The effect of known growth artifacts on the absorption and photoluminescence properties of InN films is determined using linear combination of atomic orbitals electron band structure calculations. InxAl1-xN interfacial layers are examined for various atomic fractions of Al, since these layers are observed to be relatively thick (up to 100 nm) for thin films of InN deposited on AlN or sapphire. It is found that for penetration of Al atoms in InN, forming In-rich InxAl1-xN, a decrease of the energy band gap of InN occurs, despite AlN having a much larger band gap than InN. Γc13↔Γν154 exciton emissions for InxAl1-xN are found to have an energy of 0.765–0.778 eV and may explain recent photoluminescence data for InN. Optical absorption for this alloy is dominated by a 1.58–1.62 eV transition. The second artifact investigated here is high concentration oxygen impurity atoms in wurtzite InN. Segregated oxygen species are not considered, only alloyed species with oxygen substituting on the nitrogen site. For this arrangement a new ternary semiconductor InOyN1-y with y∼0.1 is identified. A model of the tetrahedral cell In–O is made and the energy band gap of InOyN1-y is calculated. It is found that the presence of O atoms in InN can decrease the energy band gap. Optical absorption as low as 1.19 eV can be evident. The exciton emissions Γc12↔Γν151 in InOyN1-y were found to vary in energy over the range 0.84–1.01 eV. © 2004 American Vacuum Society.