Indiana Current Year Partnership Return Booklet with Forms and Schedules

Current Year Partnership Return Booklet with Forms and Schedules
IT-65 Partnership Return Booklet
INDIANA

2 0 2 3

IT-65

Partnership Return Booklet

Page 2

IT-65 Partnership Booklet 2023

SP 262
(R27 / 8-23)

INDIANA IT-65
Partnership Return Booklet Year 2023
Contents

What’s New for 2023...............................................................................................................................................................4
General Information...............................................................................................................................................................4
General Filing Instructions....................................................................................................................................................5
Instructions for Completing Form IT-65 ............................................................................................................................7
Summary of Calculations for Form IT-65.........................................................................................................................11
Certification of Signatures and Authorization Section....................................................................................................12
Mailing Options.....................................................................................................................................................................14
Instructions for Schedule IN K-1........................................................................................................................................14
Instructions for Schedule E, Apportionment of Income for Indiana ............................................................................16
Instructions for Completing Schedule PTET....................................................................................................................17
Instructions for Schedule Composite/Schedule Composite-COR.................................................................................19
Reminders .............................................................................................................................................................................25
Additional Information........................................................................................................................................................25

IT-65 Partnership Booklet 2023

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INTIME e-Services Portal Available

Pass Through Entity Tax

Increased Online Support for Tax Preparers

In addition, a new Schedule PTET has been added to report PTET
and amounts of PTET passed through to partners. See page 17
for further information on Schedule PTET.

INTIME, DOR’s e-services tax portal available at intime.dor.in.gov,
provides the following functionalities for IT-65 customers:
•	 Make payments using a bank account or credit card
•	 View and respond to correspondence from DOR
•	 Request and print return transcripts on-demand
•	 Electronic delivery of correspondence
•	 Online customer service support through secure messaging
In addition to the functionality listed above, INTIME provides
increased access and functionality for tax preparers. INTIME
provides the following functionality for tax preparers:
•	 Gain access to view and manage multiple customers under
one login
•	 Ability to file returns, make payments, and view file and pay
history for clients
•	 Request electronic power of attorney (ePOA) authorization to
view customer accounts
•	 View and respond to correspondence for clients
We strongly encourage all taxpayers to make payments and file
returns electronically whenever possible. INTIME allows customers
to make estimated payments electronically with just a few clicks.

What’s New for 2023
References to the Internal Revenue Code

The definition of adjusted gross income (AGI) is updated to
correspond to the federal definition of adjusted gross income
contained in the Internal Revenue Code (IRC). Any reference to
the IRC and subsequent regulations means the Internal Revenue
Code of 1986, as amended and in effect on January 1, 2023. For a
complete summary of new legislation regarding taxation, please see
the Synopsis of 2023 Legislation Affecting the Indiana Department of
Revenue at www.in.gov/dor/files/2023-legislative-synopsis.pdf.

Add-Backs
•	

A new add-back (154) is available for specified research and
experimental expenses required to be amortized for federal
income tax purposes. See page 10 for more information.

Credits
•	

A new credit (874) is available for qualified investments at a
mine reclamation site. See page 24 for more information.

Deductions
•	

•	

A new deduction (639) is available to allow the deduction
for the portion of small employer health insurance premiums
that is disallowed for federal purposes as a result of claiming
the credit under IRC section 45R. See page 10 for more
information.
A new deduction (641) is available to permit a current-year
deduction for specified research and experimental expenses
otherwise required to be amortized for federal tax purposes.
See page 10 for more information.

In 2023, P.L. 1-2023 was enacted to create a new Pass Through
Entity Tax (PTET) for partnerships and S corporations. The tax
is imposed at the election of the partnership or S corporation.
See Income Tax Information Bulletin #72B at www.in.gov/dor/
legal-resources/tax-library/information-bulletins/income-taxinformation-bulletins for more detailed information.

Further, PTET has changed the reporting on several schedules.
See the Instructions for Schedule IN K-1 on page 14 and
Instructions for Schedule Composite/Schedule Composite-COR
on page 18 for further information.

Penalty for Failure to Include Nonresident
Partners on Schedule Composite/Composite-COR

The line to report the $500 penalty for failure to report all
nonresident partners on composite schedules has been removed.
However, DOR will continue to assess the penalty if a partnership
does not include all nonresident partners as otherwise required.

Repeal of Election to Be Taxed at the Partnership
Level on Audit Adjustments and Schedule IN-EL

The election for a partnership to be taxed at the partnership level
on audit adjustments or amended returns was removed effective
April 30, 2023. As a result, Schedule IN-EL has been removed.
Note. This does not affect the Pass Through Entity Tax.

General Information
Annual Public Hearing

In accordance with the Indiana Taxpayer Bill of Rights, the
Indiana Department of Revenue will conduct an annual public
hearing in Indianapolis in June of 2024. Event details will be listed
at www.in.gov/dor/news-media-and-publications/dor-publicevents/annual-public-hearings. Please come and share feedback
or comments about how DOR can better administer Indiana tax
laws. If not able to attend, please submit feedback or comments
in writing to: Indiana Department of Revenue, Commissioner’s
Office, MS# 101, 100 N. Senate Avenue, Indianapolis, IN 46204.
Our homepage provides access to forms, information bulletins
and directives, tax publications, email, and various filing options.
Visit www.in.gov/dor.

Who Must File and When

Partnerships conducting business within Indiana must file an
annual return (Form IT-65) and information returns (Schedule
IN K-1) with DOR. These forms must disclose each partner’s
distributive share of the partnership income distributed or
undistributed. These forms are due on or before the 15th day of
the 4th month following the close of the partnership’s tax year.
Enclose with Form IT-65 the first five pages of the U.S. Partnership

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IT-65 Partnership Booklet 2023

Return of Income, Form 1065 or 1065B. Also enclose Schedule
M-3. Federal Schedule K-1s should not be enclosed but must be
made available for inspection upon request by DOR.
Any partnership doing business in Indiana or deriving gross income
from sources within Indiana is required to file a return. In addition,
any partnership that has partners residing in Indiana is required to file
a return, even if the partnership is not doing business in Indiana. For
Indiana adjusted gross income (AGI) tax purposes, the term doing
business generally means the operation of any business enterprise or
activity in Indiana, including but not limited to the following:
•	 The maintenance of an office, a warehouse, a construction
site, or another place of business in Indiana;
•	 The maintenance of an inventory of merchandise or material
for sale, distribution, or manufacture, or consigned goods;
•	 The sale or distribution of merchandise to customers directly
from company-owned or -operated vehicles when the title of
merchandise is transferred from the seller or distributor to
the customer at the time of sale or distribution;
•	 The rendering of a service to customers in Indiana;
•	 The ownership, rental, or operation of a business or property
(real or personal) in Indiana;
•	 The acceptance of orders in Indiana with no right of approval
or rejection in another state;
•	 Interstate transportation; or
•	 The maintenance of a public utility.
The term “partnership” means an entity treated as a partnership
for federal income tax purposes. Banks with common trust
funds filing U.S. Form 1065 must file partnership Form IT-65
and comply with the provisions of Treas. Reg. 1.6032-1 when
reporting for Indiana purposes.

