Reprinted

February 24, 2004





ENGROSSED

HOUSE BILL No. 1365

_____


DIGEST OF HB 1365 (Updated February 23, 2004 5:12 pm - DI 44)



Citations Affected: IC 6-1.1; IC 6-2.5; IC 6-3; IC 6-3.1; IC 9-18; IC 9-29; IC 15-7; IC 32-24; noncode.

Synopsis: Various state tax matters. Freezes the assessed value of land classified in the farmland protection program. Upon withdrawal from the classification, requires payment of the property taxes that would have been assessed to the land during the lesser of the period of classification or ten years, plus interest. Requires deposit of the property taxes in the farmland protection program account. Creates the farmland protection program to be administered by the Indiana land resources council. Creates the farmland protection program account. Makes the following changes to the sales and use tax: (1) Grants a credit against Indiana use tax for sales tax paid in another state for a vehicle, a watercraft, or an aircraft. (2) Makes the furnishing of satellite television service, cable radio service, and satellite radio service a retail
(Continued next page)

Effective: January 1, 2004 (retroactive); March 1, 2004 (retroactive); upon passage; April 1, 2004; July 1, 2004; January 1, 2005.





Cochran, Liggett, Kuzman, Espich
(SENATE SPONSORS_ BORST, SIMPSON)




    January 20, 2004, read first time and referred to Committee on Ways and Means.
    January 26, 2004, amended, reported _ Do Pass.
    February 4, 2004, read second time, amended, ordered engrossed.
    February 5, 2004, engrossed. Read third time, made special order of business. Reread third time, recommitted to Committee of One, amended; passed. Yeas 74, nays 19.
    February 6, 2004, re-engrossed

SENATE ACTION

    February 10, 2004, read first time and referred to Committee on Finance.
    February 19, 2004, amended, reported favorably _ Do Pass.
    February 23, 2004, read second time, amended, ordered engrossed.





Digest Continued

transaction. (3) Indicates that a deduction for sales tax paid on a purchase price that becomes uncollectible is assignable only if the retail merchant that paid the tax assigned the right to the deduction in writing. (4) Requires certain out-of-state entities to collect sales tax in Indiana. (5) Provides that gross retail income does not include receipts attributable to delivery charges or installation charges if those charges are separately stated on the invoice. Revises the manner in which net operating losses are computed. Makes the research expense credit permanent (instead of expiring at the end of 2013). Repeals the sales tax credit for sales of motor vehicles, trailers, watercraft, and aircraft that are sold in Indiana and titled or registered in another state. Eliminates the $2 annual fee to renew a permanent registration of a semitrailer. Repeals the registration fee for a converter dolly. Repeals the sales tax on complimentary hotel rooms.


Reprinted

February 24, 2004

Second Regular Session 113th General Assembly (2004)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2003 Regular Session of the General Assembly.


ENGROSSED

HOUSE BILL No. 1365



    A BILL FOR AN ACT to amend the Indiana Code concerning taxation, agriculture and animals.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 6-1.1-6.9; (04)EH1365.2.1. -->     SECTION 1. IC 6-1.1-6.9 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2005]:
     Chapter 6.9. Assessment of Classified Farmland
    Sec. 1. As used in this chapter, "farmland" refers to land classified in the farmland protection program under IC 15-7-10.
    Sec. 2. As used in this chapter, "recapture period" means the lesser of:
        (1) the period of classification of land as farmland; or
        (2) the ten (10) year period immediately preceding the date on which land is withdrawn from the farmland classification.
    Sec. 3. As used in this chapter, "taxpayer" refers to the owner of farmland.
    Sec. 4. For each assessment date during the period of the classification of land as farmland:
        (1) the land shall be assessed using the lesser of:
            (A) the assessed value finally determined for the current

year's assessment date; or
            (B) the assessed value finally determined for the assessment date that next succeeds the date of the farmland classification under IC 15-7-10;
        (2) assessing officials shall keep a record of the assessed value that would apply if the land were not classified as farmland;
        (3) ditch assessments on the farmland shall be paid; and
        (4) oil, gas, stone, coal, or other mineral wealth obtained from the farmland shall be assessed and placed on the tax duplicate.
    Sec. 5. The taxpayer shall record the approved application for farmland classification under IC 15-7-10 in the county recorder's office. After an approved application is properly recorded, the county auditor shall enter the farmland for taxation at the assessed value determined under section 4(1) of this chapter.
    Sec. 6. If farmland is withdrawn from the farmland classification:
        (1) the Indiana land resources council established by IC 15-7-9-4 shall immediately notify the assessor, auditor, and recorder of the county in which the farmland is located that the farmland has been withdrawn; and
        (2) the taxpayer shall make a notation of the withdrawal in the records of the county recorder.
    Sec. 7. (a) If farmland is withdrawn, other than under IC 15-7-10-11, from the farmland classification, the taxpayer shall pay to the county treasurer an amount equal to the sum of:
        (1) the remainder of:
            (A) the total property taxes that, if it were not for the farmland classification, would have been assessed to the land during the recapture period; minus
            (B) the total property taxes assessed to the farmland during the recapture period that were paid; plus
        (2) interest on the property taxes determined under subdivision (1) at the rate of ten percent (10%) per year.
    (b) Property taxes shall be determined under subsection (a)(1) using:
        (1) the assessed value of the land as recorded under section 4(2) of this chapter; and
        (2) the net tax rate for the taxing district in which the farmland is located;
for each year for which the property taxes are determined.
    (c) The liability imposed by this section is a lien on the land withdrawn from the farmland classification. The county treasurer

shall deposit collections under this section in the farmland protection program account established by IC 15-7-10-12. If the liability is not satisfied, the lien is treated in the same manner that delinquent taxes on real property are treated.
    Sec. 8. A conveyance of farmland does not release a person acquiring an interest in the land from an obligation or liability imposed under this chapter.

SOURCE: IC 6-2.5-1-5; (04)EH1365.2.2. -->     SECTION 2. IC 6-2.5-1-5, AS AMENDED BY P.L.257-2003, SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5. (a) Except as provided in subsection (b), "gross retail income" means the total gross receipts, of any kind or character, received in a retail transaction, including cash, credit, property, and services, for which tangible personal property is sold, leased, or rented, valued in money, whether received in money or otherwise, without any deduction for:
        (1) the seller's cost of the property sold;
        (2) the cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expense of the seller;
        (3) charges by the seller for any services necessary to complete the sale, other than delivery and installation charges;
        (4) delivery charges;
        (5) installation charges; or
        (6) (4) the value of exempt personal property given to the purchaser where taxable and exempt personal property have been bundled together and sold by the seller as a single product or piece of merchandise.
    (b) "Gross retail income" does not include that part of the gross receipts attributable to:
        (1) the value of any tangible personal property received in a like kind exchange in the retail transaction, if the value of the property given in exchange is separately stated on the invoice, bill of sale, or similar document given to the purchaser;
        (2) the receipts received in a retail transaction which constitute interest, finance charges, or insurance premiums on either a promissory note or an installment sales contract;
        (3) discounts, including cash, terms, or coupons that are not reimbursed by a third party that are allowed by a seller and taken by a purchaser on a sale;
        (4) interest, financing, and carrying charges from credit extended on the sale of personal property if the amount is separately stated on the invoice, bill of sale, or similar document given to the

purchaser; or
        (5) any taxes legally imposed directly on the consumer that are separately stated on the invoice, bill of sale, or similar document given to the purchaser;
        (6) delivery charges that are separately stated on the invoice, bill of sale, or similar document given to the purchaser; or
        (7) installation charges that are separately stated on the invoice, bill of sale, or similar document given to the purchaser.

