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Indiana Supreme Court holds foreign source dividends not deductible in calculating net operating loss

The Indiana Supreme Court has held that foreign source dividends (FSDs) deductible from adjusted gross income are not deductible when calculating a taxpayer’s Indiana net operating loss (NOL) deduction. Also, the Court rejected the taxpayer’s argument that the Indiana tax statutes facially violated the Foreign Commerce Clause of the U.S. Constitution by disallowing the FSD deduction in the Indiana NOL calculation, but incorporating the federal domestic source dividend deduction in the same calculation.

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