the taxpayer places the qualified property in service in
Indiana;
is eligible for a credit.
Sec. 12. Subject to sections 13 through 17 of this chapter, the
following property is eligible for a credit under this chapter:
(1) Tangible or intangible property for which a deduction for
depreciation is allowable under Section 167 of the Internal
Revenue Code (including software that is not a Section 197
intangible, as determined under Section 197 of the Internal
Revenue Code), regardless of whether the taxpayer takes a
depreciation deduction under Section 167 of the Internal
Revenue Code.
(2) Any license, right, or interest in a patent, copyright,
formula, process, design, pattern, know-how, format, or other
similar item for which an amortization deduction is allowable
under Section 197 of the Internal Revenue Code, regardless of
whether the taxpayer takes an amortization deduction under
Section 197 of the Internal Revenue Code.
Sec. 13. (a) This section does not apply to a nonexclusive license,
right, or interest in property described in section 12(2) of this
chapter that is acquired directly from the person, corporation, or
pass through entity that controls the right to grant nonexclusive
licenses, rights, or interests in the property.
(b) To be eligible for a credit, property must not have been used
in any other trade or business in Indiana for at least one (1) year
before it is acquired by the taxpayer.
Sec. 14. Property is not eligible for a credit if:
(1) it is acquired from a shareholder, partner, or member of
a taxpayer that has a relationship to the taxpayer described
in Section 267(b) of the Internal Revenue Code;
(2) it is acquired from a member of the family (as determined
under Section 267 of the Internal Revenue Code) of a
shareholder, partner, or member that directly, indirectly,
beneficially, by attribution (as determined under Section 1567
of the Internal Revenue Code) , or constructively owns at least
fifty percent (50%) of the stock or other equity interest in a
taxpayer;
(3) it is acquired by one (1) component member of a
controlled group (as defined in Section 267 of the Internal
Revenue Code) that includes the taxpayer or would be a
component member if pass through entities were treated as
corporations under Section 267 of the Internal Revenue Code;
(4) the basis of the property for federal income tax purposes,
in the hands of the person acquiring it, is determined:
(A) in whole or in part by reference to the federal adjusted
basis of the property in the hands of the person,
corporation, or pass through entity from whom it was
acquired; or
(B) under Section 1014(e) of the Internal Revenue Code; or
(5) the property is used to substantially replace other
property used by:
(A) the taxpayer; or
(B) another person, corporation, or pass through entity
described in subdivision (1), (2), or (3);
in a trade or business in Indiana.
Sec. 15. To be eligible for a credit, property must be primarily
used in Indiana in a trade or business other than an excluded trade
or business. For purposes of this section, rental or leasing of
property to another person or entity shall be treated as an excluded
trade or business.
Sec. 16. The following excluded property is not eligible for a
credit:
(1) Motor vehicles licensed by the bureau of motor vehicles or
by another state or country.
(2) Airplanes.
(3) Other off-premises transportation equipment.
Sec. 17. Property that is used in or as part of any of the
following excluded facilities is not eligible for a credit:
(1) Private or commercial golf course.
(2) Country club.
(3) Massage parlor.
(4) Tennis club.
(5) Skating facility (including roller skating, skateboarding, or
ice skating).
(6) Racquet sport facility (including any handball or
racquetball court).
(7) Hot tub facility.
(8) Suntan facility.
(9) Racetrack.
(10) Any facility the primary purpose of which is:
(A) retail food and beverage service;
(B) automobile sales or service; or
(C) other retail.
(11) Residential property.
(12) A package liquor store that holds a liquor dealer's permit
under
IC 7.1-3-10
or any other entity that is required to
operate under a license issued under IC 7.1.
Sec. 18. The amount of the credit accruing to a taxpayer for a
taxable year is equal to the lesser of the following:
(1) Thirty percent (30%) of the depreciable cost of the
qualified property placed in service in Indiana in a taxable
year.
(2) Six hundred thousand dollars ($600,000), in total, for all
qualified property placed in service in Indiana in a taxable
year.
Sec. 19. The taxpayer is eligible to:
(1) apply the credit to the taxpayer's tax liability; or
(2) distribute the credit to the taxpayer's members,
shareholders, or partners (if the taxpayer is a pass through
entity);
in the taxable year in which qualified property is placed in service
in Indiana in a trade or business and in each of the immediately
following four (4) taxable years.
