My understanding is that the IN CPA's are right because Title 6 of the Indiana Code does not provide for any adjustment for PAL but specifically requires adjustments for bonus depreciation and §179 deduction.  This is not unreasonable except it does create a timing difference in terms of recognition of income and loss, which would ultimately be reconciled at the disposition of the asset in question because IN provides an adjustment for the difference in adjusted basis (as part of a 3-step approach).