed.
If a return showing no liability on line 7 is filed late, the penalty
for failure to file by the due date is $10 per day the return is past First, check the “Yes” box that follows the sentence “I authorize
due, up to a maximum of $250. In addition, a separate $10 penalty the Department to discuss my tax return with my personal
is assessed on each Schedule IN K-1 information return that is representative.”
filed late.
Next, enter:
Note. No penalty is due on composite withholding tax if at • The name of the individual designating as a personal
least 80% of the withholding tax for the current year, or 100% representative; and
of the prior year’s withholding tax is remitted by the 15th day • The individual’s email address.
of the 4th month following the end of the tax year. Penalty is
applicable if all remaining tax and interest due is not paid by If this area is completed, DOR is authorized to contact the
the extended due date. personal representative, instead of the taxpayer, about this tax
return. After the return is filed, DOR will communicate primarily
Line 17. A penalty of $500 is assessed to any partnership that with the designated personal representative for any matters
fails to file a composite return for all its nonresident partners (PL concerning this return.
211-2007 SEC. 27, 44, 58). The partnership must list nonresident
partners even if the partner is not subject to withholding. If all Note. The authorization for DOR to be in contact with your
nonresident partners are not included on the composite return, personal representative may be revoked at any time. To do so,
please remit that penalty here. Note: Payment of the penalty does tell us in a signed statement. Include the taxpayer name, federal
not remove the obligation to withhold and report composite tax identification number, and the year of the tax return. Mail the
due. statement to Indiana Department of Revenue, P.O. Box 7206,
Indianapolis, IN 46207-7206.
Line 18. If line 14 is greater than zero, add lines 14 through 17
and enclose a separate remittance for the total amount owed Officer Information
for each Form IT-65 filed. Please pay in U.S. funds. If paying by An officer of the organization must sign and date the tax return
check, make check payable to Indiana Department of Revenue. and enter the officer’s name and title. Please enter a daytime
telephone number where DOR may call if there are any questions
Line 19. If the total of lines 8 through 13 exceeds line 7, subtract about the tax return. Also, enter your email address to be
the total of lines 15 through 17 from line 14. If the result is less contacted via email.
than 0, this is the net overpayment. If penalties and interest are
due because of a delinquent filing or payment, the overpayment Paid Preparer Information
must be reduced by these charges. If the result is a balance due, Fill out this area if a paid preparer completed this tax return. The
enter the difference on line 18. An overpayment credit may not paid preparer must sign and date the return. In addition, please
be carried over to the following year, so any overpayment amount enter the following:
will be refunded. • The paid preparer’s email address;
• The name of the firm the paid preparer is employed by;
• The paid preparer’s PTIN (personal tax identification
number). This must be the paid preparer’s PTIN; do not enter
an FID or Social Security number;
• The paid preparer’s complete address.
Note. Complete this area even if the paid preparer is the same
individual designated as the personal representative.
Page 12 IT-65 Partnership Booklet 2022
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Worksheet for Partnership Distributive Share Income, Deductions and Credits
Use this worksheet to compute the entry for line 1 of Form IT-65 and to assist in computing amounts reported on Schedule IN K-1.
Enter the total distributive share of income from each item as reportable on Form 1065, Schedule K. Do not complete Column B and
C entry lines unless the partnership received distributive share or tiered income from other entities.
A. B. C.
Distributive Share Amounts Partnership Distributions from Distributions
Income Partnerships / Attributed
All Sources Estates / Trusts to Indiana
Partnership’s Distributive Share of Items Everywhere
1. Ordinary business income (loss) ..............................................
2. Net rental real estate income (loss).......................................... Enter for line Enter for line
14B below total 14C below, total
3. Other net rental income ............................................................
distributive share distributive share
4. Guaranteed payments .............................................................. income received income received by
5. Interest income ......................................................................... by the partnership the partnership from
6a. Ordinary dividends ................................................................... from all other non- other partnerships,
7. Royalties................................................................................... unitary partnerships, estates, and trusts
estates, and trusts. that were derived
8. Net short-term capital gain (loss) .............................................
Enter for line 15B from or allocated to
9a. Net long-term capital gain (loss)............................................... an amount equal Indiana. Enter for
10. Net IRC Section 1231 gain (loss) ............................................. to required state line 15C an amount
11. Other income (loss) .................................................................. modifications for equal to the Indiana
Indiana Adjusted modifications to
Gross Income. adjusted gross
Less Allowable Deductions for State Tax Purposes
income attributed to
Indiana.
12. IRC Section 179 expense deduction 1 ...............................
13A. Portion of expenses related to investment portfolio income,
including investment interest expense and other (federal
non-itemized) deductions....................................................
13B. Other information from line 20 of federal K-1 related to
investment interest and expenses not listed elsewhere .....
14. Carry total on line 14A to Form IT-65 line 1 on front
page of return .................................................................... 14A 14B 14C
15. Total of Indiana state modifications to distributive share income
(see line 2f, Form IT-20S) ........................................................................................ 15B 15C
16. Net Indiana adjusted gross income distributions from
partnerships, estates, and trusts (add lines 13C and 14C)......................................................................... 16C
17. Enter amount of Indiana pass-through credits attributed from
partnerships, estates, and trusts, if any ...................................................................................................... 17C
Worksheet for Attributing Partnership Income for Unitary Corporate Partners
Use the worksheet whenever partnership income is being distributed to a corporate partner having a unitary relationship with the partnership. A
unitary business relationship means maintaining business activities or operations that are of mutual benefit, dependent upon, or contributory to one
another in transacting business between a corporate partner and the partnership. Unity may be established whenever there is unity of operation
and use evidenced by centralized management or executive force, centralized purchasing, advertising, accounting, or other controlled interaction
between a corporate partner and the partnership.
If a corporate partner and a partnership maintain a unitary business relationship as described above, the partnership distribution shall be distributed to
the partner without any apportionment by the partnership. If the partner derives income from sources both within and outside Indiana and is required to
apportion its income, the partner’s apportionment factor shall include the partner’s proportionate share of the apportionment factor of the partnership.
Use the following table to show apportionment factor’s values from the partnership assigned to the unitary corporate partner. Partnerships deriving
income from sources both within and outside Indiana or having any corporate partners must complete the Apportionment Schedule E.
Enter the partner’s pro rata amounts as determined by the partnership entity’s completed Apportionment Schedule E. Duplicate this worksheet for
each corporate partner. (These amounts are to be included with the corporate partner’s own apportionment factor.)
Apportionment Schedule E Receipts Factors
Total from Indiana Sources Line 1A
Total from All States Line 1B
IT-65 Partnership Booklet 2022 Page 13
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Line 8. Enter the name of the entity that remitted actual payment
of the withholding.
Mailing Options
Line 9. Enter the FEIN of the paying entity. Note: Do not obscure
If taxes are owed, please mail the completed return to: any digits when entering the FEIN.
Indiana Department of Revenue
P.O. Box 7205 Line 10. Enter the amount of distributive share. This amount
Indianapolis, IN 46207-7205 should include all Indiana add-backs and deductions.
If taxes are not owed, please mail the completed return to: Line 11. Enter the amount of Indiana state tax withheld. This
Indiana Department of Revenue amount should only include payments made into the corporate
P.O. Box 7147 account and withholding amounts passed through by another
Indianapolis, IN 46207-7147 entity.
Line 12. Indiana adjusted gross income subject to county tax.
Instructions for Schedule IN K-1 County tax must be calculated on nonresident individual owners
if two conditions are met for that owner.
Enclose a copy of each partner’s Schedule IN K-1 with Form IT- • First, the nonresident individual must have a principal place
65. Also, provide a completed copy of Schedule IN K-1 to each of employment or business (e.g., self-employment) in an
partner. Indiana county as of January 1 of the taxable year.