Sec. 20. Twenty percent (20%) of the credit amount determined
under section 18 of this chapter, excluding any part of the credit
carried forward from a prior taxable year, may be applied to the
state tax liability of the taxpayer in each of the taxable years in
which the taxpayer may take the credit under section 19 of this
chapter.
Sec. 21. If the amount of the credit, after applying any part of
the credit that is carried forward from a prior taxable year, is
greater than the taxpayer's state tax liability for the taxable year,
the taxpayer may carry forward the unused part of the credit to
not more than ten (10) subsequent taxable years. The amount of
the tax credit that is applied to the taxpayer's state tax liability
reduces the amount of the credit that may be carried forward to a
subsequent taxable year. A taxpayer is not eligible to carry back or
obtain a refund of any unused credit.
Sec. 22. (a) If a pass through entity does not have state tax
liability against which the credit may be applied, a shareholder,
partner, or member of the pass through entity is entitled to a credit
equal to:
(1) the credit determined for the pass through entity for the
taxable year; multiplied by
(2) the percentage of the pass through entity's distributive
income to which the shareholder, partner, or member is
entitled.
(b) The credit provided under subsection (a) is in addition to a
credit to which a shareholder, partner, or member of a pass
through entity is otherwise entitled under this chapter. However,
a pass through entity and a shareholder, partner, or member of the
pass through entity may not claim a credit under this chapter for
the same qualified property.
Sec. 23. To receive the credit provided by this chapter, a:
(1) taxpayer; or
(2) shareholder, partner, or member of a taxpayer that is a
pass through entity;
must claim the credit on the person or corporation's annual state
tax return or returns in the manner prescribed by the department.
The person or corporation shall submit to the department all
information that the department determines is necessary for the
calculation of the credit provided by this chapter and for the
determination of whether the person or corporation is eligible for
the credit. The department may require a pass through entity to
provide all information necessary to determine the amount of the
credit to which a shareholder, partner, or member is entitled.
Sec. 24. For purposes of applying sections 25 through 26 of this
chapter, if:
(1) the taxpayer places in service in a taxable year qualified
property with depreciable cost, in total, of more than two
million dollars ($2,000,000); and
(2) section 18 of this chapter limits the total amount of the
credit that is available for that taxable year to six hundred
thousand dollars ($600,000);
the credit shall be apportioned among the items of qualified
property placed in service in Indiana in that taxable year in the
manner prescribed by the department.
Sec. 25. The credit is reduced to zero (0) to the extent that the
taxpayer uses:
(1) another credit provided under this article for the same
property, an investment in the same property, compensation
paid to an employee who uses the same property, or a project
that involves the same property; or
(2) an enterprise zone deduction under
IC 6-3-2-8
for
compensation paid to an employee who uses the same
property.
Sec. 26. Except as provided in sections 27 through 29 of this
chapter, the credit provided by this chapter is reduced to the
amount determined under section 30 of this chapter if the
taxpayer:
(1) disposes of the qualified property; or
(2) otherwise permanently ceases to use the property as
qualified property;
before the end of the useful life of the qualified property.
Sec. 27. A credit is not reduced to the extent that the qualified
property ceases to be used in Indiana as a result of a loss arising
from fire, storm, other casualty, or theft that would qualify for a
casualty loss under Section 165 of the Internal Revenue Code.
However, if the property is replaced, the replacement property is
not eligible for an additional credit under this chapter.
Sec. 28. A credit is not reduced to the extent that property is:
(1) replaced by other property providing the same or similar
function (with or without enhancements); and
(2) the replacement property is used as qualified property for
at least the remainder of the useful life of the replaced
property.
Sec. 29. (a) A credit is not reduced to the extent that:
(1) the basis of the property for federal income tax purposes,
in the hands of the person, corporation, or pass through entity
acquiring it or otherwise obtaining control over it, is
determined:
(A) in whole or in part by reference to the federal adjusted
basis of the property in the hands of the person,
corporation, or pass through entity from whom it was
acquired; or
(B) under Section 1014(e) of the Internal Revenue Code;
(2) the person, corporation, or pass through entity acquiring
the property elects, in the manner prescribed by the
department, to be treated as the taxpayer for purposes of this
chapter; and
(3) the property continues to be used as qualified property for
at least the remainder of the useful life of the replaced
property, as determined as if the property were in the hands
of the original taxpayer that was eligible for the credit.
(b) The electing person, corporation, or pass through entity
shall be treated as the taxpayer for purposes of taking any credit
under this chapter and paying any recaptured amount under this
chapter.