Calculating Corporate Income Tax Rate
The corporate AGI tax rate is 4.9%

General Filing Instructions
Liability of the Partnership

Partnerships as entities are not subject to income taxes unless the
partnership makes a special election to be subject to income tax.
However, publicly traded partnerships treated as corporations
pursuant to IRC Section 7704 are classified for Indiana tax
purposes in the same manner as they are classified for federal tax
purposes. A limited liability company classified as a corporation
for federal tax purposes should file Form IT-20.
Partnerships are considered to be the taxpayer with respect to the
payment of amounts required to be withheld at source. See the
section titled “Withholding Tax Liabilities of Partnerships.”
Partnerships are subject to use tax. Use tax is due on the storage,
use, or consumption of tangible personal property purchased in
a transaction in Indiana or elsewhere. This does not apply if the
transaction is exempt from the sales and use tax by law or the
sales tax due and paid on the transaction equals the use tax due.
See the instructions for the Sales/Use Tax Worksheet on page 11.

An apportionment schedule must be enclosed with the return
if the partnership is doing business both within and outside
Indiana and has any partners not domiciled in Indiana. See the
instructions for Schedule E or Schedule E-7 on page 16.
Any partnership that has nonresident partners must also file a
composite return for all its nonresidents. Any partnership that
fails to file a composite return that includes all its nonresident
partners will be assessed a penalty of $500.
To avoid penalty and interest charges for delinquent filing of
returns, a partnership should verify its tax status and withholding
responsibilities before commencing business in Indiana.

Withholding Tax Liabilities of Partnerships

The following instances obligate the partnership to register with
DOR and become an Indiana withholding agent on behalf of each
of the following.

Withholding on Employees

Partnerships making payments of salaries, wages, tips, fees,
bonuses, and commissions that are subject to Indiana state and/
or county income taxes and are required by the IRC to withhold
federal taxes on those types of payments are also required to
withhold for Indiana tax purposes.
Withholding on the compensation of nonresident team members
of certain professional sports organizations or race team members
is based on duty days performed in Indiana. Refer to Income Tax
Information Bulletin #88 at www.in.gov/dor/files/reference/ib88.
pdf, or Income Tax Information Bulletin #88B at www.in.gov/
dor/files/ib88b.pdf. If an employee resides in a state that has a
reciprocal agreement with Indiana, the employee is exempt from
Indiana state income tax but is subject to the relevant county
tax. A partnership with an employee withholding liability must
register as an Indiana withholding agent. DOR assigns an Indiana
Taxpayer Identification Number (TID).
The partnership has two options in registering as a withholding agent:
•	 Register with DOR online using INBiz (inbiz.in.gov); or
•	 Visit either DOR’s downtown Indianapolis office or one of the
district offices located throughout the state.
Payments of amounts withheld must be remitted to DOR via
electronic method by the due date. If a filing and/or payment of the
proper amount of tax withheld is not made by the due date, penalty
and interest will be added. A person responsible for remitting
payments may be personally subject to criminal prosecution if the
failure to pay and/or file a withholding return is due to fraud or tax
evasion. All entities are required to remit withholding statements
electronically by using either a third-party vendor or via INTIME,
DOR’s e-services portal at intime.dor.in.gov.

Withholding on Partners

A partnership must withhold state income tax at the appropriate
income tax rate on the amount it pays or credits to any of its
nonresident partners on the partner’s distributive share of the
partnership’s income derived from Indiana sources regardless
of whether distributions of property are made to partner and
regardless of what of activities the partners may have in Indiana.
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All withholding will be remitted by using Form IT-6WTH. If a
partnership fails to withhold, it will be assessed a penalty. This
penalty is 20% plus interest, in addition to the amount withheld
or required to be withheld and paid to DOR. If a distribution to
nonresident partners is made with property other than money, or
a gain is realized without the payment of money, the partnership
may not release the property or credit the gain until it has funds
sufficient to pay the withholding tax due.
IC 6-3-4-12 provides that all nonresident partners must be
included in a composite return schedule, and the partnership
must continue to withhold Indiana adjusted gross income tax for
all nonresident partners. Unless the partner completes a Schedule
IN-COMPA or the partnership obtains department consent prior
to the partnership’s filing deadline, there is no provision for opting
out of withholding. Each nonresident partner’s composite tax is
calculated at the relevant tax rate unless the partnership provides
an exception code on the Schedule Composite or Schedule
Composite-COR. DOR has streamlined the procedure for making
withholding payments for nonresidents.
See page 4 for information about using INTIME, DOR’s
e-service portal at intime.dor.in.gov, for making withholding
remittances. Credit for the withholding/composite tax will
be reflected on Schedule IN K-1 for each partner. For further
information, consult Income Tax Information Bulletin #72, which
is available at www.in.gov/dor/files/reference/ib72.pdf.
Individual Partners. A partnership must withhold state adjusted
gross income (AGI) tax at the individual income tax rate on the
apportioned distributive shares of partnership income (on
current-year earnings derived from Indiana sources) and any
other guaranteed payments attributable to Indiana. It must do this
each time it pays or credits any of its nonresident partners and
part-year resident individual partners. The withholding rate for
individuals is 3.15% (.0315).
The withholding requirement does not apply to individual
partners who are residents of reverse credit states and who are
subject to and pay income taxes at rates equal to or greater than
Indiana’s individual income tax rate to the resident states. The
relevant reverse credit states are:
•	 Arizona;
•	 Oregon; and
•	 Washington, D.C.
A partnership must withhold county income tax at the county’s
relevant tax rate on each Indiana nonresident partner whose
principal place of business or employment on January 1 is located
in an Indiana county. See Schedule CT-40PNR, page 2, at www.
in.gov/dor/tax-forms/2023-individual-income-tax-forms to get
the county’s tax rate.
Trusts and Estates. A partnership must withhold on the amount
it pays or credits for the partner’s distributive share derived
from Indiana sources for partners that are trusts and estates not
domiciled in Indiana.
Note. The withholding provisions do not apply to nonresident
partners who are nontaxable trust or estate entities.
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IT-65 Partnership Booklet 2023