For purposes of subdivision (6), delivery charges are charges by the seller for preparation and delivery of the property to a location designated by the purchaser of property, including but not limited to transportation, shipping, postage, handling, crating, and packing.
    (c) A public utility's or a power subsidiary's gross retail income includes all gross retail income received by the public utility or power subsidiary, including any minimum charge, flat charge, membership fee, or any other form of charge or billing.

SOURCE: IC 6-2.5-3-1; (04)EH1365.2.3. -->     SECTION 3. IC 6-2.5-3-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 1. For purposes of this chapter:
    (a) "Use" means the exercise of any right or power of ownership over tangible personal property.
    (b) "Storage" means the keeping or retention of tangible personal property in Indiana for any purpose except the subsequent use of that property solely outside Indiana.
    (c) "A retail merchant engaged in business in Indiana" includes any retail merchant who makes retail transactions in which a person acquires personal property or services for use, storage, or consumption in Indiana and who: maintains:
        (1) maintains an office, place of distribution, sales location, sample location, warehouse, storage place, or other place of business which is located in Indiana and which the retail merchant maintains, occupies, or uses, either permanently or temporarily, either directly or indirectly, and either by himself the retail merchant or through an a representative, agent, or subsidiary; or
        (2) maintains a representative, agent, salesman, canvasser, or solicitor who, while operating in Indiana under the authority of and on behalf of the retail merchant or a subsidiary of the retail merchant, sells, delivers, installs, repairs, assembles, sets up, accepts returns of, bills, invoices, or takes orders for sales of

tangible personal property or services to be used, stored, or consumed in Indiana;
         (3) is otherwise required to register as a retail merchant under IC 6-2.5-8-1; or
        (4) may be required by the state to collect tax under this article to the extent allowed under the Constitution of the United States and federal law.

    (d) Notwithstanding any other provision of this section, tangible or intangible property that is:
        (1) owned or leased by a person that has contracted with a commercial printer for printing; and
        (2) located at the premises of the commercial printer;
shall not be considered to be, or to create, an office, a place of distribution, a sales location, a sample location, a warehouse, a storage place, or other place of business maintained, occupied, or used in any way by the person. A commercial printer with which a person has contracted for printing shall not be considered to be in any way a representative, an agent, a salesman, a canvasser, or a solicitor for the person.

SOURCE: IC 6-2.5-3-5; (04)EH1365.2.4. -->     SECTION 4. IC 6-2.5-3-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 5. (a) A person is entitled to a credit against the use tax imposed on the use, storage, or consumption of a particular item of tangible personal property equal to the amount, if any, of sales tax, purchase tax, or use tax paid to another state, territory, or possession of the United States for the acquisition of that property.
    (b) The credit provided under subsection (a) does not apply to the use tax imposed on the use, storage, or consumption of vehicles, watercraft, or aircraft that are required to be titled, registered, or licensed by Indiana.
SOURCE: IC 6-2.5-4-1; (04)EH1365.2.5. -->     SECTION 5. IC 6-2.5-4-1, AS AMENDED BY P.L.257-2003, SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. (a) A person is a retail merchant making a retail transaction when he engages in selling at retail.
    (b) A person is engaged in selling at retail when, in the ordinary course of his regularly conducted trade or business, he:
        (1) acquires tangible personal property for the purpose of resale; and
        (2) transfers that property to another person for consideration.
    (c) For purposes of determining what constitutes selling at retail, it does not matter whether:
        (1) the property is transferred in the same form as when it was

acquired;
        (2) the property is transferred alone or in conjunction with other property or services; or
        (3) the property is transferred conditionally or otherwise.
    (d) Notwithstanding subsection (b), a person is not selling at retail if he is making a wholesale sale as described in section 2 of this chapter.
    (e) The gross retail income received from selling at retail is only taxable under this article to the extent that the income represents:
        (1) the price of the property transferred, without the rendition of any service; and
        (2) except as provided in subsection (g), any bona fide charges which are made for preparation, fabrication, alteration, modification, finishing, completion, delivery, or other service performed in respect to the property transferred before its transfer and which are separately stated on the transferor's records.
For purposes of subdivision (2), charges for delivery are charges by the seller for preparation and delivery of the property to a location designated by the purchaser of property, including but not limited to transportation, shipping, postage, handling, crating, and packing. transfer shall take place before delivery of the property to the purchaser.
    (f) Notwithstanding subsection (e):
        (1) in the case of retail sales of gasoline (as defined in IC 6-6-1.1-103) and special fuel (as defined in IC 6-6-2.5-22), the gross retail income received from selling at retail is the total sales price of the gasoline or special fuel minus the part of that price attributable to tax imposed under IC 6-6-1.1, IC 6-6-2.5, or Section 4041(a) or Section 4081 of the Internal Revenue Code; and
        (2) in the case of retail sales of cigarettes (as defined in IC 6-7-1-2), the gross retail income received from selling at retail is the total sales price of the cigarettes including the tax imposed under IC 6-7-1.
    (g) Gross retail income does not include income that represents charges for serving or delivering food and food ingredients furnished, prepared, or served for consumption at a location, or on equipment, provided by the retail merchant. However, the exclusion under this subsection only applies if the charges for the serving or delivery are stated separately from the price of the food and food ingredients when the purchaser pays the charges.

SOURCE: IC 6-2.5-4-11; (04)EH1365.2.6. -->     SECTION 6. IC 6-2.5-4-11 IS AMENDED TO READ AS

FOLLOWS [EFFECTIVE MARCH 1, 2004 (RETROACTIVE)]: Sec. 11. (a) A person is a retail merchant making a retail transaction when he the person furnishes local cable television or radio service or intrastate cable satellite television or radio service that terminates in Indiana.
    (b) Notwithstanding subsection (a), a person is not a retail merchant making a retail transaction when the person provides, installs, constructs, services, or removes tangible personal property which is used in connection with the furnishing of local cable television or radio service or intrastate cable satellite or radio television service.