• Second, the business must have income from the individual’s
Beginning with tax years ending after Dec. 31, 2019, a taxpayer county of principal employment or business during that
that is required to file 25 or more Schedule IN K-1s must file the year. If a business has income from more than one Indiana
Schedule IN K-1s in an electronic format. For taxpayers filing on county, only the portion derived from the individual’s county
a calendar year basis, this electronic filing requirement begins of principal employment or business is subject to Indiana
with tax year 2020. county income tax. To determine what portion of the income
is derived from a county, the business shall apportion its
Part 1 – Partner’s Identification Section Indiana adjusted gross income across counties based on the
Complete a separate Schedule IN K-1 to identify each partner. receipts derived from each county.
Check the box if filing an amended return.
In the case of an individual whose only Indiana activity is owning
Line 1. Enter the name of the partner (individual, entity, trust an interest in the entity, do not enter an amount for county tax for
name, etc.). that individual.
Line 2. Enter the partner’s Social Security number if an individual Notwithstanding any other requirement, a nonresident individual
or the partner’s federal employer identification number (FEIN) if who is subject to Indiana county income tax on Schedule
the partner is another entity. Composite (Column E) is required to file a nonresident individual
income tax return, Form IT-40PNR, to report all sources of
Line 3. Enter the applicable pro rata percentage of the partner’s Indiana income.
interest in the partnership. The percentage should be adjusted to
an annual rate if necessary. Line 13. Enter the amount of Indiana county tax withheld.
Line 4a and b. If the partner is a disregarded entity (DE), enter Part 2 – Pro Rata Share of Indiana Pass-through
the partner’s name and FEIN, and indicate what kind of partner Tax Credits from Partnership
the entity is (see instructions for federal Schedule K-1 at apps.irs. If the partnership has available any eligible Indiana credits flowing
gov/app/picklist/list/formsPublications.html). through to the partners, enter the following:
• Federal employer identification number from the entity that
Line 5. List the type of entity of the partner for whom you are the credit was awarded to. If the credit is passed through
issuing the Schedule IN K-1. from another entity enter the FEIN from Schedule IN K-1;
• The credit’s certification year;
Line 6. Enter the partner’s state of residence or commercial • For credit codes 818, 820, 835, 839, 849, 857, 858, 860, 863,
domicile. 865, 867, 868, 869, 1818, 1820, 1835, 1849, 1858, 1860, 1863,
1865, 1867, 1868, and 1869, enter the credit’s certification,
Line 7. If partner was an Indiana nonresident individual on Jan. project, or PIN number;
1, 2022, and worked in Indiana as of Jan. 1, 2022, then enter the • The credit’s 3- or 4-digit credit code; and
individual’s 2-digit county of employment in this box. You may • The pro rata amount of credits allotted to each partner.
get the 2-digit code number from Departmental Notice #1 at
www.in.gov/dor/files/reference/dn01.pdf. A completed IN-OCC credit schedule with Form IT-65 to support
the credit distribution for certified credits must be enclosed;
otherwise, the credits will be denied.
Page 14 IT-65 Partnership Booklet 2022
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See the descriptive list of pass-through tax credits that may be For most corporate partners and all nonresident individual
available to a pass-through entity on page 19. Each credit partners, the federal Schedule K-1 amounts should be multiplied
is assigned a 3- or 4-digit code number. This should be used by the apportionment percentage calculated on Schedule E or
for identification purposes when reporting and claiming these Schedule E-7. See the instructions beginning in the next column.
credits. For more information, see Income Tax Information Enter the apportioned amounts on lines 1 through 13b. If any
Bulletin #59 available at www.in.gov/dor/files/reference/ib59.pdf. entries on lines 2 – 11 represent nonbusiness income to the
partnership, these amounts are allocated to the appropriate state.
Note. The 3-digit codes utilized on behalf of each partner on
Schedule IN-OCC towards composite tax should be reflected as Line 6. “Ordinary dividends” corresponds to line 6a on the federal
4-digit codes on Part 2 of Schedule IN K-1. Any pro rata portion K-1. Line 9, Net long-term capital gain (loss), corresponds to line
of the partner’s credit above the 4-digit amount previously utilized 9a on the federal K-1.
towards composite tax should be reported on Part 2 of Schedule
IN K-1 as a 3-digit code and the remaining amount reflected in On line 13a or 13b, include investment interest expenses
the amount claimed column. attributed to royalty income. Also include all other federal
deductions. However, for individual partners, do not include
Example. Company A used $400 of the partner’s $700 total those deductions treated as itemized deductions. Do not report
Hoosier Business Investment Credit to offset his tax liability on any other type of investment interest expense, itemized deduction,
the composite filing. The partner has $300 remaining credit. The or carryover loss on this line.
IN K-1 will breakdown the credit as follows:
Note. If the partnership has received any distributions from other
3- or 4- entities having income previously apportioned to Indiana, use the
Credit Name Amount following methodology below to report distributive share income
Digit Code
for Schedule IN K-1.
Hoosier Business Investment Credit –
1820 $400
Composite
Alternative Completion of Schedule IN K-1
Hoosier Business Investment Credit 820 $300 Information for Part 3
An alternative application of Schedule IN K-1 must be used for
the following:
If the partner has other taxable Indiana-source income, Form • Members who are nonresident individuals;
IT-40PNR, reporting all Indiana-source income (including the • Corporate partners; and
income taxed on the composite return) should be filed. When • Other partnerships if they had income from outside Indiana.
completing the IN-OCC, the partner will be able to use up to
$700 of the HBI credit, using the amount associated with the Use the following method to complete Schedule IN K-1 when the
4-digit number first. For example, if the total state tax liability is partnership had any apportioned income from outside Indiana
$500, “HBI 1820 $400” will be listed on Schedule IN-OCC, and or is otherwise required to complete the Indiana apportionment
the remaining amount is then reported as needed as “HBI 820 schedule.
$100.” A 3-digit code 820 in the amount of $200 remaining will be
available to carryforward. Modify each required Schedule IN K-1 line by recalculating the
pro rata share of total partnership income reported on line 1 of
Credits reported on Part 2 of Schedule IN K-1 that are used to Form IT-65. Include all required Indiana modifications to AGI.
offset tax liabilities will be reported on the following lines on Use the pro rata amount from line 14A on the Worksheet for
Form IT-65: Partnership Distributive Share Income, Deductions, and Credits
• Any credits not requiring an IN EDGE, IN EDGE-R, or by following these steps:
IN-OCC schedule will be reported on line 10;
• EDGE credit code 839 will be reported on line 11; Step 1. Deduct from the above pro rata share the respective pro
• EDGE-R credit code 857 will be reported on line 12; and rata amount of line 14B and line 15B of the worksheet.
• IN-OCC credit codes 818, 820, 849, 858, 860, 863, 865, 867,
868, 869, 1818, 1820, 1849, 1858, 1860, 1863, 1865, 1867, Step 2. Multiply the result by the Indiana apportionment percentage
1868, and 1869 will be reported on line 13. reported on line 4 of Form IT-65. This can also be found on
Schedule E or Schedule E-7. This amount should reflect the partner’s
Part 3 – Distributive Share Amount proportionate share of this partnership’s activity in Indiana.
