2023 Indiana Code › Title 6. Taxation › Article 3. State Income Taxes › Chapter 2. Imposition of Tax and Deductions › 6-3-2-2.5. Resident Persons; Net Operating Loss; Adjusted Gross Income

Note: This version of section effective 1-1-2022 until 1-1-2023. See also following version of this section, effective 1-1-2023.
Sec. 2.5. (a) This section applies to a resident person.
(b) Resident persons are entitled to a net operating loss deduction. The amount of the deduction taken in a taxable year may not exceed the taxpayer's unused Indiana net operating losses carried over to that year. A taxpayer is not entitled to carryback any net operating losses after December 31, 2011.
(c) An Indiana net operating loss equals the sum of:
(1) the taxpayer's federal net operating loss for a taxable year as calculated under Section 172 of the Internal Revenue Code, adjusted for certain modifications required by IC 6-3-1-3.5 as set forth in subsection (d)(1) and, in the case of an individual, reduced by any deductions allowable in determining the federal net operating loss for the taxable year, but not allowable in determining federal adjusted gross income;
(2) the excess business loss deduction disallowed under IC 6-3-1-3.5(a)(29) and IC 6-3-1-3.5(f)(14); and
(3) for taxable years beginning after December 31, 2020, a loss for a taxable year disallowed because of Section 461(l) of the Internal Revenue Code, without any modifications under subsection (d).
(d) The following provisions apply for purposes of subsection (c):
(1) The modifications that are to be applied are those modifications required under IC 6-3-1-3.5 for the same taxable year in which each net operating loss was incurred, except that the modifications do not include the modifications required under:
(A) IC 6-3-1-3.5(a)(3);
(B) IC 6-3-1-3.5(a)(4);
(C) IC 6-3-1-3.5(a)(5);
(D) IC 6-3-1-3.5(a)(35);
(E) IC 6-3-1-3.5(f)(11); and
(F) IC 6-3-1-3.5(f)(18).
(2) An Indiana net operating loss includes a net operating loss that arises when the applicable modifications required by IC 6-3-1-3.5 as set forth in subdivision (1) exceed the sum of the taxpayer's federal adjusted gross income (as defined in Section 62 of the Internal Revenue Code) if the taxpayer is an individual, or federal taxable income (as defined in Section 63 of the Internal Revenue Code) if the taxpayer is a trust or an estate for the taxable year in which the Indiana net operating loss is determined and the modifications otherwise required for federal net operating losses for the taxable year by Section 172(d) of the Internal Revenue Code. A modification that reduces a federal net operating loss shall be treated as a positive number for purposes of this subdivision, and a modification that increases a federal net operating loss shall be treated as a negative number for purposes of this subdivision.
(e) Subject to the limitations contained in subsection (g), an Indiana net operating loss carryover shall be available as a deduction from the taxpayer's adjusted gross income (as defined in IC 6-3-1-3.5) in the carryover year provided in subsection (f), but not in excess of the taxpayer's adjusted gross income (as defined in IC 6-3-1-3.5) in the carryover year determined without regard to this section.
(f) Carryovers shall be determined under this subsection as follows:
(1) An Indiana net operating loss shall be an Indiana net operating loss carryover to each of the carryover years following the taxable year of the loss.
(2) An Indiana net operating loss may not be carried over for more than twenty (20) taxable years after the taxable year of the loss.
(g) The entire amount of the Indiana net operating loss for any taxable year shall be carried to the earliest of the taxable years to which (as determined under subsection (f)) the loss may be carried. The amount of the Indiana net operating loss remaining after the deduction is taken under this section in a taxable year may be carried over as provided in subsection (f). The amount of the Indiana net operating loss carried over from year to year shall be reduced to the extent that the Indiana net operating loss carryover is used by the taxpayer to obtain a deduction in a taxable year until the occurrence of the earlier of the following:
(1) The entire amount of the Indiana net operating loss has been used as a deduction.
(2) The Indiana net operating loss has been carried over to each of the carryover years provided by subsection (f).
As added by P.L.91-1987, SEC.3. Amended by P.L.81-2004, SEC.10; P.L.182-2009(ss), SEC.192; P.L.113-2010, SEC.55; P.L.172-2011, SEC.56; P.L.239-2017, SEC.12; P.L.86-2018, SEC.70; P.L.214-2018(ss), SEC.5; P.L.234-2019, SEC.11; P.L.199-2021, SEC.4; P.L.165-2021, SEC.73; P.L.137-2022, SEC.35; P.L.1-2023, SEC.2.