A partnership must withhold tax on the amount it pays or credits
for the partner’s distributive share derived from Indiana sources
to a fiduciary. Then the trust or estate must also withhold state
income taxes for all its nonresident beneficiaries.
Corporate Partners. Partnerships must withhold AGI tax at
the corporate tax rate on the amount it pays or credits for the
partner’s distributive share derived from Indiana sources to
all nonresident corporate partners. This withholding must be
an amount reflecting the ultimate Indiana tax liability due by
respective partners because of the partnership’s activities.
A partnership must withhold and remit the Indiana Financial
Institution Tax (FIT) if:
•	 The partnership conducts the business of a financial
institution;
•	 The partnership has nonresident corporate partners; and
•	 The partners conduct the business of a financial institution.
FIT must be withheld on the respective nonresident corporate
partner’s share of partnership income as computed under IC 6-5.54. However, if a written declaration that the partner is not subject
to the FIT exists, the FIT withholding is not required. Instead,
corporate AGI tax must be withheld from the nonresident corporate
partner’s distributive share of income apportioned to Indiana.
Withholding Amounts on Tiered Partnerships/S Corporations.
A partnership must withhold state income tax at the individual
income tax rate on the apportioned distributive shares of
partnership income (on current-year earnings derived from
Indiana sources) paid or credited to another nonresident
partnership or nonresident S corporation. It must do this
each time it pays or credits any of its nonresident partners or
nonresident S corporations.
Note. Partnerships and S Corporations not domiciled in Indiana
must meet annual filing requirements and remit all unpaid tax,
penalties, and interest.

Accounting Periods and Methods

The accounting periods for Form IT-65 and the method of accounting
adopted must be the same as used for federal income tax purposes.

Composite Withholding Payments (Form IT-6WTH)

A partnership that files a composite return must withhold Indiana
state and/or county income taxes from all nonresident partners into
the corporate account using Form IT-6WTH. Payment is due the
15th day of the 4th month following the close of the partnership’s
tax period. To make additional payments, please visit INTIME
at intime.dor.in.gov. Payments for form IT-6WTH also may be
made electronically. Check our website for updates. For further
information, consult Income Tax Information Bulletin #72 available
at www.in.gov/dor/files/reference/ib72.pdf and www.in.gov/dor.
The total payments are claimed as a credit on line 9 of Form IT-65.

Extended Filing Due Date

The initial due date for filing is the 15th day of the 4th month
following the close of the partnership’s tax year. DOR accepts the
federal extension of time application (Form 7004) or the federal
electronic extension. If a taxpayer has an extension, there is no

need to contact DOR prior to filing the annual return. Returns
postmarked within one month after the last date indicated on the
federal extension form are considered timely filed.
Do not file a separate copy of the federal extension form with
DOR to request an Indiana extension at the time of requesting the
extension. Instead, enclose a copy of the federal extension of time
with the state return filing and check the box to question Q on the
front of Form IT-65.
If a federal extension is not needed, a partnership can request an
Indiana extension of time to file via INTIME, DOR’s e-service
portal at intime.dor.in.gov, or by submitting a request in writing
to: Indiana Department of Revenue, Corporate Income Tax, Tax
Administration, P.O. Box 7206, Indianapolis, IN 46207-7206.
Extensions are applicable to the time for filing the return only and
not to any tax liability due. Any payments made after the original
due date must include penalty and interest.

Amended Returns

The partnership must file an amended Indiana return within 180
days after the filing of the amended federal return if:
•	 The partnership files an amended federal return; and
•	 The change(s) affects the Indiana income or the Indiana tax
reportable by the partners.
An adjustment made by the Internal Revenue Service affecting the
reportable Indiana income must be reported to Indiana with an
amended partnership return. This must be done within 180 days
after the adjustment becomes final.
Important. Check the box at the top of Form IT-65 if filing an
amended return.
Partners generally have 90 days from the date the partnership
is required to file amended returns after the deadline for the
partnership. Tiered partners and indirect partners have special
timetables. For further information, see Income Tax Information
Bulletin #72 available at www.in.gov/dor/files/reference/ib72.pdf.

Instructions for Completing Form IT-65
Filing Period and Identification

Use Form IT-65 to file:
•	 A 2023 partnership return for a tax year ending on Dec. 31, 2023;
•	 A short tax year beginning in 2023; or
•	 A fiscal year beginning in 2023 and ending in 2024.
For a fiscal or short tax year, fill in both the beginning month, day,
and year and the ending month, day, and year at the top of the form.

Identification Section

Check the box at the top of the form if filing an amended return.
For a name change, check the box at the top of the return. The
copies of amended articles filed with the Indiana Secretary of
State must be enclosed.

The federal employer identification number (FEIN) shown in
the box at the upper-right corner of the return must be the same
as the number used on the U.S. Return of Partnership Income.
Please use the correct legal name of the partnership and its
current mailing address.
County Code Number. List the two-digit county code number
of the county in Indiana where the partnership has a primary
business location. See Departmental Notice #1 located at www.
in.gov/dor/files/reference/dn01.pdf for a list of the county code
numbers. Enter “00” (two zeroes) in the county box located to
the immediate right of the number and street if the partnership
address lies outside of Indiana.
For foreign addresses, please note the following:
•	 The name of the city, town, or village in the box labeled City;
•	 The name of the state or province in the box labeled State; and
•	 Enter the postal code in the box labeled ZIP Code; and
•	 Enter the 2-digit country code.
Enter the principal business activity code, from the North
American Industry Classification System (NAICS), in the
designated block of the return. Use the six-digit activity code
reported on the federal partnership income tax return.

Questions K through U and Other Fill-in Lines

All partnerships filing an Indiana partnership income tax
return must complete the top portion of the form. This includes
questions K through U. Check or complete all the boxes that apply
to the return:
K.	 Indicate the date and place the partnership was organized
L.	 Indicate the partnership’s state of commercial domicile.
M.	 Indicate the year the initial Indiana return was filed.
N.	 Indicate the accounting method used.
O.	 Check the “final return” box only if the partnership is dissolved,
liquidated, or has withdrawn from the state. In the event of
bankruptcy, Form BC-100 must be timely filed to close out
any sales and withholding accounts. Go to www.in.gov/dor/
tax-forms/business-tax-forms to complete this form online.
•	 Check “Composite Return” if filing a composite return
for nonresident partners.
•	 Submit a Schedule Composite for nonresident individual/
non-corporate entities or a Schedule Composite-COR for
corporate entities domiciled outside of Indiana.
•	 Check “PTET Return” if you are including a completed
Schedule PTET with this return.
P.	 Enter the total number of partners in the partnership in field
one of question P. Enter in the number of all partners who are
nonresidents of Indiana in field two of question P.
Q.	 Check the box if the partnership has a valid extension of time
or an electronic federal extension of time to file the return. If
applicable, enclose a copy of federal Form 7004 when filing
the state return.
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R.	 Check the box if this partnership is a member of any other
partnership.
S.	 Check this box if income is reported from disregarded
entities. If this box is checked, please enclose a list of the
disregarded entities with the return.
T.	 Check this box if claiming a qualified research expense credit
and attach the supporting schedule.