SOURCE: IC 6-2.5-6-9; (04)EH1365.2.7. -->     SECTION 7. IC 6-2.5-6-9, AS AMENDED BY P.L.257-2003, SECTION 30, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 9. (a) In determining the amount of state gross retail and use taxes which he a retail merchant must remit under section 7 of this chapter, a the retail merchant shall, subject to subsection subsections (c) and (d), deduct from his the retail merchant's gross retail income from retail transactions made during a particular reporting period, an amount equal to his the retail merchant's receivables which:
        (1) resulted from retail transactions in which the retail merchant did not collect the state gross retail or use tax from the purchaser;
        (2) resulted from retail transactions on which the retail merchant has previously paid the state gross retail or use tax liability to the department; and
        (3) were written off as an uncollectible debt for federal tax purposes under Section 166 of the Internal Revenue Code during the particular reporting period.
    (b) If a retail merchant deducts a receivable under subsection (a) and subsequently collects all or part of that receivable, then the retail merchant shall, subject to subsection (c)(6), (d)(6), include the amount collected as part of his the retail merchant's gross retail income from retail transactions for the particular reporting period in which he the retail merchant makes the collection.
    (c) This subsection applies only to retail transactions occurring after June 30, 2004. The right to a deduction under this section is assignable only if the retail merchant that paid the state gross retail or use tax liability assigned the right to the deduction in writing.
    (d)
The following provisions apply to a deduction for a receivable treated as uncollectible debt under subsection (a):
        (1) The deduction does not include interest.
        (2) The amount of the deduction shall be determined in the

manner provided by Section 166 of the Internal Revenue Code for bad debts but shall be adjusted to exclude:
            (A) financing charges or interest;
            (B) sales or use taxes charged on the purchase price;
            (C) uncollectible amounts on property that remain in the possession of the seller until the full purchase price is paid;
            (D) expenses incurred in attempting to collect any debt; and
            (E) repossessed property.
        (3) The deduction shall be claimed on the return for the period during which the receivable is written off as uncollectible in the claimant's books and records and is eligible to be deducted for federal income tax purposes. For purposes of this subdivision, a claimant who is not required to file federal income tax returns may deduct an uncollectible receivable on a return filed for the period in which the receivable is written off as uncollectible in the claimant's books and records and would be eligible for a bad debt deduction for federal income tax purposes if the claimant were required to file a federal income tax return.
        (4) If the amount of uncollectible receivables claimed as a deduction by a retail merchant for a particular reporting period exceeds the amount of the retail merchant's taxable sales for that reporting period, the retail merchant may file a refund claim under IC 6-8.1-9. However, the deadline for the refund claim shall be measured from the due date of the return for the reporting period on which the deduction for the uncollectible receivables could first be claimed.
        (5) If a retail merchant's filing responsibilities have been assumed by a certified service provider (as defined in IC 6-2.5-11-2), the certified service provider may claim, on behalf of the retail merchant, any deduction or refund for uncollectible receivables provided by this section. The certified service provider must credit or refund the full amount of any deduction or refund received to the retail merchant.
        (6) For purposes of reporting a payment received on a previously claimed uncollectible receivable, any payments made on a debt or account shall be applied first proportionally to the taxable price of the property and the state gross retail tax or use tax thereon, and secondly to interest, service charges, and any other charges.
        (7) A retail merchant claiming a deduction for an uncollectible receivable may allocate that receivable among the states that are members of the streamlined sales and use tax agreement if the books and records of the retail merchant support that allocation.


SOURCE: IC 6-2.5-8-10; (04)EH1365.2.8. -->     SECTION 8. IC 6-2.5-8-10, AS AMENDED BY P.L.254-2003, SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 10. (a) A person that:
        (1) makes retail transactions from outside Indiana to a destination in Indiana;
        (2) does not maintain a place of business in Indiana; and
        (3) either:
            (A) engages in the regular or systematic soliciting of retail transactions from potential customers in Indiana;
            (B) enters into a contract to provide property or services to an agency (as defined in IC 4-13-2-1) or an a state educational institution of higher education (as defined in IC 20-12-0.5-1); or
            (C) agrees to sell property or services to an agency (as defined in IC 4-13-2-1) or an a state educational institution of higher education (as defined in IC 20-12-0.5-1); or
            (D) is closely related to another person that maintains a place of business in Indiana or is described in clause (A), (B), or (C);

shall file an application for a retail merchant's certificate under this chapter and collect and remit tax as provided in this article. Conduct described in subdivision (3)(B) and (3)(C) occurring after June 30, 2003, constitutes consent to be treated under this article as if the person has a place of business in Indiana or is engaging in conduct described in subdivision (3)(A), including the provisions of this article that require a person to collect and remit tax under this article.
    (b) A person is rebuttably presumed to be engaging in the regular or systematic soliciting of retail transactions from potential customers in Indiana if the person does any of the following:
        (1) Distributes catalogs, periodicals, advertising flyers, or other written solicitations of business to potential customers in Indiana, regardless of whether the distribution is by mail or otherwise and without regard to the place from which the distribution originated or in which the materials were prepared.
        (2) Displays advertisements on billboards or displays other outdoor advertisements in Indiana.
        (3) Advertises in newspapers published in Indiana.
        (4) Advertises in trade journals or other periodicals that circulate primarily in Indiana.
        (5) Advertises in Indiana editions of a national or regional publication or a limited regional edition in which Indiana is included as part of a broader regional or national publication if

the advertisements are not placed in other geographically defined editions of the same issue of the same publication.
        (6) Advertises in editions of regional or national publications that are not by the contents of the editions geographically targeted to Indiana but that are sold over the counter in Indiana or by subscription to Indiana residents.
        (7) Broadcasts on a radio or television station located in Indiana.
        (8) Makes any other solicitation by telegraphy, telephone, computer data base, cable, optic, microwave, or other communication system.
    (c) A person not maintaining a place of business in Indiana is considered to be engaged in the regular or systematic soliciting of retail transactions from potential customers in Indiana if the person engages in any of the activities described in subsection (b) and:
        (1) makes at least one hundred (100) retail transactions from outside Indiana to destinations in Indiana during a period of twelve (12) consecutive months; or
        (2) makes at least ten (10) retail transactions totaling more than one hundred thousand dollars ($100,000) from outside Indiana to destinations in Indiana during a period of twelve (12) consecutive months.
    (d) Subject to subsection (e), the location in or outside Indiana of vendors that:
        (1) are independent of a person that is soliciting customers in Indiana; and
        (2) provide products or services to the person in connection with the person's solicitation of customers in Indiana:
             (A) including products and services such as creation of copy, printing, distribution, and recording; but
            (B) excluding:
                (i) delivery of goods;
                (ii) billing or invoicing for the sale of goods;
                (iii) providing repairs of goods;
                (iv) assembling or setting up goods for use by the purchaser; or
                (v) accepting returns of unwanted or damaged goods;

is not to be taken into account in the determination of whether the person is required to collect use tax under this section.
    (e) Subsection (d) does not apply if the person soliciting orders is closely related to the vendor.
    (f) For purposes of subsections (a) and (e), a person is closely related to another person if:


        (1) the two (2) persons:
            (A) use an identical or a substantially similar name, trademark, or good will to develop, promote, or maintain sales;
            (B) pay for each other's services in whole or in part contingent on the volume or value of sales; or
            (C) share a common business plan or substantially coordinate their business plans; and
        (2) either:
            (A) one (1) or both of the persons are corporations and:
                (i) one (1) person; and
                (ii) any other person related to the person in a manner that would require an attribution of stock from the corporation to the person or from the person to the corporation under the attribution rules of Section 318 of the Internal Revenue Code;
            own directly, indirectly, beneficially, or constructively at least fifty percent (50%) of the value of the corporation's outstanding stock;
            (B) both entities are corporations and an individual stockholder and the members of the stockholder's family (as defined in Section 318 of the Internal Revenue Code) own directly, indirectly, beneficially, or constructively a total of at least fifty percent (50%) of the value of both entities' outstanding stock; or
            (C) one (1) or both persons are limited liability companies, partnerships, limited liability partnerships, estates, or trusts, and their members, partners, or beneficiaries own directly, indirectly, beneficially, or constructively a total of at least fifty percent (50%) of the profits, capital, stock, or value of one (1) or both persons.