Complete lines 1 through 13b for the partner. Also provide the
partner with a Schedule IN K-1 showing the partner’s share of Step 3. Add to the above amount the pro rata share of any
income, credits, and modifications. If filing federal Form 1065- other (entity) source income this partnership received that was
B, convert taxable income distributions to federal Form 1065 previously apportioned or allocated as distributive share income
Schedule K-1 format. derived from Indiana. This can be found on line 16C of the
worksheet. The result is the modified Indiana partnership income
Line 1 through line 13b. For full-year Indiana resident partners, from Indiana sources. It should be reported on the appropriate
complete these lines as shown on the federal Schedule K-1, Form lines of Schedule IN K-1 of nonresident individuals, corporations,
1065 or Form 8865. and partnerships for AGI purposes.
IT-65 Partnership Booklet 2022 Page 15
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Also use the Worksheet for Attributing Partnership Income to • For receipts from hedging or similar transactions, only the
Unitary Corporate Partners to compile additional information for net gain resulting from both sets of transactions is treated as
reporting distributive share income. Certain corporate partners a receipt.
require these additional income figures from the partnership
to properly report distributive share incomes and to compute The numerator of the receipts factor must include the following to
Indiana state income tax liabilities as a result of the partnership’s the extent included in the receipts numerator:
activity in Indiana. • All sales made in Indiana;
• All sales made from Indiana to the U.S. government;
Part 4 – State Modifications • All receipts from sales of business property in Indiana; and
Lines 1-7. Enter the Indiana modifications from the front of • All interest, dividend, or other intangible income earned in
Form IT-65, lines 2a through 2c (and any additional sheets) as Indiana.
percentage applied. In the case of nonresident individuals, enter
them as apportioned. List the pro rata share amount of each The numerator contains intangible income attributed to
modification on the appropriate line. (Use a negative sign to Indiana, including interest from consumer and commercial
denote negative amounts.) loans, installment sales contracts, and credit and debit cards as
prescribed under IC 6-3-2-2.2.
Line 8. Enter the total distributive share of modifications. Add
lines 1 through 7. Total receipts include gross sales of real and tangible personal
property less returns and allowances. Sales of tangible personal
Line 9. Add Part 3, line 14, to Part 4, line 8. For nonresident property are in Indiana if the property is delivered or shipped to
partners/shareholders, carry this amount to Schedule Composite, a purchaser within Indiana regardless of the f.o.b. point or other
Column C, or on Schedule Composite-COR, Column B. conditions of sale. Indiana no longer requires the inclusion of
“throwback” sales in the numerator of the receipts factor.
Sales or receipts not specifically attributed above shall be
Instructions for Schedule E,
attributed as follows:
Apportionment of Income for Indiana • Gross receipts from the sale, rental, or lease of real property
are in Indiana if the real property is located in Indiana;
Complete the apportionment of income schedule whenever the • Gross receipts from the rental, lease, or licensing of the use
partnership: of tangible personal property are in Indiana if the property is
• Has income derived from sources both within and outside in Indiana. If property was both within and outside Indiana
Indiana; and during the tax year, the gross receipts are considered in
• Has any nonresident or corporate partners. Indiana to the extent the property was used in Indiana;
• Interest income and other receipts from loans or installment
The apportionment percentage determines the Indiana net sales contracts that are primarily secured by or deal with real
income of the nonresident individual partners, trusts, and or tangible personal property are attributed to Indiana if the
estates that pass through as a result of the partnership’s activities security or sale property is located in Indiana; consumer loans
everywhere. The apportionment factor may also determine the not secured by real or tangible personal property are attributed
Indiana net income that passes to partners subject to corporate to Indiana if the loan is made to an Indiana resident; and
income tax and financial institutions tax. commercial loans and installment obligations not secured by
real or tangible personal property are attributed to Indiana if
Note. Interstate transportation companies should consult the proceeds of the loan are applied in Indiana.
Schedule E-7 for details concerning apportionment of income. • Interest income, merchant discounts, travel and entertainment
This schedule is available at www.in.gov/dor/tax-forms/2022- credit card receivables, and credit card holder’s fees are attributed
corporatepartnership-income-tax-forms/. to the state where the card charges and fees are regularly billed.
• Receipts from the performance of fiduciary and other
Part I – Apportionment of Adjusted Gross Income services are attributed to the state where the benefits of
Sales/Receipts. The sales factor is a fraction. The numerator the services are consumed. Receipts from the issuance of
is the total receipts of the taxpayer in Indiana during the tax traveler’s checks, money orders, or United States savings
year. The denominator is the total receipts of the taxpayer in all bonds are attributed to the state where those items are
jurisdictions during the tax year. purchased.
• Receipts from investments are attributed to Indiana if the
In the case of certain receipts, all or a portion of the receipts are taxpayer’s commercial domicile is in Indiana.
not included. • Gross receipts from the performance of certain
• Receipts do not include deemed foreign dividends under IRC telecommunications and broadcast services are attributed
section 965 or GILTI. to Indiana if the income-producing activity is in Indiana. If
• For receipts from the sale of securities, including stocks, such activities are conducted partly within and partly outside
bonds, options, and future and forward contracts, only the Indiana, the gross receipts from the services are attributable to
net gain from the sale is treated as a receipt. Indiana if the direct costs incurred in Indiana related to those
receipts are greater than the direct costs incurred in any other
Page 16 IT-65 Partnership Booklet 2022
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state, unless the activities are otherwise directly attributed to Partners may only be excluded from withholding by means of
Indiana according to IC 6-3-2-2.2 or IC 6-3-2-2(f). the IN-COMPA waiver form. However, if a nonresident partner’s
• Receipts from other services and other intangibles are attributed distributive share of income after modifications is a negative
to Indiana if the benefit of the service or intangible is received in amount, do not list the partner on the applicable schedule.
Indiana. Please see Multistate Tax Commission regulations for
further information on whether the receipts from a particular The composite returns must be filed with and have the same due
transaction are attributed to Indiana. date as the partnership return. If the IRS allows the partnership an
extension to file its tax return, the due date for its Indiana return
Sales to the United States Government. The United States is automatically extended for the same period, plus one month.
government is the purchaser when it makes direct payment to
the seller. A sale to the United States government of tangible Filing Requirements for Schedule Composite/
personal property is in Indiana if it is shipped from an office, a Schedule Composite-COR
store, a warehouse, or another place of storage in Indiana. See the The following limitations and conditions apply to each partner
previous rules for sales other than tangible personal property if included as a member in the composite return:
such sales are made to the United States government. • No deduction is permitted for carryover of net operating
losses or capital losses;
Other Gross Receipts. On line 6, report other gross business • No personal exemption is permitted;
receipts not included elsewhere. • No deduction is allowed for charitable contributions allowed
or allowable pursuant to IRC Section 170;
On line 7, report direct premiums and annuity considerations • No credit is permitted for taxes paid to other states;
received during the taxable year for insurance upon property • No credit carryovers are permitted (except for those on
or risks in Indiana. The terms direct premiums and annuity Schedule IN-OCC); and
considerations mean the gross premiums received from direct • All other credits that flow through to partners on a pro rata
business as reported in the corporation’s annual statement filed basis are limited to the partner’s state income tax liability. See
with the Department of Insurance. the list of Pass-through Tax Credits.
Total Receipts. Complete all lines as indicated. Add all the The partnership filing a composite return is liable for the
receipts in Column A (lines 1A through 7A), and enter the tax shown on the return. It is also liable for any additional
total on line 8A. In addition, enter the total receipts from all tax, interest, and penalty as a result of a subsequent audit or
jurisdictions on line 8B. examination. Any refund of state or county tax as a result of filing
a composite return will be remitted directly to the partnership.
