Depreciation: 1040 Indiana (IN)

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The Indiana Department of Revenue requires taxpayers to report adjustments on Schedule 1 or B for differences in depreciation amounts claimed on the federal tax return and depreciation amounts allowable on the Indiana tax return. Information from the asset module, federal Form 4562, the Indiana 4562 worksheet, and the federal K1-St screen calculates the depreciation adjustments on the Indiana Depreciation Reconciliation worksheet and the Indiana Adjustment for Disposition of Assets worksheet. Amounts from these worksheets calculate Indiana Schedule 1 and B. Use the INDepr screen to modify the adjustments reported on the Indiana worksheets and schedules. 

Previously, Indiana required taxpayers to report depreciation differences between the federal return and the Indiana return according to type of property (Motorsports entertainment complex property, Qualified disaster assistance property, Qualified leasehold improvement property, Qualified refinery property, Qualified restaurant property, or Qualified retail improvement property) when applicable. Indiana no longer has a requirement other than for the reporting of a "catch-up" adjustment in the final year of depreciation or year of disposal. You still have the option to assign an asset to a specific category of property by using the association IN - Qualified Property in the Depreciation tab or the Other tab of the asset module. This association will not have an affect on the calculation of the return.

Pass-through entities

To include Schedule IN-K1 (or equivalent) depreciation adjustments in the Indiana Depreciation Reconciliation Worksheet, enter the adjustments from pass-through entities in the Nonconforming State Depreciation Adjustment section of the federal K1-St screen. You can use the following fields on the federal K1-St screen only when IN is the state postal code:

  • Depreciation addition
  • Depreciation subtraction
  • Disposition addition
  • Disposition subtraction
  • Section 179 expense excess add-back

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