Aggregate Partnership Distributive Share Income

Note. Round all entries to the nearest whole dollar amount and
do not use a comma in dollar amounts of four digits or more. For
example, instead of entering “3,455” enter “3455.”
Line 1. Enter the amount from the U.S. partnership return
Schedule K:
•	 Net ordinary business income;
•	 Net income from real estate activities from Form 8825;
•	 Other rental income activities;
•	 Portfolio income and deductions;
•	 Royalties;
•	 Capital gains and losses;
•	 Guaranteed payments; and
•	 Other income.
Total net income (loss) from Schedule K, line 1 through line 11
less line 12, and a portion of line 13 related to investment income
(see instructions below).
The Section 179 deduction and that portion of investment
expenses included in federal Schedule K, part of line 12, and line
17 relating to investment portfolio (royalty) income, flowing
through to federal Schedule E, may be tentatively deducted.
Use the Worksheet for Partnership Distributive Share Income,
Deductions, and Credits to help you calculate this figure. The
income worksheet must be used if this partnership received any
distributive income from one of the following:
•	 An owned partnership interest;
•	 An estate; or
•	 A trust.
See the worksheet and instructions on page 13.
If filing federal Form 1065B by an electing large partnership,
use the amounts from line 1 through 8 of Schedule K. Convert
distributive share of income items into a Form 1065 Schedule K
format. Carry the figures to Form IT-65 and Schedule IN K-1.

Required Indiana State Modifications, Lines 2a
through 2d

Lines 2a through 2d. Enter any add-backs here. Enter the name of
the add-back, its 3-digit code, and its amount. Use a negative sign
for negative amounts (-). Attach additional sheets if necessary.

Adding Back Depreciation Expenses

Several of the discontinued add-backs were created by timing
differences between federal and Indiana allowable expenses.
Following is an example of how to report a difference.
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IT-65 Partnership Booklet 2023

Example. ABC Company has qualified restaurant equipment. For
federal tax purposes, they use the accelerated 15-year recovery
period for an asset placed in service in 2009. Since 2009, ABC
Company has been adding back the depreciation expense taken
for federal purposes that exceeded the amount allowable for
Indiana purposes. The accumulated depreciation on such an asset
through 2012 is, therefore, different for federal and state purposes.
This difference will remain until the asset is fully depreciated or
until the time of its disposition.
In this example, the asset was acquired in January 2009 at a
purchase price of $120,000. This normally would have a 25-year
recovery period, but IRC Sec. 168 allows for a 15-year recovery
period. Tax year 2012 is the last year ABC Company will have
reported a qualified restaurant equipment add-back until the end
of the 15-year recovery period.
If this asset was sold before being fully depreciated, the catch-up
modification would be reflected in the year of the sale. However, if
this property is held through 2023 (the 15th year of depreciation),
ABC Company will report a negative $12,800 catch-up add-back
on the 2023 state tax return.
Reporting Certain Prior-Year Modifications
In certain cases, a modification in a prior year may have been
limited due to various federal limitations, including basis
limitations, passive loss limitations, and at-risk loss limitations.
Even though certain modifications may not apply to activities
during the current taxable year, you may be required to report a
modification when you have income against which to realize the
modification. Use the modification code for the year in which
the modification was actually accrued. This includes, but is not
limited to, modifications required to be reported using 3-digit
code 149 (Meal Deduction Add-Back) and code 634 (COVIDRelated Employee Retention Credit Disallowed Expenses
Deduction).

The following add-backs and deductions should
be entered on lines 2a through 2d.
Conformity Add-Back

Before this publication was finalized Indiana had not conformed
to any changes to the Internal Revenue Code (IRC) that may
have become law after January 1, 2023. Therefore, the IRC used
to figure Indiana income may not wind up being the same as the
IRC used to figure federal income.
This add-back is specific to these annual current year conformity
issues. If uncertainty exists as to whether or not Indiana will adopt
some or all of the federal legislation passed after January 1, 2023,
that acts to modify federal AGI, you may add back those items
as an “other” add-back. In the event those items are adopted, an
amended return should be filed to recoup the add-back(s).
Conformity Add-Back – Positive Entry (3-digit code: 120)
This add-back is only for current year conformity issues.
Conformity issues for preceding tax years must be addressed on
the add-back line specific to the item in question.

If the state legislature does not conform to federal code changes
enacted after January 1, 2023, you may have to amend your return
at a later date to reflect any differences between Indiana and
federal law. You may wish to periodically check DOR’s homepage
at www.in.gov/dor for updates.
Conformity Add-Back – Negative Entry (3-digit code: 147)
This add-back generally is based on conformity issues arising from a
previous year. However, in rare cases this can arise from conformity
issues arising in the current year where the IRC treats an item as
taxable or nondeductible that was previously exempt or deductible.
Tax Add-Back (3-digit code: 100)
Add back all state taxes based on or measured by income, levied
by any state, which were deducted on the federal tax return.
Wagering taxes fall within this category to be added back.
However, the amount to be added back is being phased out. See
the following instructions.
•	

Wagering taxes. The portion of wagering taxes required to be
added back as a tax based on or measured by income is being
reduced (phased out). The percentage of taxes required to be
added back is determined by the first date of the taxpayer’s
taxable year, and is determined as follows: 2019 – 87.5% ;
2020 – 75%; 2021 – 62.5%; 2022 – 50%; 2023 – 37.5% 2024 –
25.0%; 2025 – 12.5%; 2026 and later – no add back required.
For example, Casino X deducts $10,000,000 in riverboat
wagering taxes in 2023. Casino X reports a $10,000,000 federal
income tax deduction for these taxes in 2023. Individual owns
10% of Casino X. Individual’s share of Casino X’s income
taxes is $1,000,000. Instead of Individual adding back the full
$1,000,000, Individual will add back $375,000.

Note. Income, losses and/or expenses from other schedules and
forms may flow through to federal Schedules C, E and F. For
example, partnership income from federal Schedule K-1 may be
included on federal Schedule E, while expenses from federal Form
8829 may be included on federal Schedule C. Make sure to check
these schedules and forms for any deduction that needs to be
added back.
Add-Back for Bonus Depreciation (3-digit code: 104)
An amount attributable to bonus depreciation in excess of any
regular depreciation that would be allowed if an election under
Internal Revenue Code (IRC) Section 168(k) had not been made
as applied to property in the year that it was placed into service.
Taxpayers that own property for which additional first-year special
depreciation for qualified property was allowed in the current
taxable year or in an earlier taxable year must add or subtract an
amount necessary to make the AGI equal the amount computed
without applying any bonus depreciation. The first-year special
depreciation includes 100% bonus depreciation. The subsequent
depreciation allowance must be calculated as if the bonus
depreciation had not been permitted until the property is disposed
or fully depreciated for Indiana purposes. Enclose a statement to
explain the adjustment. Income Tax Information Bulletin #118 at
www.in.gov/dor/files/reference/ib118.pdf explains the required
modification on the allowance of depreciation for state tax purposes.