Apportionment of Income for Indiana The partnership should send a copy of the general Indiana filing
Divide line 8A by line 8B. Multiply by 100 to arrive at a percentage requirements to each nonresident partner.
rounded to the nearest second decimal place. This is the Indiana
apportionment percentage; carry it to the apportionment entry Instructions for Completing Schedule Composite/
line on the return, line 4 on Form IT-65. Schedule Composite-COR
Indicate the name of each nonresident partner on the appropriate
Part II – Business/Other Income Questionnaire schedule. Subject to the limitations and conditions specified in the
Complete all applicable questions in this section. If income is filing requirements, separately compute the state tax liability on
apportioned, enclose the completed Schedule E or Schedule E-7 the composite return attributable to each nonresident partner. See
with Form IT-65. Schedule CT-40PNR, page 2, at www.in.gov/dor/tax-forms/2022-
individual-income-tax-forms to get the applicable county tax rate.
The completed Schedule E or Schedule E-7 must be enclosed with
the return. Note. The name of all nonresident individuals of reverse credit
agreement states who are subject to and pay income taxes at rates
equal to or greater than Indiana’s individual income tax rate to the
resident states must be listed on the Schedule Composite, but with
Instructions for Schedule Composite/
the amount of withholding tax/credit for these partners listed as zero.
Schedule Composite-COR
Column A. If a partner has an exception where the partner may
Any partnership that has partners who are nonresidents of Indiana not be subject to tax or may be subject to a reduced tax, enter the
must file a composite return and include all its nonresident partners. exception code applicable to that partner. If no exception code
Submit a Schedule Composite for all individual/non-corporate applies to a partner, leave the column blank. If an invalid code is
partners and a Schedule Composite-COR for all corporate partners. entered, this will be treated as a blank code. If a code is entered
A partnership will be assessed a penalty of $500 if it fails to file into this column, compute the values for state and local income
a composite return that includes all nonresident partners that tax based on the proper amount of tax due rather than based on
have positive, distributive shares of income. Remitting the $500 the default computation. For 2022, the codes 03 through 13 will
penalty with the return does NOT allow the partnership to avoid require a signed IN-COMPA from the partner. Failure to obtain
the additional 20% failure to withhold penalty, nor does it relieve and include a signed IN-COMPA will require the partnership to
the partnership from obligation to complete composite schedules. withhold as otherwise required under IC 6-3-4-12.
IT-65 Partnership Booklet 2022 Page 17
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• Code 01 - Approved alternative arrangement. This is available • Code 11 - Net operating losses. Enter this code if the partner
only if DOR has approved an alternative withholding has an Indiana net operating loss carryforward that can offset
arrangement with the corporation responsible for paying the the income in whole or in part. Do not reduce the income
tax. You must maintain DOR’s approval of the arrangement with subject to tax by more than the net operating loss reported.
your records as DOR can require you to provide it at a later date. • Code 12 - Credits from other sources. Enter this code if the
• Code 02 - Credit used to offset composite tax. If the partner partner indicates one or more credits that would reduce the
would have been entitled to claim a nonrefundable tax credit tax liability. These should be either a carryforward credit
that flowed through from the partnership to reduce the regardless of source or a credit from a source other than the
partner’s income tax liability, the partnership may reduce the corporation. Do not enter a credit used to reduce tax using
amount of composite tax by the partner’s share of such credit. Code 02. In addition, the tax cannot be reduced by more than
Do not reduce the tax by more than the partner’s share of the credits reported by the partner.
any credits that properly passed through to the partner. Also, • Code 13 - Partnership reporting estimated tax. Enter this
you may only reduce the tax by the amount of current year code if the partner is a partnership registered with the
credit unless specifically permitted. Finally, you may not use Indiana Secretary of State as doing business in Indiana and
this code to reduce composite tax for credits that did not flow the partner indicates that it is remitting estimated Indiana
through from the partnership. taxes on its behalf.
• Code 03 - Employee Stock Ownership Plan Enter this code if • Code 14 - Entity has multiple tiers. If the partnership is
the partner is an employee stock option plan (ESOP). part of a multi-tiered structure and has obtained written
• Code 04 - Income offset by previously disallowed deductions. department consent for an alternative withholding
If: arrangement, enter this code. The written consent of the
ο a partner is determined to have zero basis on their share department must be attached or otherwise made available
of their interest in the partnership, and upon department request.
ο the partner has deductions that were disallowed because • Code 15 - Partner is an Indiana resident. Enter this code if
the partner had zero basis, the partner is an Indiana resident and tax is reported as being
the share of income subject to tax can be reduced by the withheld on behalf of the partner. This withholding can occur
newly-allowed Indiana deductions and the tax recomputed directly or indirectly, such as withholding in a tiered pass
after the newly-allowed deductions. through structure.
• Code 05 - Insurance Company not subject to AGIT or FIT.
If the partner is an insurance company that is not subject to Column B.
AGIT or FIT for the year in question, use this code. Use this Schedule Composite – Enter the 2-character state of residency
code only if the insurance company has filed a timely election for each nonresident listed.
to be subject to Indiana gross premiums tax. Schedule Composite-COR – Enter the Indiana adjusted gross
• Code 06 - Nonprofit Entity. If the partner if an entity that is a income from Schedule IN K-1, Part 4, line 9.
nonprofit corporation or a retirement plan that is subject to
Indiana adjusted gross income tax or financial institutions tax Column C.
on only its unrelated business income AND the partnership Schedule Composite – Enter the Indiana adjusted gross income
knows that the income from the partnership would not be from Schedule IN K-1, Part 4, line 9.
considered unrelated business income to the partner, enter Schedule Composite-COR – Multiply the amount in Column B
this code. Do not enter this code if the partnership lacks by the Indiana corporate tax rate (see page 5).
actual knowledge of the character of the income in the
partner’s hands or if the partnership knows that the income is Column D. State Tax. Multiply the adjusted gross income by
unrelated business income to the partner. .0323.
• Code 07 - Real Estate Investment Trust. Enter this code if the
partner is a real estate investment trust (REIT). However, do Column E. Enter the income subject to county tax from IN K-1,
not enter this code if the REIT is a captive REIT required to Part 1, line 12.
add back its dividends paid.
• Code 08 - Real Estate Mortgage Investment Conduit. Enter Column F. Multiply the amount in Column E by the county tax
this code if the partner is a real estate mortgage investment rate associated with the county reported on IN K-1, line 7. This
conduit. rate is listed on Schedule CT-40PNR, which is located at www.
• Code 09 - Treaty-based exclusion. If a partner is subject to a in.gov/dor/tax-forms/2022-individual-income-tax-forms.
treaty-based exception from federal income tax, the scope of
the treaty includes the income derived from the corporation, Notwithstanding any other requirement, a nonresident individual
and the corporation has knowledge of the partner’s who is subject to Indiana county income tax on Schedule
exemption, enter this code for the partner. Composite (Column F) is required to file a nonresident individual
• Code 10 - Passive activity losses. Enter this code if the income tax return, Form IT-40PNR, to report all sources of
partner has passive income from the partnership that is offset Indiana income.
by previously-disallowed passive losses. Do not reduce the
income subject to tax by more than the passive loss reported Note. If the nonresident owner is also employed by the business,
as previously disallowed. the business shall use the county reported on the owner/employee’s
WH-4 to determine whether or where withholding is required.
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Example. Individual X, a nonresident of Indiana, is a 50% owner • A school scholarship credit that can be carried forward for up
of a business that operates in St. Joseph County and Elkhart to nine years; and
County. Individual X works at the business’s St. Joseph County • A community revitalization enhancement district credit with
location. The business has $200,000 in Indiana adjusted gross an indefinite carryforward period.
income, with 60% of the receipts derived from St. Joseph County
and 40% from Elkhart County. Of Individual X’s $100,000 The taxpayer would apply the credits in the following order
income, $60,000 ($100,000 x 60%) from St. Joseph County is until the credit is exhausted or their liability is reduced to zero,
subject to county income tax and withholding and the remaining whichever comes first:
$40,000 from Elkhart County is not subject to county income tax. • Neighborhood assistance credit
• School scholarship credit expiring in nine years
Get Income Tax Information Bulletin #72 at www.in.gov/dor/files/ • Community revitalization enhancement district credit
reference/ib72.pdf for additional information.
