1040-IN: Depreciation - Final year catch-up adjustment

Alerts and notices

When the Internal Revenue Code introduced various components of income and deductions for depreciable assets, Indiana did not initially conform with federal law and add-backs were required on the Indiana return. Now that Indiana has passed legislation retroactively conforming to the IRC, the Indiana DOR advised that taxpayers should not make any further adjustments on the annual Indiana tax return until the year of disposal or final year of depreciation.

In that final year, taxpayers are allowed a "catch-up" adjustment for the add-backs reported on previous returns. A catch-up adjustment is a negative add-back on the Indiana return for items that required a positive add-back in prior years. Enter the catch-up adjustment as a negative amount on the INAdj-2 screen in the Income & Adjustment folder. A negative adjustment will calculate on Schedule 1 or B.

Note: The nature of how and when a catch-up adjustment can be made on the Indiana return varies from item to item. Hence, certain catch-up adjustments may not have been allowed to be reported on the Indiana return until the current year. Refer to Indiana Department of Revenue documentation for further information.