Note. Special rules may apply if the bonus depreciation is taken
against property acquired in a like-kind exchange. See Income Tax
Information Bulletin #118 at www.in.gov/dor/files/reference/ib118.
pdf for additional information.
Add-Back for Section 179 Expense Excess (3-digit code: 105)
Add or subtract the amount necessary to make the adjusted gross
income of the taxpayer that placed any IRC Section 179 property
in service in the current taxable year or in an earlier taxable year
equal to the amount of adjusted gross income that would have
been computed as if the federal limit for expensing under IRC
section 179 was $25,000 as opposed to $1,000,000 (adjusted for
inflation).
Indiana has adopted an expensing cap of $25,000. The federal
increase to a $1,000,000 deduction was not allowed for purposes
of calculating Indiana adjusted gross income. However, the
$2,500,000 threshold for phase-out (adjusted for inflation) is
allowed for purposes of calculating Indiana AGI. The depreciation
allowances in the year of purchase and in later years must
be adjusted to reflect the additional first-year depreciation
deduction, including the special depreciation allowance for 100%
bonus depreciation property, until the property is sold or fully
depreciated for Indiana purposes.
Note. The net amount determined for the net bonus depreciation
or the IRC Section 179 add-back might be a negative figure
(because of a higher depreciation basis in subsequent years). If
it is, use a minus sign to denote that. (If the taxable income is a
loss, this adjustment increases a loss when added back.) Enclose a
statement to explain the adjustment.
Note. Special rules may apply if the Section 179 expensing is
taken against property acquired in a like-kind exchange. See
Income Tax Information Bulletin #118 at www.in.gov/dor/files/
reference/ib118.pdf for additional information.
Add-Back of OOS Municipal Obligation Interest
(3-digit code: 137)
Interest earned from a direct obligation of a state or political
subdivision other than Indiana (out of state, or OOS) is taxable by
Indiana if the obligation is acquired after Dec. 31, 2011. Interest
earned from obligations held or acquired before Jan. 1, 2012, is
not subject to Indiana income tax and should not be reported as
an add-back.
Note. Interest earned from obligations of Puerto Rico, Guam,
Virgin Islands, American Samoa, or Northern Mariana is not
included in federal gross income and is exempt under federal
law. There is no add-back for interest earned on these obligations.
For more information, see Income Tax Information Bulletin #19
available at www.in.gov/dor/files/reference/ib19.pdf.
Federal Repatriated Dividend Deduction Add-Back
(3-digit code: 139)
Add back the deduction for income under IRC Section 965
reported to partners. Report the add-back to the partners using
code 139 on Schedule IN K-1. For nonresident individuals,
include only the apportioned amount of the add-back.
IT-65 Partnership Booklet 2023

Page 9

Excess Federal Interest Deduction Modification
(3-digit code: 142)
IRC Section 163(j) limits the federal interest deduction for
most business interest to a portion of adjusted taxable income
plus business interest income. However, Indiana decoupled
from this provision. Subtract an amount equal to the amount
disallowed as a federal deduction for excess business interest
in the year in which the interest was first paid or accrued. Add
back any amount of interest previously deducted for Indiana and
allowable for federal purposes in the current taxable year. For
partners, the partner will be required to compute any add-back
at the partner level. For purposes of reporting this modification
and determining composite tax, compute any add-back as if the
partnership is the only source of the partner’s interest income/
deduction.
Specified Research and Experimental Expenses Add-Back
(3-digit code: 154)
If you claimed a federal income tax deduction for specified research
and experimental expenses that are required to be amortized for
federal purposes pursuant to IRC section 174, add back the amount
of expenses you actually deducted for federal income tax purposes.
See the instructions for Code 641 for further information on the
amount of expenses allowable as a deduction.
Note. If after printing of these instructions, IRC Section 174
is amended to allow immediate expensing of research and
experimental expenses and you elect to amortize those expenses,
you cannot use this code and Code 641 to accelerate the
allowance of your expenses.
Example. Corporation DEF incurred $100,000 of specified
research expenses in 2023. Corporation DEF reported $10,000
of amortized expenses in 2023. Corporation DEF will use Code
154 to add back the $10,000 claimed for federal purposes and use
Code 641 to report $100,000 allowable for Indiana purposes. For
2024-2028, Corporation DEF will continue to use Code 154 to
report timing differences.
Deduction for Interest on U.S. Government Obligations
(3-digit code: 610)
Deduct interest income, less related expenses, from certain
obligations of the U.S. government included as income on the
federal return. See Income Tax Information Bulletin #19 available
at www.in.gov/dor/files/reference/ib19.pdf for a list of eligible
items.
Indiana Lottery Winnings Annuity Deduction (3-digit code: 629)
If a taxpayer receives proceeds from a winning Hoosier Lottery
ticket for a lottery held prior to July 1, 2002, those proceeds may
be deducted from the taxpayer’s Indiana adjusted gross income.
This deduction applies only to prizes won from the Hoosier
Lottery Commission; proceeds from other state lotteries or from
other gambling sources, such as casinos, are not deductible. In
addition, proceeds from winning Hoosier Lottery tickets for
lotteries held after June 30, 2002, are not deductible.
Note. Individuals or entities that have purchased Hoosier Lottery
prizes from a winning ticket holder for valuable consideration are
not eligible for this deduction.
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IT-65 Partnership Booklet 2023

Infrastructure Fund Gift Deduction (3-digit code: 631)
Shareholders or partners may be eligible to claim a deduction if a
contribution has been made to a regional development infrastructure
fund. Record the amount on Part 4, lines 5-7 of the IN K-1.
Filers should keep detailed records of the contribution as DOR
can ask filers to provide this information at a later date.
Indiana-only Tax-exempt Bonds Deduction (3-digit code: 636)
If you had interest from a bond issued by or in the name of certain
Indiana government subdivisions or entities or amounts received
upon redemption or maturity of the bond, deduct any interest or
other income included in federal gross income. Do not deduct
any bond interest that is excluded from federal gross income.
In addition, if you sell the bond, do not deduct any amounts for
which the bond is sold in excess of your purchase price. See IC
6-8-5-1 for further information regarding the deduction.
Small Employer Health Insurance Premium Deduction
(3-digit code: 639)
If you:
•	 claimed a federal tax credit for small employer health
insurance premiums under IRC section 45R; and
•	 would have been permitted a deduction for those premiums
except for the disallowance under IRC section 280C(h),
you are permitted a deduction for the portion of the premiums
disallowed for federal purposes. Use Code 639 to enter the
amount of premiums for which a deduction was disallowed for
federal purposes because you claimed a federal tax credit for small
employer health insurance premiums.
Specified Research and Experimental Expenses Deduction
(3-digit code: 641)
If you claimed a federal income tax deduction for specified
research and experimental expenses that are required to be
amortized for federal purposes pursuant to IRC section 174,
deduct the amount of expenses paid or incurred in the current
taxable year for federal income tax purposes. See the instructions
for Code 154 for further information on the amount of expenses
required to be added back. Do not claim this deduction for any
research expenses for which a deduction is disallowed under IRC
section 280C(c).
Note. If after printing of this bulletin, IRC Section 174 is amended to
allow immediate expensing of research and experimental expenses
and you elect to amortize those expenses, you cannot use this code
and Code 154 to accelerate the allowance of your expenses.
Example. Corporation DEF incurred $100,000 of specified research
expenses in 2023. Corporation DEF reported $10,000 of amortized
expenses in 2023. Corporation DEF will use Code 641 to report
$100,000 allowable for Indiana purposes and use Code 154 to add back
the $10,000 claimed for federal purposes. For 2024-2028, Corporation
DEF will continue to use Code 154 to report timing differences.
Line 2d. Enter the total amount of add-backs and subtractions
from any additional sheets. If more than five modifications are
needed, attach additional sheets detailing them. Total the amounts
from the additional sheets and enter the total here (use a negative
sign to denote a negative amount).