For more information about Indiana tax credits, see Income
Column G. Add the amounts from Columns D and F. Tax Information Bulletin #59 available at www.in.gov/dor/files/
reference/ib59.pdf.
Enter the amount from Schedule Composite, line 15G, on Form
IT-65, line 6a. If completing Schedule Composite-COR, enter the The following credits have been assigned a three-digit code
amount from line 26C on Form IT-65, line 6b. for identification purposes. Use the code when reporting and
claiming any of these credits. Refer to Income Tax Information
Note. A federal Schedule K-1 for each partner is not required Bulletin #59 available at www.in.gov/dor/files/reference/ib59.pdf
to be enclosed but must be made available for inspection upon for more information.
request by DOR.
Airport Development Zone Employment Expense
Pass-through Tax Credits Credit 800
Each partner is allowed a pro rata share of the income tax This credit has been repealed. However, any previously approved
credits available to the partnership. Each partner’s share of an yet unused credit is available to be claimed.
available credit is reported on Schedule IN K-1, Part 2. It must
be supported by enclosing the properly completed tax credit Airport Development Zone Investment Cost
schedule or form with the partnership’s return. Credit 801
This credit has been repealed. However, any previously approved
Note. Enterprise zone credits and most other tax liability yet unused credit is available to be claimed.
credits may not be applied against the partnership’s employee
withholding or use tax liabilities on Form IT-65. Airport Development Zone Loan Interest
Credit 802
Caution. A taxpayer cannot be granted more than one of the This credit has been repealed. However, any previously approved
following credits for the same project: yet unused credit is available to be claimed.
• Alternative Vehicle Fuel Manufacturer Credit (prior to repeal)
• Community Revitalization Enhancement District Credit; Alternative Fuel Vehicle Manufacturer Credit 845
• Enterprise Zone Investment Cost Credit; This credit has been repealed. However, any previously approved
• Hoosier Business Investment Credit; yet unused credit is available to be claimed.
• Industrial Recovery Credit; and
• Venture Capital Investment Credit. Community Revitalization Enhancement District
Credit 808
Apply this restriction first when figuring allowable credits. See A state and local income tax liability credit is available for a
Income Tax Information Bulletin #59 at www.in.gov/dor/files/ qualified investment for the redevelopment or rehabilitation of
reference/ib59.pdf or more information. property within a community revitalization enhancement district.
To be eligible for the credit, the intended expenditure plan must
Order of Credit Application be approved by the IEDC before the expenditure is made. The
If claiming more than one credit, first use the credits that cannot credit is equal to 25% of the IEDC-approved qualified investment
be carried over and applied against the state AGI in another year. made by the taxpayer during the tax year. DOR has the authority
Next, use the credits that can be carried over for a limited number to disallow any credit if the taxpayer:
of years and applied against the state AGI. If one or more credits • Ceases existing operations;
are available, apply the credits in the order that the credits would • Substantially reduces its operations within the district or
expire. Finally, use the credits that can be carried over and applied elsewhere in Indiana; or
against the state AGI in another year. • Reduces other Indiana operations to relocate them into the
district.
Example. A business has the following credits available to be
claimed: The taxpayer can assign the credit to a lessee who remains subject
• A neighborhood assistance credit for which no carryover is to the same requirements. The assignment must be in writing.
available;
IT-65 Partnership Booklet 2022 Page 19
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Any consideration may not exceed the value of the part of the This credit is administered by the IEDC. Contact them at One
credit assigned. Both parties must report the assignment on state North Capitol, Suite 700, Indianapolis, IN 46204, via website at
income tax returns for the year of assignment. www.iedc.in.gov, or by phone at (317) 232-8800.
Enclose the certification from the IEDC, otherwise the credit will The approved credit must be reported on Schedule IN-OCC,
be denied. found at www.in.gov/dor/tax-forms/2022-individual-income-tax-
forms. Make sure to enclose this schedule with your tax filing. If
Contact the Indiana Economic Development Corporation at One you are claiming this credit as an owner of a pass-through entity
North Capitol, Suite 700, Indianapolis, IN, 46204, or visit the such as S corporations, partnerships, limited liability companies,
website at www.iedc.in.gov for more information about this credit. etc., make sure to keep Schedule IN K-1 with your records as
DOR can require you to provide this information.
Economic Development for a Growing Economy
(EDGE) Credit 839 Enterprise Zone Employment Expense Tax
This credit is for businesses that conduct certain activities Credit 812
designed to foster job creation in Indiana. It is a refundable tax This credit is available for employers based on qualified
liability credit. investments made within Indiana. It is the lesser of 10% of
qualifying wages or $1,500 per qualified employee, up to the
Note. Schedule IN-EDGE must be completed and enclosed with amount of tax liability on income derived from an active
the return, regardless of whether it is claimed at the partnership enterprise zone. Enclose the completed Schedule EZ with Form
or pass-through level. Otherwise the credit will be denied. A PIN IT-65 return to claim this credit.
must be obtained from the IEDC.
See Indiana Schedule EZ Parts 1, 2, and 3 available at www.in.gov/
Claim this credit on line 11 of Form IT-65 and/or on Part 2 of dor/tax-forms/enterprise-zone-forms/ for more information.
Schedule IN K-1.
Enterprise Zone Loan Interest Tax Credit 814
Contact the Indiana Economic Development Corporation at One This credit can be for up to 5% of the interest received from all
North Capitol, Suite 700, Indianapolis, IN 46204, for eligibility qualified loans made before Jan. 1, 2018, for use in an active
requirements. Visit www.iedc.in.gov for additional information. Indiana enterprise zone.
Economic Development for a Growing Economy See Income Tax Information Bulletin #66 available at www.
Retention (EDGE-R) Credit 857 in.gov/dor/files/reference/ib66.pdf and Indiana Schedule LIC
This credit is for businesses that conduct certain activities designed available at www.in.gov/dor/tax-forms/enterprise-zone-forms/
to foster job retention in Indiana. It is a refundable tax liability credit. for more information about how to calculate this credit. Enclose
the completed enterprise zone Schedule LIC with Form IT-65
Note. Schedule IN-EDGE-R must be completed and enclosed return. For more information, contact the Indiana Economic
with the return, whether it is claimed at the partnership or pass- Development Corporation, One North Capitol, Suite 700,
through level. Otherwise, the credit will be denied. A PIN must be Indianapolis, IN, 46204. Call IEDC at (317) 232-8800 or visit
obtained from the IEDC. www.iedc.in.gov.
Claim this credit on line 12 of the return and/or on Part 2 of Enclose the certification from the IEDC; otherwise, the credit will
Schedule IN K-1. be denied.
If claiming the EDGE or EDGE-R credit at both the partnership Ethanol Production Tax Credit 815
and pass-through levels, the amount of credit claimed may not This credit has been repealed. However, any previously approved
exceed the total credit approved. Whether claiming at the pass- yet unused credit is available to be claimed.
through or entity level, the Schedule EDGE or EDGE-R must
be enclosed with Form IT-65. Contact the Indiana Economic Film and Media Production Tax Credit 869
Development Corporation at One North Capitol, Suite 700, Effective July 1, 2022, a credit is available for expenses incurred
Indianapolis, IN 46204, for eligibility requirements. Visit www. for qualified film and media production expenses. The amount
iedc.in.gov for additional information. of the taxpayer’s credit is equal to the taxpayer’s qualified film
and media production expenses multiplied by a percentage
Economic Development for a Growing Economy - determined by the Indiana Economic Development Corporation,
Nonresident Employees (EDGE-NR) 865 but not more than 30% of the expenses.