SOURCE: IC 6-3-1-3.5; (04)EH1365.2.9. -->     SECTION 9. IC 6-3-1-3.5, AS AMENDED BY P.L.1-2004, SECTION 49, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2004 (RETROACTIVE)]: Sec. 3.5. When used in this article, the term "adjusted gross income" shall mean the following:
    (a) In the case of all individuals, "adjusted gross income" (as defined in Section 62 of the Internal Revenue Code), modified as follows:
        (1) Subtract income that is exempt from taxation under this article by the Constitution and statutes of the United States.
        (2) Add an amount equal to any deduction or deductions allowed or allowable pursuant to Section 62 of the Internal Revenue Code

for taxes based on or measured by income and levied at the state level by any state of the United States.
        (3) Subtract one thousand dollars ($1,000), or in the case of a joint return filed by a husband and wife, subtract for each spouse one thousand dollars ($1,000).
        (4) Subtract one thousand dollars ($1,000) for:
            (A) each of the exemptions provided by Section 151(c) of the Internal Revenue Code;
            (B) each additional amount allowable under Section 63(f) of the Internal Revenue Code; and
            (C) the spouse of the taxpayer if a separate return is made by the taxpayer and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer.
        (5) Subtract:
            (A) one thousand five hundred dollars ($1,500) for each of the exemptions allowed under Section 151(c)(1)(B) of the Internal Revenue Code for taxable years beginning after December 31, 1996; and
            (B) five hundred dollars ($500) for each additional amount allowable under Section 63(f)(1) of the Internal Revenue Code if the adjusted gross income of the taxpayer, or the taxpayer and the taxpayer's spouse in the case of a joint return, is less than forty thousand dollars ($40,000).
        This amount is in addition to the amount subtracted under subdivision (4).
        (6) Subtract an amount equal to the lesser of:
            (A) that part of the individual's adjusted gross income (as defined in Section 62 of the Internal Revenue Code) for that taxable year that is subject to a tax that is imposed by a political subdivision of another state and that is imposed on or measured by income; or
            (B) two thousand dollars ($2,000).
        (7) Add an amount equal to the total capital gain portion of a lump sum distribution (as defined in Section 402(e)(4)(D) of the Internal Revenue Code) if the lump sum distribution is received by the individual during the taxable year and if the capital gain portion of the distribution is taxed in the manner provided in Section 402 of the Internal Revenue Code.
        (8) Subtract any amounts included in federal adjusted gross income under Section 111 of the Internal Revenue Code as a recovery of items previously deducted as an itemized deduction

from adjusted gross income.
        (9) Subtract any amounts included in federal adjusted gross income under the Internal Revenue Code which amounts were received by the individual as supplemental railroad retirement annuities under 45 U.S.C. 231 and which are not deductible under subdivision (1).
        (10) Add an amount equal to the deduction allowed under Section 221 of the Internal Revenue Code for married couples filing joint returns if the taxable year began before January 1, 1987.
        (11) Add an amount equal to the interest excluded from federal gross income by the individual for the taxable year under Section 128 of the Internal Revenue Code if the taxable year began before January 1, 1985.
        (12) Subtract an amount equal to the amount of federal Social Security and Railroad Retirement benefits included in a taxpayer's federal gross income by Section 86 of the Internal Revenue Code.
        (13) In the case of a nonresident taxpayer or a resident taxpayer residing in Indiana for a period of less than the taxpayer's entire taxable year, the total amount of the deductions allowed pursuant to subdivisions (3), (4), (5), and (6) shall be reduced to an amount which bears the same ratio to the total as the taxpayer's income taxable in Indiana bears to the taxpayer's total income.
        (14) In the case of an individual who is a recipient of assistance under IC 12-10-6-1, IC 12-10-6-2.1, IC 12-15-2-2, or IC 12-15-7, subtract an amount equal to that portion of the individual's adjusted gross income with respect to which the individual is not allowed under federal law to retain an amount to pay state and local income taxes.
        (15) In the case of an eligible individual, subtract the amount of a Holocaust victim's settlement payment included in the individual's federal adjusted gross income.
        (16) For taxable years beginning after December 31, 1999, subtract an amount equal to the portion of any premiums paid during the taxable year by the taxpayer for a qualified long term care policy (as defined in IC 12-15-39.6-5) for the taxpayer or the taxpayer's spouse, or both.
        (17) Subtract an amount equal to the lesser of:
            (A) for a taxable year:
                (i) including any part of 2004, the amount determined under subsection (f); and
                (ii) beginning after December 31, 2004, two thousand five hundred dollars ($2,500); or


            (B) the amount of property taxes that are paid during the taxable year in Indiana by the individual on the individual's principal place of residence.
        (18) Subtract an amount equal to the amount of a September 11 terrorist attack settlement payment included in the individual's federal adjusted gross income.
        (19) Add or subtract the amount necessary to make the adjusted gross income of any taxpayer that owns property for which bonus depreciation was allowed in the current taxable year or in an earlier taxable year equal to the amount of adjusted gross income that would have been computed had an election not been made under Section 168(k)(2)(C)(iii) of the Internal Revenue Code to apply bonus depreciation to the property in the year that it was placed in service.
         (20) Add an amount equal to any deduction allowed under Section 172 of the Internal Revenue Code.
    (b) In the case of corporations, the same as "taxable income" (as defined in Section 63 of the Internal Revenue Code) adjusted as follows:
        (1) Subtract income that is exempt from taxation under this article by the Constitution and statutes of the United States.
        (2) Add an amount equal to any deduction or deductions allowed or allowable pursuant to Section 170 of the Internal Revenue Code.
        (3) Add an amount equal to any deduction or deductions allowed or allowable pursuant to Section 63 of the Internal Revenue Code for taxes based on or measured by income and levied at the state level by any state of the United States.
        (4) Subtract an amount equal to the amount included in the corporation's taxable income under Section 78 of the Internal Revenue Code.
        (5) Add or subtract the amount necessary to make the adjusted gross income of any taxpayer that owns property for which bonus depreciation was allowed in the current taxable year or in an earlier taxable year equal to the amount of adjusted gross income that would have been computed had an election not been made under Section 168(k)(2)(C)(iii) of the Internal Revenue Code to apply bonus depreciation to the property in the year that it was placed in service.
         (6) Add an amount equal to any deduction allowed under Section 172 of the Internal Revenue Code.
    (c) In the case of life insurance companies (as defined in Section