Line 3. Add lines 1 through 2d.

Apportionment of Income

Partnerships deriving income from sources within and outside
Indiana and having non-Indiana-domiciled partners or nonunitary corporate partners must complete line 4.
Line 4. Enter the Indiana apportionment percentage if the
partnership has any multistate business activities. If apportioning
income, enter the Indiana percentage (rounded to two decimal
places) from Schedule E or Schedule E-7. Do not enter 100%.
Before continuing to lines 5 through 14, complete Schedule IN
K-1 for each partner.

Summary of Calculations for Form IT-65
Sales/Use Tax

IC 6-2.5-3-2 imposes a use tax on the use, storage, or
consumption of tangible personal property in Indiana that was
purchased or rented in a retail transaction, wherever located, and
sales tax was not paid. This rate is 7%. Examples of taxable items
include:
•	 Magazine subscriptions;
•	 Office supplies;
•	 Electronic components; and
•	 Rental equipment.
Any property purchased free of tax by use of an exemption
certificate may be subject to the use tax. In addition, any property
purchased out of state or exempt from Indiana sales or use tax and
converted to a nonexempt use by the business is subject to the use
tax at the time of conversion. Complete the Sales/Use Tax Worksheet
below to compute any sales/use tax liability. For more information
about use tax, visit www.in.gov/dor or call 317-232-2240.
Note. A registered retail sales merchant or out-of-state use tax
agent for Indiana must report nonexempt purchases used in
the Indiana business. This is reported on Form ST-103, Indiana

Annual, or Monthly Sales and Use Tax Voucher. If use tax is not
paid by the original due date of the return, interest will be added
to the amount due. A 10% penalty or $5, whichever is greater, is
charged on each unpaid use tax liability.
Caution. Do not report totals from Form ST-103 on this
worksheet or on Form IT-65.
Line 5. Enter the use tax due from the Sales/Use Tax worksheet
below.
Line 6a. Enter the total tax liability of the nonresident members
from line 15G of Schedule Composite (column D plus column F).
Enclose Schedule Composite.
Line 6b. Enter the total tax liability of the nonresident corporate
entity(ies) from line 29C of Schedule Composite-COR. Enclose
Schedule Composite-COR.
Line 6c. Enter the total tax from Schedule PTET, Line 24.
Enclose Schedule PTET.
Line 8. Enter the total amount of pass-through withholding and
Pass Through Entity Tax (PTET) remitted by other entities on
your behalf. Enclose Schedule IN K-1 from the paying entity.
Line 9. Enter the total composite withholding payments and
PTET payments from Form IT-6WTH. Amounts withheld from
nonresident partners included in the composite return must be
remitted using Form IT-6WTH.
Note. Do not claim withholding or PTET with Form IT-6WTH
until you have remitted the withholding or PTET to DOR. Any
payments made with the return should not be included in line 9.
Line 10. Enter any other payments and credits belonging to the
partnership.
Note. Certain Motorsports Investment District Income (prize
winnings) and IN state and Marion County withholding taxes
may be reported on Form IN-MSID and/or Form IN-MSID-A.

Sales/Use Tax Worksheet

List all purchases made during the tax year from out-of-state retailers.
Column A

Description of personal property purchased from out-of-state retailer

Column B

Date of purchase(s)

Column C

Purchase Price of
Property(s)

Magazine subscriptions:
Mail order purchases:
Internet purchases:
Other purchases:
1.	Total purchase price of property subject to the sales/use tax: enter total of Columns C...............................

1

2.	Sales/use tax: Multiply line 1 by .07 (7%)......................................................................................................

2

3.	Sales tax previously paid on the above items (up to 7% per item)................................................................

3

4.	Total amount due: Subtract line 3 from line 2. Carry to Form IT-65, line 5. If the amount is negative, enter
zero and put no entry on line 5 of the IT-65...................................................................................................

4

IT-65 Partnership Booklet 2023

Page 11

If the partnership allocates any of those prize winnings and
withholding amounts to the ultimate recipients (e.g., corporation,
partnership, individual, etc.), the partnership must issue form INMSID-A to the recipients to reflect the amounts passed through
(winnings and withholdings). If you did not allocate amounts
to other ultimate recipients, you should issue an IN-MSID-A to
yourself in order to claim the credit for these amounts.
A detailed explanation must be enclosed for any credits claimed
on this line.
Line 11. Enter the amount of Economic Development for a
Growing Economy (EDGE) credit being claimed from line 19
of Schedule IN-EDGE if not passing through to partners on
Schedule IN K-1. Complete Schedule IN-EDGE and enclose it
with the return. Otherwise, this credit will be denied.
Line 12. Enter the amount of EDGE-R credit being claimed from
line 19 of Schedule IN-EDGE-R if not passing through to partners
on Schedule IN K-1. Complete Schedule IN-EDGE-R and enclose
it with the return. Otherwise, this credit will be denied.
Line 13. Enter the total amount of credits claimed from Schedule
IN-OCC, and enclose Schedule IN-OCC with the return. Otherwise,
these credits will be denied. If filing this schedule with Form IT-65,
only reflect the credit amounts from Schedule IN K-1s on behalf of
the entity’s partners who are included on the composite return. Do
not include credits from the IN K-1s that belong to partners who
are not included on the composite return. Enter the combined pro
rata credits on one line of the IN-OCC; do not enter a line for each
composite member. The total amount of credit for the members
on the composite return cannot exceed the entity’s total tax due. In
addition, sales and use tax cannot be offset by these nonrefundable
credits if included in the total tax due. If an individual income tax
return is being filed for a nonresident member included on the
Schedule Composite, the nonresident member should use the 4-digit
code provided on Schedule IN K-1, not the 3 digit code utilized on
the pass-through entity’s income tax return.
Line 14. Subtract lines 8 through 13 from line 7. If a balance due
remains, proceed to lines 15 through 17.
Line 15. Enter the total interest due.
See Departmental Notice #3 available at www.in.gov/dor/files/
reference/dn03.pdf for the current interest rate or contact DOR by
calling 317-232-2240.
Line 16. Enter the total penalty due. The penalty for late payment
is 10% of the amount (but not less than $5) of any composite tax
due on line 14 paid after the 15th day of the 4th month following
the end of the partnership’s taxable year. The penalty is still due on
use tax paid after the original due date of the return.
If a return showing no liability on line 7 is filed late, the penalty
for failure to file by the due date is $10 per day the return is past
due, up to a maximum of $250. In addition, a separate $10 penalty
is assessed on each Schedule IN K-1 information return that is
filed late.
Page 12