This credit is for incremental state income tax amounts that would
have been withheld on employees from reciprocal states if those Note. Certification for this credit must be obtained from the
employees had been subject to Indiana state tax withholding. Indiana Economic Development Corporation. See iedc.in.gov/
Owners of pass-through entities such as S corporations, indiana-advantages/investments/film-and-media-tax-credit for
partnerships, limited liability companies, etc., are eligible for this further information.
credit. Unlike the EDGE and EDGE-R credits, the EDGE-NR
credit is a non-refundable credit.
Page 20 IT-65 Partnership Booklet 2022
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This credit must be reported on Schedule IN-OCC, found at www. Beginning with the 2022 tax year, this credit must be reported on
in.gov/dor/tax-forms/2022-corporatepartnership-income-tax- Schedule IN-OCC, found at www.in.gov/dor/tax-forms/2022-
forms/. Make sure to enclose this schedule with your tax filing. corporatepartnership-income-tax-forms/. Make sure to enclose
this schedule with your tax filing.
Enclose the certification letter from the IEDC with the return,
otherwise the credit will be denied. This credit is administered by the IEDC. Contact them at One
North Capitol, Suite 700, Indianapolis, IN 46204, via website at
Foster Care Donations Credit 867 www.iedc.in.gov, or by phone at (317) 232-8800.
Effective starting in taxable year 2022, a credit for donations
to qualifying foster care organizations is available. The credit Submit a copy of the letter from the IEDC which:
is 50% of the donation made to qualifying organizations, up to • verifies the amount of tax credit for the taxable year, and
a maximum of $10,000 per taxable year. In addition, no more • designates the amount of credit that is refundable (if any).
than $2,000,000 in credits can be awarded during a state fiscal
year. See www.in.gov/dor/tax-forms/foster-care-credit-donation- Enter code 818 on Schedule IN K-1 to:
information/ for further information regarding the application • designate any offset portion of this credit, and/or
and approval process. • designate any refundable portion of this credit.
This credit must be reported on Schedule IN-OCC, found at www. Maintain with your records proof of the relocation costs as well
in.gov/dor/tax-forms/2022-corporatepartnership-income-tax- as proof of employment of the minimum number of employees
forms/. Make sure to enclose this schedule with your tax filing. in Indiana and, if applicable, payroll in both Indiana and
everywhere, as DOR may request this information at a later date.
Enclose the approval letter from the Department of Revenue with
the return, otherwise the credit will be denied. Historic Building Rehabilitation Tax Credit 819
This credit has been repealed. However, any previously approved
Headquarters Relocation Credit – Offset 818 &/or yet unused credit is available to be claimed.
Refundable
A business may be eligible for a credit if it meets one of two sets Hoosier Business Investment Tax Credit 820
of criteria. The first set of criteria (“first test”) is that the business This credit is for qualified investments, including costs associated
meets all of the following: with the following:
• Has an annual worldwide revenue of $50 million; • Constructing special-purpose buildings and foundations;
• Has at least 75 Indiana employees (for credits awarded before • Making onsite infrastructure improvements;
July 1, 2022); and • Modernizing existing equipment;
• Relocates its corporate headquarters to Indiana. • Purchasing equipment used to make motion pictures or
audio production;
The second set of criteria (“second test”) is that the business meets • Purchasing or constructing new equipment directly related to
either (1) or (2), meets (3), and meets (4) or (5): expanding the workforce in Indiana;
1. Received at least $4 million in venture capital in the six • Retooling existing machinery and equipment;
months immediately preceding the business’s application for • Purchasing retooled or refurbished machinery;
this tax credit. • Constructing or modernizing transportation or logistical
2. Closes on at least $4,000,000 in venture capital not more than distribution facilities;
six months after submitting the business’s application for this • Improving the transportation of goods via highway, rail, air,
tax credit. or water;
3. Has at least 10 Indiana employees (for credits awarded before • Improving warehousing and logistical capabilities;
July 1, 2022). • Purchasing new pollution control, energy conservation, or
4. Relocates its corporate headquarters to Indiana. renewable energy generation equipment; and
5. Relocates the number of jobs equal to 80% of the business’s • Purchasing new onsite digital manufacturing equipment.
total payroll during the immediately preceding quarter to an
Indiana location. It does not include property that can be readily moved out of
Indiana.
Important. While both the entity and the owners may be eligible
to claim an offset credit (818), only the owners are eligible to This credit is administered by the IEDC at One North Capitol, Suite
claim their share of any refundable credit if the IEDC has granted 700, Indianapolis, IN, 46204. Visit www.iedc.in.gov or call (317)
a refundable credit under the second test above. 233-3638 for more information. Also, see Income Tax Information
Bulletin #95 available at www.in.gov/dor/files/reference/ib95.pdf.
The credit may be as much as 50% of the cost incurred in
relocating the taxpayer’s headquarters. For more information Submit a copy of the IEDC certificate verifying the amount of tax
(including limitations on the credit and the application process), credit for the taxable year with the return, otherwise the credit
see Income Tax Information Bulletin #97, available at www. will be denied. This credit must be claimed on Schedule IN-OCC.
in.gov/dor/files/reference/ib97.pdf.
IT-65 Partnership Booklet 2022 Page 21
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Indiana Research Expense Tax Credit 822 Important. Any unused credit existing before Jan. 01, 2020, is still
Indiana has a research expense credit that is similar to the federal eligible for carryforward for an unlimited number of years.
credit (Form 6765) for increasing research activities for qualifying
expenses paid in carrying on a trade or business in Indiana. Compute For additional information regarding procedures for obtaining this
the credit using Schedule IT-20REC. To claim a portion of a prior- credit, contact the Indiana Economic Development Corporation,
year Indiana Research Expense Credit, please include Schedule One North Capitol, Suite 700, Indianapolis, IN 46204, call (317)
IT-20REC from the prior year being utilized along with a statement 232-8800, or visit their website at www.iedc.in.gov.
reflecting the utilization of the prior-year credit up to this point.
Note. See the section “Restriction for Certain Tax Credits -
Schedule IT-20 REC, available at www.in.gov/dor/tax- Limited to One per Project” on page 23.
forms/2022-corporatepartnership-income-tax-forms/, must
be completed and enclosed with the return to claim this credit; Military Base Investment Cost Credit 826
otherwise, the credit will be denied. For more information, visit This credit has been repealed. However, any previously approved
DOR’s website at www.in.gov/dor. Filers claiming the research yet unused credit is available to be claimed.
expense credit should maintain and keep documentation
supporting the credit in a usable form. Military Base Recovery Credit 827
This credit has been repealed. However, any previously approved
Important. Make sure to check Box U on Form IT-65 if claiming yet unused credit is available to be claimed.
this credit.