Sec. 30. The reduced credit under section 26 of this chapter is
the amount determined under STEP FOUR of the following
formula:
STEP ONE: Determine the number of months in the useful
life of the qualified property beginning with the month in
which the qualified property is placed in service in Indiana in
a trade or business.
STEP TWO: Determine the number of months that the
property was used as qualified property beginning with the
month in which the qualified property is placed in service in
Indiana in a trade or business.
STEP THREE: Divide the STEP TWO amount by the STEP
ONE amount.
STEP FOUR: Multiple the depreciable cost of the property by
the STEP THREE result.
Sec. 31. (a) The difference between:
(1) the total amount of the credit for qualified property that
is:
(A) applied to state tax liability; or
(B) distributed to the shareholders, partners, or members
of the taxpayer, if the taxpayer is a pass through entity;
and
(2) the amount of the reduced credit;
shall be treated as a listed tax due from the taxpayer on the day
that the person, corporation, or pass through entity's annual
return is due for the taxable year in which the property
permanently ceases to be used as qualified property.
taxpayer concerning the number of new employees that the
taxpayer is likely to employ and any other data available to
the department of commerce.
(7) The maximum number of new employees for which a
credit may be taken under this chapter, which may not exceed
fifty (50), using data provided by the taxpayer concerning the
number of new employees that the taxpayer is likely to employ
and any other data available to the department of commerce.
(8) The maximum total credit amount that may be taken
under this chapter, using data provided by the taxpayer
concerning the likely employee expenses that will be incurred
by the taxpayer and the number of new employees that the
taxpayer is likely to employ and any other data available to
the department of commerce.
(c) With the consent of the applicant taxpayer, a certification
issued under this section may be amended at any time.
Sec. 12. (a) The department of commerce may not certify a
full-time employee position as eligible for a credit if the full-time
employee position is in a facility described in
IC 6-3.1-26-17.
(b) A credit is not available under this chapter for employee
expenses incurred for an individual employed in a facility
described in
IC 6-3.1-26-17.
Sec. 13. (a) The credit granted by this section applies only to
taxable years beginning after December 31, 2005.
(b) A taxpayer that:
(1) is certified by the department of commerce as a small
business employer of at least five (5) new employees;
(2) employs at least five (5) new employees in Indiana in a
taxable year beginning after December 31, 2005; and
(3) qualifies as a small business in the taxable year in which
the taxpayer incurs employee expenses for new employees;
is eligible for a credit.
Sec. 14. The amount of the credit for a taxpayer in a taxable
year is equal to thirty percent (30%) of the employee expenses
attributable to the lesser of:
(1) the number of new employee's employed by the taxpayer
in each month of the taxable year; or
(2) the number of new employees specified by the department
of commerce in the certification under section 11 of this
chapter.
However, the total amount of credits that the taxpayer may take in
all taxable years may not exceed the amount specified in section
11(b)(8) of this chapter.
Sec. 15. The credit is available for employee expenses in each of
the five (5) taxable years beginning with the taxable year
immediately following the taxable year in which the taxpayer is
certified as a small business employer under section 11 of this
chapter.
Sec. 16. If the amount of the tax credit, after applying any part
of the credit that is carried forward from a prior taxable year, is
greater than the taxpayer's state tax liability for the taxable year,
the taxpayer may carry forward the unused part of the credit to
not more than ten (10) subsequent taxable years. The amount of
the tax credit that is applied to the taxpayer's state tax liability
reduces the amount of the credit that may be carried forward to a
subsequent taxable year. A taxpayer is not eligible to carry back or
obtain a refund of any unused credit.
Sec. 17. (a) If a pass through entity does not have state tax
liability against which the credit may be applied, a shareholder,
partner, or member of the pass through entity is entitled to a credit
equal to:
(1) the credit determined for the pass through entity for the
taxable year; multiplied by
(2) the percentage of the pass through entity's distributive
income to which the shareholder, partner, or member is
entitled.
(b) The credit provided under subsection (a) is in addition to a
credit to which a shareholder, partner, or member of a pass
through entity is otherwise entitled under this chapter. However,
a pass through entity and a shareholder or partner of the pass
through entity may not claim a credit under this chapter for the
same new employees.