IT-65 Partnership Booklet 2023

Note. No penalty is due on composite withholding tax if at
least 80% of the withholding tax for the current year, or 100%
of the prior year’s withholding tax is remitted by the 15th day
of the 4th month following the end of the tax year. Penalty is
applicable if all remaining tax and interest due is not paid by
the extended due date.
Line 17. If line 14 is greater than zero, add lines 14 through 16
and enclose a separate remittance for the total amount owed
for each Form IT-65 filed. Please pay in U.S. funds. If paying by
check, make check payable to Indiana Department of Revenue.
Line 18. If the total of lines 8 through 13 exceeds line 7, subtract
the total of lines 15 and 16 from line 14. If the result is less than
0, this is the net overpayment. If penalties and interest are due
because of a delinquent filing or payment, the overpayment must
be reduced by these charges. If the result is a balance due, enter
the difference on line 18. An overpayment credit may not be
carried over to the following year, so any overpayment amount
will be refunded.

Certification of Signatures and
Authorization Section
Sign, date, and print the name on the return. If a paid preparer
completes the return, authorize DOR to discuss the tax return
with the preparer by checking the authorization box above the
line for the name of the personal representative.

Personal Representative Information

Typically, DOR contacts a taxpayer if we have any questions or
concerns about the tax return. If the taxpayer wants DOR to be able
to discuss the tax return with someone else (e.g., the person who
prepared it or a designated person), this area must be completed.
First, check the “Yes” box that follows the sentence “I authorize
the Department to discuss my tax return with my personal
representative.”
Next, enter:
•	 The name of the individual designating as a personal
representative; and
•	 The individual’s email address.
If this area is completed, DOR is authorized to contact the
personal representative, instead of the taxpayer, about this tax
return. After the return is filed, DOR will communicate primarily
with the designated personal representative for any matters
concerning this return.
Note. The authorization for DOR to be in contact with your
personal representative may be revoked at any time. To do so,
tell us in a signed statement. Include the taxpayer name, federal
identification number, and the year of the tax return. Mail the
statement to Indiana Department of Revenue, P.O. Box 7206,
Indianapolis, IN 46207-7206.

Worksheet for Partnership Distributive Share Income, Deductions and Credits
Use this worksheet to compute the entry for line 1 of Form IT-65 and to assist in computing amounts reported on Schedule IN K-1.
Enter the total distributive share of income from each item as reportable on Form 1065, Schedule K. Do not complete Column B and
C entry lines unless the partnership received distributive share or tiered income from other entities.
A.
Partnership
Income
All Sources

Distributive Share Amounts
Partnership’s Distributive Share of Items
1.	 Ordinary business income (loss)...............................................
2.	 Net rental real estate income (loss)..........................................
3.	 Other net rental income.............................................................
4.	 Guaranteed payments...............................................................
5.	 Interest income..........................................................................
6a.	 Ordinary dividends....................................................................
7.	 Royalties...................................................................................
8.	 Net short-term capital gain (loss)..............................................
9a.	 Net long-term capital gain (loss)...............................................
10.	 Net IRC Section 1231 gain (loss)..............................................
11.	 Other income (loss)...................................................................
Less Allowable Deductions for State Tax Purposes
12.	

B.
Distributions from
Partnerships /
Estates / Trusts
Everywhere

C.
Distributions
Attributed
to Indiana

Enter for line
14B below total
distributive share
income received
by the partnership
from all other nonunitary partnerships,
estates, and trusts.
Enter for line 15B
an amount equal
to required state
modifications for
Indiana Adjusted
Gross Income.

Enter for line
14C below, total
distributive share
income received by
the partnership from
other partnerships,
estates, and trusts
that were derived
from or allocated to
Indiana. Enter for
line 15C an amount
equal to the Indiana
modifications to
adjusted gross
income attributed to
Indiana.

14B

14C

15B

15C

IRC Section 179 expense deduction 1................................

13A.	 Portion of expenses related to investment portfolio income,
including investment interest expense and other (federal
non-itemized) deductions....................................................
13B.	 Other information from line 20 of federal K-1 related to
investment interest and expenses not listed elsewhere......
14.	

Carry total on line 14A to Form IT-65 line 1 on front
page of return.....................................................................

15.	

Total of Indiana state modifications to distributive share income
(see line 2f, Form IT-20S).........................................................................................

16.	

Net Indiana adjusted gross income distributions from
partnerships, estates, and trusts (add lines 14C and 15C).........................................................................

16C

17.	

Enter amount of Indiana pass-through credits attributed from
partnerships, estates, and trusts, if any.......................................................................................................

17C

14A

Worksheet for Attributing Partnership Income for Unitary Corporate Partners
Use the worksheet whenever partnership income is being distributed to a corporate partner having a unitary relationship with the partnership. A
unitary business relationship means maintaining business activities or operations that are of mutual benefit, dependent upon, or contributory to one
another in transacting business between a corporate partner and the partnership. Unity may be established whenever there is unity of operation
and use evidenced by centralized management or executive force, centralized purchasing, advertising, accounting, or other controlled interaction
between a corporate partner and the partnership.
If a corporate partner and a partnership maintain a unitary business relationship as described above, the partnership distribution shall be distributed to
the partner without any apportionment by the partnership. If the partner derives income from sources both within and outside Indiana and is required to
apportion its income, the partner’s apportionment factor shall include the partner’s proportionate share of the apportionment factor of the partnership.
Use the following table to show apportionment factor’s values from the partnership assigned to the unitary corporate partner. Partnerships deriving
income from sources both within and outside Indiana or having any corporate partners must complete the Apportionment Schedule E.
Enter the partner’s pro rata amounts as determined by the partnership entity’s completed Apportionment Schedule E. Duplicate this worksheet for
each corporate partner. (These amounts are to be included with the corporate partner’s own apportionment factor.)
Apportionment Schedule E

Receipts Factors

Total from Indiana Sources

Line 1A

Total from All States

Line 1B

IT-65 Partnership Booklet 2023

Page 13

Officer Information

An officer of the organization must sign and date the tax return and
enter the officer’s name and title. Please enter a daytime telephone
number where DOR may call if there are any questions about the
tax return. Also, enter your email address to be contacted via email.