816(a) of the Internal Revenue Code) that are organized under Indiana law, the same as "life insurance company taxable income" (as defined in Section 801 of the Internal Revenue Code), adjusted as follows:
        (1) Subtract income that is exempt from taxation under this article by the Constitution and statutes of the United States.
        (2) Add an amount equal to any deduction allowed or allowable under Section 170 of the Internal Revenue Code.
        (3) Add an amount equal to a deduction allowed or allowable under Section 805 or Section 831(c) of the Internal Revenue Code for taxes based on or measured by income and levied at the state level by any state.
        (4) Subtract an amount equal to the amount included in the company's taxable income under Section 78 of the Internal Revenue Code.
        (5) Add or subtract the amount necessary to make the adjusted gross income of any taxpayer that owns property for which bonus depreciation was allowed in the current taxable year or in an earlier taxable year equal to the amount of adjusted gross income that would have been computed had an election not been made under Section 168(k)(2)(C)(iii) of the Internal Revenue Code to apply bonus depreciation to the property in the year that it was placed in service.
         (6) Add an amount equal to any deduction allowed under Section 172 or Section 810 of the Internal Revenue Code.
    (d) In the case of insurance companies subject to tax under Section 831 of the Internal Revenue Code and organized under Indiana law, the same as "taxable income" (as defined in Section 832 of the Internal Revenue Code), adjusted as follows:
        (1) Subtract income that is exempt from taxation under this article by the Constitution and statutes of the United States.
        (2) Add an amount equal to any deduction allowed or allowable under Section 170 of the Internal Revenue Code.
        (3) Add an amount equal to a deduction allowed or allowable under Section 805 or Section 831(c) of the Internal Revenue Code for taxes based on or measured by income and levied at the state level by any state.
        (4) Subtract an amount equal to the amount included in the company's taxable income under Section 78 of the Internal Revenue Code.
        (5) Add or subtract the amount necessary to make the adjusted gross income of any taxpayer that owns property for which bonus depreciation was allowed in the current taxable year or in an

earlier taxable year equal to the amount of adjusted gross income that would have been computed had an election not been made under Section 168(k)(2)(C)(iii) of the Internal Revenue Code to apply bonus depreciation to the property in the year that it was placed in service.
         (6) Add an amount equal to any deduction allowed under Section 172 of the Internal Revenue Code.
    (e) In the case of trusts and estates, "taxable income" (as defined for trusts and estates in Section 641(b) of the Internal Revenue Code) adjusted as follows:
        (1) Subtract income that is exempt from taxation under this article by the Constitution and statutes of the United States.
        (2) Subtract an amount equal to the amount of a September 11 terrorist attack settlement payment included in the federal adjusted gross income of the estate of a victim of the September 11 terrorist attack or a trust to the extent the trust benefits a victim of the September 11 terrorist attack.
        (3) Add or subtract the amount necessary to make the adjusted gross income of any taxpayer that owns property for which bonus depreciation was allowed in the current taxable year or in an earlier taxable year equal to the amount of adjusted gross income that would have been computed had an election not been made under Section 168(k)(2)(C)(iii) of the Internal Revenue Code to apply bonus depreciation to the property in the year that it was placed in service.
         (4) Add an amount equal to any deduction allowed under Section 172 of the Internal Revenue Code.
    (f) This subsection applies only to the extent that an individual paid property taxes in 2004 that were imposed for the March 1, 2002, assessment date or the January 15, 2003, assessment date. The maximum amount of the deduction under subsection (a)(17) is equal to the amount determined under STEP FIVE of the following formula:
        STEP ONE: Determine the amount of property taxes that the taxpayer paid after December 31, 2003, in the taxable year for property taxes imposed for the March 1, 2002, assessment date and the January 15, 2003, assessment date.
        STEP TWO: Determine the amount of property taxes that the taxpayer paid in the taxable year for the March 1, 2003, assessment date and the January 15, 2004, assessment date.
        STEP THREE: Determine the result of the STEP ONE amount divided by the STEP TWO amount.
        STEP FOUR: Multiply the STEP THREE amount by two

thousand five hundred dollars ($2,500).
        STEP FIVE: Determine the sum of the STEP THREE amount and two thousand five hundred dollars ($2,500).

SOURCE: IC 6-3-2-2.5; (04)EH1365.2.10. -->     SECTION 10. IC 6-3-2-2.5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2004 (RETROACTIVE)]: Sec. 2.5. (a) This section applies to a resident person. for a particular taxable year, if the taxpayer's adjusted gross income for that taxable year is reduced because of a deduction allowed under Section 172 of the Internal Revenue Code for a net operating loss. For purposes of section 1 of this chapter, the taxpayer's adjusted gross income, for the particular taxable year, is the remainder determined under STEP FOUR of the following formula:
        STEP ONE: Determine the taxpayer's adjusted gross income, for the taxable year, as calculated without the deduction for net operating losses provided by Section 172 of the Internal Revenue Code.
        STEP TWO: Determine, in the manner prescribed in subsection (b), the amount of the taxpayer's net operating losses that are deductible for the taxable year under Section 172 of the Internal Revenue Code, as adjusted to reflect the modifications required by IC 6-3-1-3.5.
        STEP THREE: Enter the larger of zero (0) or the amount determined under STEP TWO.
        STEP FOUR: Subtract the amount entered under STEP THREE from the amount determined under STEP ONE.
    (b) For purposes of STEP TWO of subsection (a), the modifications that are to be applied are those modifications required under IC 6-3-1-3.5 for the same taxable year during which each net operating loss was incurred. In addition, for purposes of STEP TWO of subsection (a), the following procedures apply:
        (1) The taxpayer's net operating loss for a particular taxable year shall be treated as a positive number.
        (2) A modification that is to be added to federal adjusted gross income or federal taxable income under IC 6-3-1-3.5 shall be treated as a negative number.
        (3) A modification that is to be subtracted from federal adjusted gross income or federal taxable income under IC 6-3-1-3.5 shall be treated as a positive number.
     (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 back or carried over to that year.
    (c) An Indiana net operating loss equals the taxpayer's federal net operating loss for a taxable year as calculated under Section 172 of the Internal Revenue Code, adjusted for the modifications required by IC 6-3-1-3.5.
    (d) The following provisions apply for purposes of subsection (c):
        (1) The modifications that are to be applied are those modifications required under IC 6-3-1-3.5 for the same taxable year in which each net operating loss was incurred.
        (2) An Indiana net operating loss includes a net operating loss that arises when the modifications required by IC 6-3-1-3.5 exceed the taxpayer's federal taxable income (as defined in Section 62 of the Internal Revenue Code) for the taxable year in which the Indiana net operating loss is determined.
    (e) Subject to the limitations contained in subsection (g), an Indiana net operating loss carryback or carryover shall be available as a deduction from the taxpayer's adjusted gross income (as defined in IC 6-3-1-3.5) in the carryback or carryover year provided in subsection (f).
    (f) Carrybacks and carryovers shall be determined under this subsection as follows:
        (1) An Indiana net operating loss shall be an Indiana net operating loss carryback to each of the carryback years preceding the taxable year of the loss.
        (2) An Indiana net operating loss shall be an Indiana net operating loss carryover to each of the carryover years following the taxable year of the loss.
        (3) Carryback years shall be determined by reference to the number of years allowed for carrying back a net operating loss under Section 172(b) of the Internal Revenue Code.
        (4) Carryover years shall be determined by reference to the number of years allowed for carrying over net operating losses under Section 172(b) of the Internal Revenue Code.
        (5) A taxpayer who makes an election under Section 172(b)(3) of the Internal Revenue Code to relinquish the carryback period with respect to a net operating loss for any taxable year shall be considered to have also relinquished the carryback of the Indiana net operating loss for purposes of this section.
    (g) The entire amount of the Indiana net operating loss for any taxable year shall be carried to the earliest of the taxable years to which (as determined under subsection (f)) the loss may be carried.