Sec. 18. To receive the credit provided by this chapter, a:
(1) taxpayer; or
(2) shareholder, partner, or member of a taxpayer that is a
pass through entity;
must claim the credit on the individual or entity's annual state tax
return or returns in the manner prescribed by the department. The
individual or entity shall submit to the department all information
that the department determines is necessary for the calculation of
the credit provided by this chapter and for the determination of
whether the individual or entity is eligible for the credit. The
department may require a pass through entity to provide sufficient
information for the department to determine the amount of the
credit to which a shareholder, partner, or member is entitled.
Sec. 19. The credit is reduced to zero (0) to the extent that the
taxpayer uses:
(1) another credit provided under this article for the same
project, property used in the same project, an investment in
the same project, or compensation paid to an employee who
is employed in the same project or who uses property that is
part of the same project; or
(2) an enterprise zone deduction under
IC 6-3-2-8
for
compensation paid to an employee who is employed in the
same project or who uses property that is part of the same
project.
Sec. 20. Except as provided in sections 21 through 22 of this
chapter, the credit is reduced in any taxable year to the extent that
the taxpayer employs in the project fewer than the number of new
employees specified by the department of commerce in the
certification under section 11 of this chapter during any of the one
hundred twenty (120) consecutive months beginning with the
month specified in the certification under section 11 of this chapter.
Sec. 21. A credit is not reduced for any month to the extent that
the failure to employ at least the number of new employees
specified by the department of commerce in the certification under
section 11 of this chapter is a temporary reduction in employment
that occurs as a result of:
(1) a labor dispute; or
(2) a loss arising from fire, storm, other casualty, or theft that
would qualify for a casualty loss under Section 165 of the
Internal Revenue Code.
Sec. 22. (a) A credit is not reduced to the extent that:
(1) ownership or control of substantially all of the project is
transferred to another person, corporation, or pass through
entity;
(2) the person, corporation, or pass through entity acquiring
the project elects, in the manner prescribed by the
department, to be treated as the taxpayer for purposes of this
chapter; and
(3) the project continues to employ the number of new
employees specified by the department of commerce in the
certification under section 11 of this chapter after it is
acquired for the remainder of the period described in section
20 of this chapter.
(b) The electing person, corporation, or pass through entity
shall be treated as the taxpayer for purposes of taking any credit
under this chapter and paying any recaptured amount under this
chapter.
Sec. 23. The reduced credit under section 20 of this chapter is
the amount determined under STEP NINE of the following
formula:
STEP ONE: Determine the period beginning with the month
specified by the department of commerce in the certification
under section 11 of this chapter through the earlier of:
(A) the last month of the current taxable year; or
(B) the last month that the taxpayer is required under
section 20 of this chapter to employ new employees.
STEP TWO: For each month in the period determined under
STEP ONE, determine the lesser of:
(A) the number of new employees that the taxpayer
employed in the project in the month; or
(B) the number of employees specified as eligible for a
credit in the certification under section 11 of this chapter.
STEP THREE: Determine the sum of the amounts determined
under STEP TWO.
STEP FOUR: Determine the greater of zero (0) or the number
of months remaining after the last month determined under
STEP ONE through the last month that the taxpayer is
required under section 20 of this chapter to employ new
employees.
STEP FIVE: Multiple the STEP FOUR amount by the lesser
of:
(A) the number of employees specified as eligible for a
credit in the certification under section 11 of this chapter,
if the reduction in employment is not a permanent
reduction in employment; or
(B) zero (0), if the reduction in employment is a permanent
reduction in employment.
STEP SIX: Add the STEP THREE amount and the STEP
FIVE amount.
STEP SEVEN: Multiply one hundred twenty (120) by the
number of employees specified as eligible for a credit in the
certification under section 11 of this chapter.
STEP EIGHT: Divide the STEP SIX result by the STEP
SEVEN result.
STEP NINE: Multiply the maximum credit amount specified
by the department of commerce in the certification under
section 11 of this chapter by the STEP EIGHT result.
Sec. 24. (a) The difference between:
(1) the total amount of the credit for new employee expenses
that is:
(A) applied to state tax liability ; or
(B) distributed to the shareholders, partners, or members
of the taxpayer, if the taxpayer is a pass through entity;
and
(2) the amount of the reduced credit;
shall be treated as a listed tax due on the day that the person,
corporation, or pass through entity's annual return is due for the
taxable year in which the taxpayer temporarily fails or
permanently ceases to employ at least the number of new
employees specified by the department of commerce in the
certification under section 11 of this chapter.
(b) The amount due is reduced by any amount of the credit that
is recaptured in a prior taxable year.
(c) The amount due from a pass through entity is reduced to the
extent that the pass through entity presents proof to the
department that: