OK
Oklahoma House Bill HB3529

Oklahoma 2022 Regular Session

Oklahoma House Bill HB3529 Compare Versions

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2828 STATE OF OKLAHOMA
2929
3030 2nd Session of the 58th Legislature (2022)
3131
3232 HOUSE BILL 3529 By: Virgin
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3838 AS INTRODUCED
3939
4040 An Act relating to revenue and taxation; a mending 68
4141 O.S. 2021, Section 2358, which relates to Oklahoma
4242 taxable income and Oklahoma adjus ted gross income;
4343 modifying provisions for exemption of certain capit al
4444 gains; modifying reference to taxable years;
4545 providing exception f or certain livestock; providing
4646 for exemption based upon treatment of assets for
4747 purposes of federal income taxation; and providing an
4848 effective date.
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5656 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
5757 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2358, is
5858 amended to read as follows:
5959 Section 2358. For all tax years beginning after December 31,
6060 1981, taxable income and adjusted gross income shall be adjusted to
6161 arrive at Oklahoma taxable income and Oklaho ma adjusted gross income
6262 as required by this section.
6363 A. The taxable income of any taxpayer shall be adjust ed to
6464 arrive at Oklahoma taxable income for corporations and Oklahoma
6565 adjusted gross income for individ uals, as follows:
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9292 1. There shall be added in terest income on obligations of any
9393 state or political subdivision thereto which is not otherwise
9494 exempted pursuant to other laws of this state, to the extent that
9595 such interest is not included in taxable income and adjusted gross
9696 income.
9797 2. There shall be deducted amounts included in such income that
9898 the state is prohibited from taxing because of the provisi ons of the
9999 Federal Constitution, the State Constitution, federal laws or laws
100100 of Oklahoma.
101101 3. The amount of any federal net operating loss deduction shall
102102 be adjusted as follows:
103103 a. For carryovers and carrybacks to taxable years
104104 beginning before January 1, 1981, the amount of any
105105 net operating loss deduction allowed to a taxpayer for
106106 federal income tax purpo ses shall be reduced to an
107107 amount which is the same portion thereof as the loss
108108 from sources within this state, as determined pursuant
109109 to this section and Section 2362 of this title, for
110110 the taxable year in which such loss is sustained is of
111111 the total loss for such year;
112112 b. For carryovers and carryba cks to taxable years
113113 beginning after December 31, 1980, the amount of any
114114 net operating loss deduction allowed for the taxable
115115 year shall be an amount equal to the aggregate of the
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142142 Oklahoma net operating loss ca rryovers and carrybacks
143143 to such year. Oklahoma net operating losses shall be
144144 separately determined by reference to Section 172 of
145145 the Internal Revenue Code, 26 U.S.C., Section 172, as
146146 modified by the Oklahoma Income Tax Act, Section 2351
147147 et seq. of this title, and shall be allowed without
148148 regard to the existence of a federal net operating
149149 loss. For tax years beginning after December 31,
150150 2000, and ending before January 1, 2008, the years to
151151 which such losses may be carried shall be determined
152152 solely by reference to Section 172 of the Internal
153153 Revenue Code, 26 U.S.C., Section 172, with the
154154 exception that the terms "net operating loss" and
155155 "taxable income" shall be replaced with "Oklahoma net
156156 operating loss" and "Oklahoma taxable income ". For
157157 tax years beginning after December 31, 2007, and
158158 ending before January 1, 2009, years to which such
159159 losses may be carried back shall be limited to two (2)
160160 years. For tax years beginning after December 31,
161161 2008, the years to which such losses may be carried
162162 back shall be determined solely by reference to
163163 Section 172 of the Internal Revenue Code, 26 U.S.C.,
164164 Section 172, with the exception that the terms "net
165165 operating loss" and "taxable income" shall be replaced
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192192 with "Oklahoma net operating loss " and "Oklahoma
193193 taxable income".