The amount of the Indiana net operating loss remaining after the deduction is taken under this section in a taxable year may be carried back or carried over as provided in subsection (f). The amount of the Indiana net operating loss carried back or carried over from year to year shall be reduced to the extent that the Indiana net operating loss carryback or carryover is used by the taxpayer to obtain a deduction in a taxable year until the occurrence of the earlier of the following:
        (1) The entire amount of the Indiana net operating loss has been used as a deduction.
        (2) The Indiana net operating loss has been carried over to each of the carryover years provided by subsection (f).

SOURCE: IC 6-3-2-2.6; (04)EH1365.2.11. -->     SECTION 11. IC 6-3-2-2.6, AS AMENDED BY P.L.192-2002(ss), SECTION 73, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2004 (RETROACTIVE)]: Sec. 2.6. (a) This section applies to a corporation or a nonresident person. for a particular taxable year, if the taxpayer's adjusted gross income for that taxable year is reduced because of a deduction allowed under Section 172 of the Internal Revenue Code for a net operating loss. For purposes of section 1 of this chapter, the taxpayer's adjusted gross income, for the particular taxable year, derived from sources within Indiana is the remainder determined under STEP FOUR of the following formula:
        STEP ONE: Determine, in the manner prescribed in section 2 of this chapter, the taxpayer's adjusted gross income, for the taxable year, derived from sources within Indiana, as calculated without the deduction for net operating losses provided by Section 172 of the Internal Revenue Code.
        STEP TWO: Determine, in the manner prescribed in subsection (b), the amount of the taxpayer's net operating losses that are deductible for the taxable year under Section 172 of the Internal Revenue Code, as adjusted to reflect the modifications required by IC 6-3-1-3.5, and that are derived from sources within Indiana.
        STEP THREE: Enter the larger of zero (0) or the amount determined under STEP TWO.
        STEP FOUR: Subtract the amount entered under STEP THREE from the amount determined under STEP ONE.
    (b) For purposes of STEP TWO of subsection (a), the modifications that are to be applied are those modifications required under IC 6-3-1-3.5 for the same taxable year during which each net operating loss was incurred. In addition, for purposes of STEP TWO of subsection (a), the amount of a taxpayer's net operating losses that are derived from sources within Indiana shall be determined in the same

manner that the amount of the taxpayer's income derived from sources within Indiana is determined, under section 2 of this chapter, for the same taxable year during which each loss was incurred. Also, for purposes of STEP TWO of subsection (a), the following procedures apply:
        (1) The taxpayer's net operating loss for a particular taxable year shall be treated as a positive number.
        (2) A modification that is to be added to federal adjusted gross income or federal taxable income under IC 6-3-1-3.5 shall be treated as a negative number.
        (3) A modification that is to be subtracted from federal adjusted gross income or federal taxable income under IC 6-3-1-3.5 shall be treated as a positive number.
        (4) A net operating loss under this section shall be considered even though in the year the taxpayer incurred the loss the taxpayer was not subject to the tax imposed under section 1 of this chapter because the taxpayer was:
            (A) a life insurance company (as defined in Section 816(a) of the Internal Revenue Code); or
            (B) an insurance company subject to tax under Section 831 of the Internal Revenue Code.
     (b) Corporations and nonresident persons are entitled to a net operating loss deduction. The amount of the deduction taken in a taxable year may not exceed the taxpayer's unused Indiana net operating losses carried back or carried over to that year.
    (c) An Indiana net operating loss equals the taxpayer's federal net operating loss for a taxable year as calculated under Section 172 of the Internal Revenue Code, derived from sources within Indiana and adjusted for the modifications required by IC 6-3-1-3.5.
    (d) The following provisions apply for purposes of subsection (c):
        (1) The modifications that are to be applied are those modifications required under IC 6-3-1-3.5 for the same taxable year in which each net operating loss was incurred.
        (2) The amount of the taxpayer's net operating loss that is derived from sources within Indiana shall be determined in the same manner that the amount of the taxpayer's adjusted income derived from sources within Indiana is determined under section 2 of this chapter for the same taxable year during which each loss was incurred.
        (3) An Indiana net operating loss includes a net operating loss

that arises when the modifications required by IC 6-3-1-3.5 exceed the taxpayer's federal taxable income (as defined in Section 63 of the Internal Revenue Code), if the taxpayer is a corporation, or when the modifications required by IC 6-3-1-3.5 exceed the taxpayer's federal adjusted gross income (as defined by Section 62 of the Internal Revenue Code), if the taxpayer is a nonresident person, for the taxable year in which the Indiana net operating loss is determined.
    (e) Subject to the limitations contained in subsection (g), an Indiana net operating loss carryback or carryover shall be available as a deduction from the taxpayer's adjusted gross income derived from sources within Indiana (as defined in section 2 of this chapter) in the carryback or carryover year provided in subsection (f).
    (f) Carrybacks and carryovers shall be determined under this subsection as follows:
        (1) An Indiana net operating loss shall be an Indiana net operating loss carryback to each of the carryback years preceding the taxable year of the loss.
        (2) An Indiana net operating loss shall be an Indiana net operating loss carryover to each of the carryover years following the taxable year of the loss.
        (3) Carryback years shall be determined by reference to the number of years allowed for carrying back a net operating loss under Section 172(b) of the Internal Revenue Code.
        (4) Carryover years shall be determined by reference to the number of years allowed for carrying over net operating losses under Section 172(b) of the Internal Revenue Code.
        (5) A taxpayer who makes an election under Section 172(b)(3) of the Internal Revenue Code to relinquish the carryback period with respect to a net operating loss for any taxable year shall be considered to have also relinquished the carryback of the Indiana net operating loss for purposes of this section.
    (g) The entire amount of the Indiana net operating loss for any taxable year shall be carried to the earliest of the taxable years to which (as determined under subsection (f)) the loss may be carried. The amount of the Indiana net operating loss remaining after the deduction is taken under this section in a taxable year may be carried back or carried over as provided in subsection (f). The amount of the Indiana net operating loss carried back or carried over from year to year shall be reduced to the extent that the