Natural Gas Commercial Vehicle Credit 858
Individual Development Account Tax Credit 823 This credit has sunset. However, any previously approved yet
A credit is available for contributions made to a community unused credit is available to be claimed.
development corporation participating in an Individual
Development Account (IDA) program. The IDA program is This carryforward credit is available to pass-through entities, such
designed to assist qualifying low-income residents in accumulating as members of partnerships and S corporations.
savings and building personal finance skills. The organization must
have an approved program number from the Indiana Housing and The carryforward portion of the previously approved credit must
Community Development Authority (IHCDA) for a contribution be reported on Schedule IN-OCC, found at www.in.gov/dor/tax-
to qualify for preapproval. The credit is equal to 50% of the forms/2022-corporatepartnership-income-tax-forms/. Make sure
contribution, which must be between $100 and $50,000. to enclose this schedule with your tax filing. If you are claiming
this credit as a pass-through entity, make sure to keep Schedule
Applications for the credit are filed through the IHCDA. To request IN K-1 with your records as DOR can require you to provide this
more information about this credit, contact the Indiana Housing information.
and Community Development Authority at 30 S. Meridian St., Suite
1000, Indianapolis, IN 46204 or call (317) 232-7777. Neighborhood Assistance Tax Credit 828
If a contribution is made to the Neighborhood Assistance Program
Keep any approval certification or letter of credit assignment with (NAP) or activities were engaged in to upgrade areas in Indiana,
your records as DOR can require you to provide this information a credit for this assistance may be available. Effective July 1, 2014,
at a later date. contributions to organizations that provide services to individuals
who are ex-offenders are also eligible for this credit. Contact
Industrial Recovery Credit 824 the Indiana Housing and Community Development Authority,
This credit is based on a taxpayer’s qualified investment in Neighborhood Assistance Program, 30 S. Meridian St., Suite 1000,
a vacant industrial facility located in a designated industrial Indianapolis, IN 46204, for more information. Call (317) 232-7777
recovery site. If the Indiana Economic Development Corporation within Indianapolis or (800) 872-0371 outside of Indianapolis.
approves the application and the plan for rehabilitation, you
are entitled to a credit based on the “qualified investment.” The New Employer Credit 850
minimum age for a facility to be eligible for this credit has been This credit has been repealed. However, any previously approved
reduced from 20 years to 15 years. This credit is available to pass- yet unused credit is available to be claimed.
through entities such as S corporations, partnerships, limited
liability companies, etc. Redevelopment Tax Credit 863
You may be eligible for a credit if you make a qualified investment
Note. Except for in situations described in the next sentence, for the redevelopment or rehabilitation of real property located
a taxpayer is entitled to receive this credit only for a qualified within a qualified redevelopment site.
investment made before Jan. 1, 2020. A taxpayer is entitled to
receive a credit for a qualified investment made after Dec. 31, 2019, This credit is administered by the Indiana Economic Development
and before Jan. 1, 2030, if the taxpayer is awarded a credit under: Corporation (IEDC), One North Capitol, Suite 700, Indianapolis,
• an application approved by the Indiana Economic IN, 46204. Visit the IEDC website at www.iedc.in.gov or call (317)
Development Corporation (IEDC) before Jan. 1, 2020; or 232-8800 for additional information.
• an agreement entered into by the taxpayer and IEDC before
Jan. 1, 2021.
Page 22 IT-65 Partnership Booklet 2022
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The approved credit must be reported on Schedule IN-OCC, New reporting requirement. Enclose Schedule IN-OCC to claim
found at www.in.gov/dor/tax-forms/2022-individual-income-tax- this credit; otherwise, the credit will be denied.
forms. Make sure to enclose this schedule with your tax filing.
Venture Capital Investment Credit – Qualified
Riverboat Building Credit 832 Indiana Investment Fund 868
This credit has been repealed. However, any previously approved A taxpayer who provides qualified investment capital (either debt
yet unused credit is available to be claimed. or equity capital) to a qualified Indiana investment fund may be
eligible for this credit.
School Scholarship Credit 849
A credit is available for contributions to school scholarship programs. Note. Certification for this credit must be obtained from the
A taxpayer that makes a qualifying contribution to a scholarship Indiana Economic Development Corporation, Development
granting organization (SGO) is entitled to a credit against the state Finance Office, VCI Credit Program, One North Capitol, Suite
tax liability in the taxable year in which the contribution is made. The 700, Indianapolis, IN 46204.
amount of a taxpayer’s credit is equal to 50% of the amount of the
contribution made to the SGO for a school scholarship program. In This credit must be reported on Schedule IN-OCC, found at www.
some cases, the department may round the credit down to the nearest in.gov/dor/tax-forms/2022-corporatepartnership-income-tax-
dollar if the department receives information that the credit should forms/. Make sure to enclose this schedule with your tax filing.
be the amount as rounded down. Effective Jan. 1, 2013, this credit can
now be carried forward for nine years after the unused credit year. Apply online through the IEDC’s website at www.iedc.in.gov or
call (317) 232-8800 for more information.
Note. Credits that apply to taxable years beginning before Jan. 1,
2013, may not be carried forward. Enclose the certification letter from the IEDC with the return,
otherwise the credit will be denied. Do not claim this credit before
To qualify for the credit, the taxpayer must: July 1, 2023.
• Make a contribution to a scholarship granting organization
that is certified by the Department of Education under IC Restriction for Certain Tax Credits – Limited to
20-51; One Per Project
• Make the contribution directly to the SGO; A taxpayer may not be granted more than one credit for the
• Designate in writing to the SGO that the contribution is to be same project. The credits that are included are the alternative
used solely for a school scholarship program or have written fuel vehicle manufacturer credit, community revitalization
confirmation from the SGO that the contribution will be used enhancement district credit, enterprise zone investment cost
solely for a school scholarship program. credit, Hoosier business investment credit, industrial recovery
credit, and the venture capital investment credit.
Although there are no limits on the size of a qualifying
contribution to an SGO, the entire tax credit program has a limit Schedule IN-EL
of $18.5 million in credits per state fiscal year of July 1, 2022 If you are a partnership that has elected to be taxed at the
through June 30, 2023. partnership level, please include Schedule IN-EL. Specific
instructions for completing Schedule IN-EL are found with the
Enclose Schedule IN-OCC to claim this credit, otherwise the schedule.
credit will be denied.
Venture Capital Investment Tax Credit 835
Reminders
A taxpayer that provides qualified investment capital to a qualified • Complete the partnership’s identification section.
Indiana business may be eligible for this credit. Certification for this • If the partnership’s name has changed, check the box at
credit must be obtained from the Indiana Economic Development the top of the return. Enclose with the return copies of the
Corporation Development Finance Office, VCI Credit Program, articles of amendment filed with the Indiana Secretary of
One North Capitol, Suite 700, Indianapolis, IN 46204, telephone State.
number (317) 232-8827, or visit www.iedc.in.gov. • List the name of the Indiana county; enter “00” (two zeroes)
in the county box to indicate an out-of-state business
Beginning with the 2020 tax year, this credit must be reported on operation.
Schedule IN-OCC, found at www.in.gov/dor/tax-forms/2022- • Partnerships filing on a fiscal-year or short year basis must
corporatepartnership-income-tax-forms/. Make sure to enclose enter tax year beginning and ending dates.
this schedule with your tax filing. If you are claiming this credit • A composite return listing all nonresident partners must be
as an owner of a pass-through entity, such as an S corporation, filed on Schedule Composite/Schedule Composite-COR.
partnership, limited liability company, etc., make sure to keep • Enclose Schedule E or Schedule E-7, if applicable.
Schedule IN K-1 with your records as DOR can require you to • Enclose the first five pages of the U.S. Partnership Return of
provide this information. Income, Form 1065 or Form 1065 B, and Schedule M-3.
Also, see the Restriction for Certain Tax Credits - Limited to
One per Project below.