194194 4. Items of the following nature shall be allocated as
195195 indicated. Allowable deductions attributable to items separately
196196 allocable in subpara graphs a, b and c of this paragraph, whether or
197197 not such items of income were actually received, shall be all ocated
198198 on the same basis as those items:
199199 a. Income from real and tangible personal property, such
200200 as rents, oil and mining production or royalties , and
201201 gains or losses from sales of such property, shall be
202202 allocated in accordance with the situs of such
203203 property;
204204 b. Income from intangible personal pro perty, such as
205205 interest, dividends, patent or copyright royalties,
206206 and gains or losses from sales of such property, shall
207207 be allocated in accordance with the domiciliary situs
208208 of the taxpayer, except that:
209209 (1) where such property has acquired a nonunitary
210210 business or commercial situs apart from the
211211 domicile of the taxpayer such income shall be
212212 allocated in accordance with such business or
213213 commercial situs; interest income from
214214 investments held to generate working capital for
215215 a unitary business enterprise sh all be included
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242242 in apportionable income; a resident trust or
243243 resident estate shall be treated as ha ving a
244244 separate commercial or business situs insofar as
245245 undistributed income is concerned, but shall not
246246 be treated as having a separate commercial or
247247 business situs insofar as distributed income is
248248 concerned,
249249 (2) for taxable years beginning after Decembe r 31,
250250 2003, capital or ordinary gains or losses from
251251 the sale of an ownership interest in a publicly
252252 traded partnership, as defined by Section 7704(b)
253253 of the Internal Revenue Code, shall be allocated
254254 to this state in the ratio of the original cost
255255 of such partnership's tangible property in this
256256 state to the original cost of such partnership 's
257257 tangible property everyw here, as determined at
258258 the time of the sale; if more than fifty percent
259259 (50%) of the value of the partnership 's assets
260260 consists of intangible a ssets, capital or
261261 ordinary gains or losses from the sale of an
262262 ownership interest in the partnership shall be
263263 allocated to this state in accordance with the
264264 sales factor of the partnership for its first
265265 full tax period immediately preceding its tax
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292292 period during which the ownership interest in the
293293 partnership was sold; the provisions of this
294294 division shall only apply if the capital or
295295 ordinary gains or losses f rom the sale of an
296296 ownership interest in a partnership do not
297297 constitute qualifying gain receiving capital
298298 treatment as defined in subparagraph a of
299299 paragraph 2 of subsection F of this section,
300300 (3) income from such property which is required to be
301301 allocated pursuant to the provisions of paragraph
302302 5 of this subsection shall be allocated as herein
303303 provided;
304304 c. Net income or loss from a business activity which is
305305 not a part of business carried on within or without
306306 the state of a unitary character shall be sepa rately
307307 allocated to the state in which such activity is
308308 conducted;
309309 d. In the case of a manufact uring or processing
310310 enterprise the business of which in Oklahoma consists
311311 solely of marketing its products by:
312312 (1) sales having a situs without this state, shipp ed
313313 directly to a point from without the state to a
314314 purchaser within the state, commonly known as
315315 interstate sales,
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342342 (2) sales of the product stored in public warehouses
343343 within the state pursuant to "in transit"
344344 tariffs, as prescribed and allowed by the
345345 Interstate Commerce Commission, to a purchaser
346346 within the state,
347347 (3) sales of the product stored in public warehouses
348348 within the state where the shipment to such
349349 warehouses is not covered by "in transit"
350350 tariffs, as prescribed and allowed by the
351351 Interstate Commerce Commission, to a purchaser
352352 within or without the state,
353353 the Oklahoma net income shall , at the option of the
354354 taxpayer, be that portion of the total net income of
355355 the taxpayer for federal income tax purposes derived
356356 from the manufacture and/or processi ng and sales
357357 everywhere as determined by the ratio of the sales
358358 defined in this section mad e to the purchaser within
359359 the state to the total sales everywhere . The term
360360 "public warehouse" as used in this subparag raph means
361361 a licensed public warehouse, the p rincipal business of
362362 which is warehousing merchandise for the public;
363363 e. In the case of insurance companies, Oklahoma taxable
364364 income shall be taxable income of the taxpayer for
365365 federal tax purposes, as adjusted for the adjustments
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392392 provided pursuant to the provisions of paragraphs 1
393393 and 2 of this subsection, apportioned as follows:
394394 (1) except as otherwise provided by divi sion (2) of