Indiana net operating loss carryback or carryover is used by the taxpayer to obtain a deduction in a taxable year until the occurrence of the earlier of the following:
        (1) The entire amount of the Indiana net operating loss has been used as a deduction.
        (2) The Indiana net operating loss has been carried over to each of the carryover years provided by subsection (f).
    (h) An Indiana net operating loss deduction determined under this section shall be allowed notwithstanding the fact that in the year the taxpayer incurred the net operating loss the taxpayer was not subject to the tax imposed under section 1 of this chapter because the taxpayer was:
        (1) a life insurance company (as defined in Section 816(a) of the Internal Revenue Code); or
        (2) an insurance company subject to tax under Section 831 of the Internal Revenue Code.
    (i) In the case of a life insurance company that claims an operations loss deduction under Section 810 of the Internal Revenue Code, this section shall be applied by:
        (1) substituting the corresponding provisions of Section 810 of the Internal Revenue Code in place of references to Section 172 of the Internal Revenue; and
        (2) substituting life insurance company taxable income (as defined in Section 801 the Internal Revenue Code) in place of references to taxable income (as defined in Section 63 of the Internal Revenue Code).
    (j) For purposes of an amended return filed to carry back an Indiana net operating loss:
        (1) the term "due date of the return" as used in IC 6-8.1-9-1(a)(1) means the due date of the return for the taxable year in which the net operating loss was incurred; and
        (2) the term "date the payment was due" as used in IC 6-8.1-9-2(c) means the due date of the return for the taxable year in which the net operating loss was incurred.

SOURCE: IC 6-3.1-4-6; (04)EH1365.2.12. -->     SECTION 12. IC 6-3.1-4-6, AS AMENDED BY P.L.224-2003, SECTION 191, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 6. Notwithstanding the other provisions of this chapter, a taxpayer is not entitled to a credit for Indiana qualified research expense incurred after December 31, 2013. Notwithstanding Section 41 of the Internal Revenue Code, the termination date in Section 41(h) of the Internal Revenue Code does not apply to a taxpayer who is eligible for the credit under this chapter

for the taxable year in which the Indiana qualified research expense is incurred.

SOURCE: IC 9-29-5-6; (04)EH1365.2.13. -->     SECTION 13. IC 9-29-5-6 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 6. The registration fee for each semitrailer to be used with a tractor licensed under this section is as follows:
        (1) Thirty dollars ($30) for a one (1) year registration.
        (2) Sixty dollars ($60) for a five (5) year registration. However, the five (5) year registration fee shall be reduced by twelve dollars ($12) for each full year after the initial year of the five (5) year period provided in IC 9-18. However, the reduced fee may not be less than the registration fee for a one (1) year registration.
        (3) For a permanent registration, the fee is as follows:
            (A) sixty-five dollars ($65). at the time the semitrailer is first registered.
            (B) Two dollars ($2) annually to renew the registration.
SOURCE: IC 15-7-10; (04)EH1365.2.14. -->     SECTION 14. IC 15-7-10 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]:
     Chapter 10. Farmland Protection Program
    Sec. 1. As used in this chapter, "assistant commissioner" refers to the assistant commissioner of agriculture appointed under IC 4-4-22-20.
    Sec. 2. As used in this chapter, "council" refers to the Indiana land resources council established by IC 15-7-9-4.
    Sec. 3. As used in this chapter, "designated area" refers to an area of land set aside under section 8(c) of this chapter in a county within which land may be designated as farmland eligible for the program.
    Sec. 4. As used in this chapter, "farmland" includes the following:
        (1) Acreage used for the production of:
            (A) food;
            (B) feed;
            (C) forage;
            (D) fibre; and
            (E) oilseed crops.
        (2) Acreage used to raise:
            (A) livestock;
            (B) dairy animals;
            (C) dairy products;
            (D) poultry;
            (E) poultry products; and
            (F) furbearing animals.
        (3) Acreage used to:
            (A) grow horticultural and nursery stock;
            (B) grow fruits;
            (C) grow vegetables;
            (D) grow forage;
            (E) grow timber;
            (F) grow trees;
            (G) raise fish and other aquaculture products;
            (H) raise bees and apiary products; and
            (I) grow other crops used for agricultural income.
        (4) Areas including;
            (A) buildings;
            (B) land modifications;
            (C) wetlands;
            (D) pasture;
            (E) forest land;
            (F) wildlife land;
            (G) riparian areas;
            (H) buffers; and
            (I) other areas;
        that enhance or depend on the inherent productivity of the land.
    Sec. 5. As used in this chapter, "livestock" has the meaning set forth in IC 4-4-3.2-1(b).
    Sec. 6. As used in this chapter, "program" refers to the farmland protection program established by section 7 of this chapter.
    Sec. 7. The farmland protection program is established to provide a voluntary tool to Indiana landowners to protect and conserve rural lands, including the following:
        (1) Farmland.
        (2) Other rural natural areas as defined by the council.
    Sec. 8. (a) The council shall administer the program. The council shall work with local agencies and organizations to establish a cooperative relationship in land use practices and policies. The council, after consulting with local agencies and organizations, shall develop specific program guidelines and policies to administer the program. The program must be compatible with the federal Farm and Ranch Land Protection Program (7 CFR 1491).
    (b) The council may adopt rules under IC 4-22-2 to implement

the program.
    (c) The council, working with local agencies and organizations, shall establish criteria for designated areas of land on a county by county basis. Only land within a designated area is eligible for the program. Before establishing an area as a designated area, the council shall hold a hearing in the county in which the land is located. The council shall follow the procedures for public hearings under IC 5-14-1.5-5. The council shall obtain the approval of the local zoning authority having jurisdiction over the designated area, or, if the designated area does not lie within the jurisdiction of any local zoning authority, the county commissioners of the county in which the designated area is located, before designating an area as a designated area for purposes of this chapter.
    (d) The council shall establish criteria for evaluating applications for the program, including the following:
        (1) Land must have been in an agriculture production or conservation program at the time of application and for five (5) years before the application.
        (2) Land must be in a designated area.
        (3) Land in:
            (A) a locally recognized agricultural district;
            (B) an agricultural protection zone;
            (C) an agricultural security area; or
            (D) any effective local agricultural protection initiative;
        shall be given higher consideration.

         (4) At least thirty-five (35) acres of working land must be located within an agricultural area, with not more than one (1) residence on a single or combined tract to meet acreage requirements with either single or multiple owners.
        (5) Larger tracts must be given priority.