IT-65 Partnership Booklet 2022 Page 23
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Partner’s Liability and Filing Requirements
Additional Information A partner’s share of profit or loss from a partnership is included in
the partner’s calculation of federal AGI. It is generally subject to the
Utility Receipts Tax same rules for arriving at Indiana AGI. Thus, a partner’s distributive
A Utility Receipts Tax was imposed on the taxable receipts from share, before any modifications required by Indiana statutes, is
the retail sale of utility services, For taxable receipts received after the same ratio and amount as determined under IRC Section 704
June 30, 2022, the Utility Receipts Tax no longer applies. However, and its prescribed regulations. The partners include shares of all
a taxpayer subject to Utility Receipts Tax must file a return to partnership income, whether distributed or undistributed, on
report taxable receipts and tax for receipts that the taxpayer their separate entity or individual Indiana income or franchise tax
received before July 1, 2022. Use Form URT-1 (Utility Receipts returns. Each partner’s distributive share of income is adjusted by
Tax Return) for this tax. Gross receipts are defined as the value modifications provided for in IC 6-3-1-3.5.
received for the retail sale of utility services. The utility services
subject to tax include: Individual Partners
• Electric energy; Residents. A resident partner reports the entire distributive
• Natural gas; share of partnership income (loss) as adjusted, no matter where
• Water; the partnership’s business is located or in which state(s) it does
• Steam; business. Form IT-40 (Indiana Individual Income Tax Return)
• Sewage; and should be completed by each individual partner.
• Telecommunications.
Nonresidents. The nonresident individual partner will be
If there are more than $1,000 in gross receipts from the sale of included on Schedule Composite and have amounts withheld
utility services, Form URT-1 may need to be filed, in addition to on the distributive share of income. Schedule IN K-1 is used to
Form IT-65. Refer to General Tax Information Bulletin #201 at report withholding paid by the partnership. The partner must
www.in.gov/dor/files/reference/gb201.pdf. claim credit on an IT-40PNR return by enclosing Schedule IN
K-1 for amounts withheld by the partnership from the partner’s
Utility Services Use Tax distributive share of income. Nonresident partners generally
An excise tax known as the utility services use tax is imposed on the are exempt from filing individual income tax returns if all
retail consumption of utility services in Indiana where the utility Indiana income is reported on the composite return schedule.
receipts tax is not paid by the utility providing the service. The utility Nonresident partners with other Indiana-source income or who
services use tax does not apply for billings issued after June 30, 2022. wish to benefit from other deductions or credits not available on
a composite return should file Form IT-40PNR. If a nonresident
A taxpayer might be liable for this tax if utility services from partner has filed a Schedule IN-COMPA, the partner is required
outside Indiana (or anywhere if for resale) and become the end user to complete an IT-40PNR and report all Indiana-source income.
in Indiana of any part of the purchase. The person who consumes
the utility service is liable for the utility services use tax. The tax is Important:
based on the price of the purchase. Unless the seller of the utility • Full-year nonresident partners are exempt from filing an
service is registered with DOR to collect the utility services use tax individual income tax return if:
on the taxpayer’s behalf, remit this tax on Form USU-103. For more ο all Indiana income is reported on the composite
information, see General Tax Information Bulletin #202 available at return schedule;
www.in.gov/dor/files/reference/gb202.pdf. ο no county tax was reported* on Schedule Composite,
Column F; and
How to Register as a Withholding Agent ο no other Indiana income is reported on an individual
A partnership with any employee for which withholding tax income tax return. If any is, income from the partnership
reporting is required as previously described to register as an Indiana also must be reported on that return.
withholding agent. DOR assigns an Indiana TID, which consists of:
• A 10-digit number exclusive to the taxpayer; and *If county tax was reported, the nonresident must file Form IT-
• A 3-digit number for the location being registered. 40PNR.
The partnership has two options: • A part-year nonresident partner must file Form IT-40PNR to
• The partnership can register with DOR online using INBiz report:
(inbiz.in.gov); or ο The total amount of income (loss) received while
• Visit either DOR’s downtown Indianapolis office or one of the residing in Indiana;
district offices located throughout the state. ο That part of Indiana source income received while a
nonresident; and
Note. All businesses must electronically file and remit sales and/ ο Apportioned Indiana income (loss), as modified,
or withholding taxes. Businesses can file and remit withholding received by a nonresident of Indiana.
taxes through INTIME, DOR’s e-services portal at intime.dor.
in.gov, or a third party vendor; they can also use INTIME to file Note. Passive losses may not exceed the limits imposed by IRC
and remit sales tax. Section 469. Also, losses may not exceed the partner’s investment.
See IRC Section 704.
Page 24 IT-65 Partnership Booklet 2022
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Corporate Partners Using the single-factor apportionment formula, under IC 6-3-2-2(b),
Corporate partners that are nonresidents will be included on ABC Company determines its apportionment percentage as follows:
the Schedule Composite or Schedule Composite-COR and have
amounts withheld on the distributive share of income. Schedule Indiana sales/receipts 5000.00
IN K-1 will be used to report the withholding paid into the Divided by everywhere sales/receipts /41667.00
corporate account. Equals .1200
Multiplied by 100 x 100
The partner must claim credit for the withholding amount by Equals Indiana apportionment percentage 12.00%
enclosing Schedule IN K-1 with one of the following:
• Form FIT-20; Computations for Taxpayers A and B:
• Form IT-20; Taxpayer A, as a resident of Indiana, must report his own entire
• Form IT-20S; share of partnership income to Indiana regardless of whether the
• Form IT-20NP; partnership apportions its income. As a general rule, if Taxpayer
• Form IT-41; or A pays tax to another state (on a portion of partnership income),
• Form IT-65. he can take a credit on his individual return.
All distributions are fully taxable for Indiana adjusted gross Indiana adjusted partnership income for Taxpayer A is computed
income tax purposes. Taxable partnership income (loss) includes as follows:
pro rata Indiana modifications. However, losses may not exceed Guaranteed payment $10,000
the limits imposed by IRC Section 704. Distributive share (50% x $65,000) + 32,500
Indiana adjusted distributive share of income $42,500
Corporate partners doing business within and outside Indiana
must also determine taxable AGI from Indiana sources through Taxpayer B, as a nonresident of Indiana, reports only her
the use of the allocation and apportionment provisions contained own share of partnership income and guaranteed payment
in IC 6-3-2-2(b)-(h). These generally follow the Uniform Division apportioned to Indiana. As a general rule, if Taxpayer B is
of Income for Tax Purposes Act. Thus, a multistate corporation required to pay tax to another state on a portion of her income
must first determine what part of its AGI, which includes all from ABC Company, she cannot take a credit on her Indiana
partnership income, constitutes business income and what part return but must claim it from her state of residence.
is nonbusiness income. The relationship between the corporate
partner and the partnership controls whether the income is Indiana adjusted partnership income for Taxpayer B is computed
classified as income derived from a unitary partnership or derived as follows:
from a nonunitary partnership. Guaranteed payment $10,000
Distributive share (50% x 65,000) + 32,500
Use the worksheet on page 13 for Attributing Partnership Total partnership share of income $42,500
Income for Unitary Corporate Partners to compute the portion Multiply by apportionment percentage x 12%
of partnership income subject to tax under the Adjusted Gross Apportioned Indiana distributive share of income $5,100
Income Tax Act.
Indiana Partnership Income for Individuals
Example:
Taxpayer A is a resident of Indiana, and Taxpayer B is a
nonresident of Indiana. Each has a 50% interest in ABC
Company, an Indiana partnership doing business both within
Indiana and outside Indiana.
ABC Company has income from operations of $530,000 and
expenses of $500,000. Of these expenses, $35,000 is an expense for
state income tax. Taxpayers A and B each received a guaranteed
payment of $10,000. The guaranteed payments are included in the
expenses of $500,000.
Computations for ABC Company for a Taxable Period:
Income from operations $530,000
Expenses - 500,000
Add-back modifications + 35,000
Partnership income $65,000
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