Paid Preparer Information

Fill out this area if a paid preparer completed this tax return. The
paid preparer must sign and date the return. In addition, please
enter the following:
•	 The paid preparer’s email address;
•	 The name of the firm the paid preparer is employed by;
•	 The paid preparer’s PTIN (personal tax identification
number). This must be the paid preparer’s PTIN; do not enter
an FID or Social Security number;
•	 The paid preparer’s complete address.
Note. Complete this area even if the paid preparer is the same
individual designated as the personal representative.

Mailing Options
If taxes are owed, please mail the completed return to:
Indiana Department of Revenue
P.O. Box 7205
Indianapolis, IN 46207-7205
If taxes are not owed, please mail the completed return to:
Indiana Department of Revenue
P.O. Box 7147
Indianapolis, IN 46207-7147

Instructions for Schedule IN K-1
Enclose a copy of each partner’s Schedule IN K-1 with Form IT-65.
Also, provide a completed copy of Schedule IN K-1 to each partner.
Beginning with tax years ending after Dec. 31, 2019, a taxpayer
that is required to file 25 or more Schedule IN K-1s must file the
Schedule IN K-1s in an electronic format. For taxpayers filing on
a calendar year basis, this electronic filing requirement begins
with tax year 2020.

Line 4a and b. If the partner is a disregarded entity (DE), enter
the partner’s name and FEIN, and indicate what kind of partner
the entity is (see instructions for federal Schedule K-1 at apps.irs.
gov/app/picklist/list/formsPublications.html).
Line 5. List the type of entity of the partner for whom you are
issuing the Schedule IN K-1.
Line 6. Enter the partner’s state of residence or commercial
domicile.
Line 7. If partner was an Indiana nonresident individual on Jan.
1, 2023, and worked in Indiana as of Jan. 1, 2023, then enter the
individual’s 2-digit county of employment in this box. You may
get the 2-digit code number from Departmental Notice #1 at
www.in.gov/dor/files/reference/dn01.pdf.
Line 8. Enter the name of the entity that remitted actual payment
of the withholding.
Line 9. Enter the FEIN of the paying entity. Note: Do not obscure
any digits when entering the FEIN.
Line 10. Enter the amount of Indiana PTET paid.
Line 11. Enter the amount of Indiana state tax withheld. This
amount should only include payments made into the corporate
account and withholding amounts passed through by another entity.
Line 12. Enter the amount of Indiana county tax withheld.

Part 2 – Pro Rata Share of Indiana Pass-through
Tax Credits from Partnership

If the partnership has available any eligible Indiana credits flowing
through to the partners, enter the following:
•	 Federal employer identification number from the entity that
the credit was awarded to. If the credit is passed through
from another entity enter the FEIN from Schedule IN K-1;
•	 The credit’s certification year;
•	 For credit codes 818, 820, 835, 839, 849, 857, 858, 860,
863, 865, 867, 868, 869, 874, 1818, 1820, 1835, 1849, 1858,
1860, 1863, 1865, 1867, 1868, and 1869, enter the credit’s
certification, project, or PIN number;
•	 The credit’s 3- or 4-digit credit code; and
•	 The pro rata amount of credits allotted to each partner.

Part 1 – Partner’s Identification Section

A completed IN-OCC credit schedule with Form IT-65 to support
the credit distribution for certified credits must be enclosed;
otherwise, the credits will be denied.

Line 1. Enter the name of the partner (individual, entity, trust
name, etc.).
Line 2. Enter the partner’s Social Security number if an individual
or the partner’s federal employer identification number (FEIN) if
the partner is another entity.

See the descriptive list of pass-through tax credits that may be
available to a pass-through entity on page 20. Each credit
is assigned a 3- or 4-digit code number. This should be used
for identification purposes when reporting and claiming these
credits. For more information, see Income Tax Information
Bulletin #59 available at www.in.gov/dor/files/reference/ib59.pdf.

Line 3. Enter the applicable pro rata percentage of the partner’s
interest in the partnership. The percentage should be adjusted to
an annual rate if necessary.

Note. The 3-digit codes utilized on behalf of each partner on Schedule
IN-OCC towards composite tax should be reflected as 4-digit codes
on Part 2 of Schedule IN K-1. Any pro rata portion of the partner’s

Complete a separate Schedule IN K-1 to identify each partner.
Check the box if filing an amended return.

Page 14

IT-65 Partnership Booklet 2023

credit above the 4-digit amount previously utilized towards composite
tax should be reported on Part 2 of Schedule IN K-1 as a 3-digit code
and the remaining amount reflected in the amount claimed column.
Example. Company A used $400 of the partner’s $700 total
Hoosier Business Investment Credit to offset his tax liability on
the composite filing. The partner has $300 remaining credit. The
IN K-1 will breakdown the credit as follows:
Credit Name

3- or 4Amount
Digit Code

Hoosier Business Investment Credit –
Composite

1820

$400

Hoosier Business Investment Credit

820

$300

If the partner has other taxable Indiana-source income, Form IT40PNR, reporting all Indiana-source income (including the income
taxed on the composite return) should be filed. When completing
the IN-OCC, the partner will be able to use up to $700 of the HBI
credit, using the amount associated with the 4-digit number first.
For example, if the total state tax liability is $500, “HBI 1820 $400”
will be listed on Schedule IN-OCC, and the remaining amount is
then reported as needed as “HBI 820 $100.” A 3-digit code 820 in
the amount of $200 remaining will be available to carryforward.
Credits reported on Part 2 of Schedule IN K-1 that are used to
offset tax liabilities will be reported on the following lines on
Form IT-65:
•	 Any credits not requiring an IN EDGE, IN EDGE-R, or
IN-OCC schedule will be reported on line 10;
•	 EDGE credit code 839 will be reported on line 11;
•	 EDGE-R credit code 857 will be reported on line 12; and
•	 IN-OCC credit codes 818, 820, 849, 858, 860, 863, 865, 867,
868, 869, 1818, 1820, 1849, 1858, 1860, 1863, 1865, 1867,
1868, and 1869 will be reported on line 13.

Part 3 – Distributive Share Amount

Complete lines 1 through 13b for the partner. Also provide the
partner with a Schedule IN K-1 showing the partner’s share of
income, credits, and modifications. If filing federal Form 1065B, convert taxable income distributions to federal Form 1065
Schedule K-1 format.
Line 1 through line 13b. For full-year Indiana resident partners,
complete these lines as shown on the federal Schedule K-1, Form
1065 or Form 8865.

On line 13a or 13b, include investment interest expenses
attributed to royalty income. Also include all other federal
deductions. However, for individual partners, do not include
those deductions treated as itemized deductions. Do not report
any other type of investment interest expense, itemized deduction,
or carryover loss on this line.
Line 14. Add the sum of lines 1 through 11 and subtract lines 12,
13a, and 13b.
The amount on this line is used solely to determine the income
subject to withholding and Pass Through Entity Tax. The partner
must make any determinations related to the t