         (6) A scoring system similar to the federal Farm and Ranch Land Protection Program (7 CFR 1491) shall be developed. There shall be a minimum score requirement to qualify for the program, including standards on:
            (A) soil erosion;
            (B) conservation plans with the federal Natural Resources Conservation Service's quality criteria;
            (C) landowner participation; and
            (D) management plans.
    (e) A consistent lack of compliance with environmental permits and requirements shall disqualify a landowner from the program.
    (f) Applications must be received by the council by January 1 of

each year, beginning January 1, 2005. Contracts must be entered into by March 1 of each year, beginning March 1, 2005.
    (g) The council may reject an application for the program if the council finds that the parcel proposed for protection was divided from a larger parcel in a transaction intended to defeat the purposes of the program.
    Sec. 9. (a) A landowner may enroll in the program by entering into a contract with the council for a period of ten (10) years, with an unlimited number of automatic renewal periods of five (5) years each. A landowner may give notice to the state of the landowner's intention to terminate the contract at the end of the contract period. If a landowner is going to terminate the contract, the landowner must give six (6) months advance notice before the expiration date of the contract.

     (b) Contract conditions run with the land and must be recorded.
    (c) During the term of the contract, one (1) residential building lot may be split from the root parcel (which includes all contiguous property under substantially common ownership at the time of enrollment in the program) if the residential building lot is used for the residence of an individual who is farming the land.
    (d) A split may not be made from the root parcel for manufacturing, industrial, or commercial lots unless the split is in keeping with the purpose, principles, and objectives of the program.

     Sec. 10. When a county government, local planning commission, or other local entity engaged in planning for a local community has developed standards for the preservation of farmland, the council shall consider the standards when evaluating applications.
     Sec. 11. (a) A landowner may withdraw from the program when proposing to enroll in an alternate land protection program of equal or greater time period and conditions.
    (b) An early withdrawal, except under subsection (a), from the contract shall result in the loss of and pay back of any incentive received from the program
.
     (c) Any violation of the contract shall disqualify the farmland or the landowner from enrolling in the program for ten (10) years after the time of confirmation of the violation.
     Sec. 12. (a) The farmland protection program account is established within the state general fund for the purpose of providing money to match federal funds under 7 CFR 1491 to be used for the protection of farmland in Indiana. The account shall be administered by the council.


    (b) The account consists of:
        (1) money collected under IC 6-1.1-6.9-7;
        (2) gifts and bequests; and
        (3) grants.
    (c) The expenses of administering the account shall be paid from money in the account.
    (d) The treasurer of state shall invest the money in the account not currently needed to meet the obligations of the account in the same manner as other public money may be invested. Interest that accrues from these investments shall be deposited in the account.
    (e) Money in the account at the end of a state fiscal year does not revert to the state general fund.
    (f) Money in the account may be spent only after appropriation by the general assembly.
    Sec. 13. Owners of land in the program shall be given priority for state grants or technical assistance given by the commissioner of agriculture or the department of commerce.

SOURCE: IC 32-24-1-5.4; (04)EH1365.2.15. -->     SECTION 15. IC 32-24-1-5.4 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 5.4. (a) For purposes of this section, "protected farmland" means land that is:
        (1) included in an area designated as protected by the Indiana land resources council under IC 15-7-10-8(c); and
        (2) covered under a contract between the Indiana land resources council and the landowner under IC 15-7-10-9.
    (b) If land being condemned under this article is designated as protected farmland under a contract entered into under IC 15-7-10-9, the damages offered by the condemnor shall be two hundred percent (200%) of:
        (1) the fair market value offered under section 5 of this chapter; or
        (2) the award made by a court under this article.

     (c) This section does not apply to land that is being condemned for:
        (1) a highway;
        (2) a road;
        (3) a street
; or
        (4) a right-of-way under IC 32-24-4-1.

SOURCE: IC 6-2.5-4-4.5; IC 6-2.5-6-15.
; (04)EH1365.2.16. -->     SECTION 16. THE FOLLOWING ARE REPEALED [EFFECTIVE APRIL 1, 2004]: IC 6-2.5-4-4.5; IC 6-2.5-6-15.
SOURCE: IC 6-2.5-5-15; (04)EH1365.2.17. -->     SECTION 17. IC 6-2.5-5-15 IS REPEALED [EFFECTIVE JULY 1, 2004].
SOURCE: IC 9-18-9-4; (04)EH1365.2.18. -->     SECTION 18. IC 9-18-9-4 IS REPEALED [EFFECTIVE JULY 1, 2004].
SOURCE: ; (04)EH1365.2.19. -->     SECTION 19. [EFFECTIVE JANUARY 1, 2004 (RETROACTIVE)] (a) IC 6-2.5-3-5, as amended by this act, applies only to vehicles, watercraft, and aircraft that are initially titled, registered, or licensed in Indiana after June 30, 2004.
    (b) IC 6-2.5-4-11, as amended by this act, applies only to transactions occurring after March 1, 2004. A retail transaction to which IC 6-2.5-4-11, as amended by this act, applies shall be considered as having occurred after March 1, 2004, if charges are collected for the retail transactions upon original statements and billings dated after March 31, 2004.
    (c) IC 6-2.5-8-10, as amended by this act, and the repeal of IC 6-2.5-5-15 by this act apply only to retail transactions occurring after June 30, 2004. A retail transaction shall be considered as having occurred after June 30, 2004, to the extent that delivery of the property or services constituting selling at retail is made after that date to the purchaser or to the place of delivery designated by the purchaser. However, a transaction shall be considered as having occurred before July 1, 2004, to the extent that the agreement of the parties to the transaction was entered into before July 1, 2004, and payment for the property or services furnished in the transaction is made before July 1, 2004, notwithstanding the delivery of the property or services after June 30, 2004.
    (d) IC 6-2.5-6-9, as amended by this act, applies only to deductions assigned after June 30, 2004.
    (e) IC 6-3-1-3.5, IC 6-3-2-2.5, and IC 6-3-2-2.6, all as amended by this act, apply only to taxable years beginning after December 31, 2003.
    (f) The following provisions apply to deductions for net operating losses that are claimed after December 31, 2003:
        (1) Deductions for net operating losses that are incurred in taxable years beginning after December 31, 2003, and are carried back or carried forward and deducted in taxable years ending before January 1, 2004, must be calculated under IC 6-3-2-2.5 and IC 6-3-2-2.6, both as amended by this act.
        (2) Deductions for net operating losses that were incurred in taxable years ending before January 1, 2004, and that are carried forward and deducted in taxable years ending after December 31, 2003, must be calculated under IC 6-3-2-2.5 and IC 6-3-2-2.6, both as amended by this act.
        (3) Deductions for net operating losses that were incurred in taxable years ending before January 1, 2004, and are carried back or carried forward and deducted in taxable years ending before January 1, 2004, must be calculated under the versions of IC 6-3-2-2.5 and IC 6-3-2-2.6 that were in effect in the year the net operating loss was incurred.
        (4) Regardless of the applicable method of calculation in the year in which the net operating loss is deducted, any net operating loss available for carry forward shall be reduced by the amount of the net operating loss previously deducted in an earlier taxable year.

SOURCE: ; (04)EH1365.2.20. -->     SECTION 20. [EFFECTIVE JANUARY 1, 2005] IC 6-1.1-6.9, as added by this act, applies only to property taxes first due and payable after December 31, 2005.
SOURCE: ; (04)EH1365.2.21. -->     SECTION 21. An emergency is declared for this act.