395395 this subparagraph, taxable income of an insurance
396396 company for a taxable year shall be apportioned
397397 to this state by multiplying such income by a
398398 fraction, the numerator of which is the direct
399399 premiums written for insu rance on property or
400400 risks in this state, and the denominator of which
401401 is the direct premiums written for insurance on
402402 property or risks everywhere . For purposes of
403403 this subsection, the term "direct premiums
404404 written" means the total amount of direct
405405 premiums written, assessments and annuity
406406 considerations as reported for the taxable year
407407 on the annual statement filed by the company with
408408 the Insurance Commissioner in th e form approved
409409 by the National Association of Insurance
410410 Commissioners, or such other for m as may be
411411 prescribed in lieu thereof,
412412 (2) if the principal source of premiums written by an
413413 insurance company consists o f premiums for
414414 reinsurance accepted by it, th e taxable income of
415415 such company shall be apportioned to this state
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442442 by multiplying such income by a fraction, the
443443 numerator of which is the sum of (a) direct
444444 premiums written for insurance on property or
445445 risks in this state, plus (b) premiums written
446446 for reinsurance accepted in respect of property
447447 or risks in this state, and the denominator o f
448448 which is the sum of (c) dir ect premiums written
449449 for insurance on property or risks everywhere,
450450 plus (d) premiums written for reinsurance
451451 accepted in respect of proper ty or risks
452452 everywhere. For purposes of this paragraph,
453453 premiums written for reinsuranc e accepted in
454454 respect of property or risks in this state,
455455 whether or not otherwise determinable, may at the
456456 election of the company be determined on the
457457 basis of the proportion which premiums written
458458 for insurance accepted from companies
459459 commercially domiciled in Oklahoma bears to
460460 premiums written for reinsurance accepted from
461461 all sources, or alternatively in the proportion
462462 which the sum of the direct premiums written fo r
463463 insurance on property or risks in this state by
464464 each ceding company from which reinsur ance is
465465 accepted bears to the sum of the total direct
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492492 premiums written by each such ceding company for
493493 the taxable year.
494494 5. The net income or loss remaining after the separate
495495 allocation in paragraph 4 of this subsection, being that which is
496496 derived from a unitary business enterprise , shall be apportioned to
497497 this state on the basis of the arithmetical average of three factors
498498 consisting of property, payroll and sales or gross revenue
499499 enumerated as subparagraphs a, b and c of this paragraph . Net
500500 income or loss as used in this paragrap h includes that derived from
501501 patent or copyright royalties, purchase discounts, and interest o n
502502 accounts receivable relating to or arising from a business activity,
503503 the income from which is apportioned pursuant to this subsect ion,
504504 including the sale or oth er disposition of such property and any
505505 other property used in the unitary enterprise . Deductions used in
506506 computing such net income or los s shall not include taxes based on
507507 or measured by income . Provided, for corporations w hose property
508508 for purposes of the tax imposed by Section 2355 of this title has an
509509 initial investment cost equaling or excee ding Two Hundred Million
510510 Dollars ($200,000,00 0.00) and such investment is made on or after
511511 July 1, 1997, or for corporations which e xpand their property or
512512 facilities in this state and such expansion has an investment cost
513513 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
514514 over a period not to exceed three (3) years, and such expansion is
515515 commenced on or after January 1, 2000, the three factors sha ll be
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542542 apportioned with property and payroll, each comprising twenty -five
543543 percent (25%) of the apportionment factor and sales comprising fif ty
544544 percent (50%) of the apportionment factor . The apportionment
545545 factors shall be compu ted as follows:
546546 a. The property factor is a fraction, the numerator of
547547 which is the average value of the taxpayer 's real and
548548 tangible personal property owned or rented a nd used in
549549 this state during the tax period and the denominator
550550 of which is the averag e value of all the taxpayer 's
551551 real and tangible personal property everywhere owned
552552 or rented and used during the tax period.
553553 (1) Property, the income from which is separa tely
554554 allocated in paragraph 4 of this subsection,
555555 shall not be included in determinin g this
556556 fraction. The numerator of the fraction shall
557557 include a portion of the investment in
558558 transportation and other equipmen t having no
559559 fixed situs, such as rolling stoc k, buses, trucks
560560 and trailers, including machinery and equipment
561561 carried thereon, air planes, salespersons '
562562 automobiles and other similar equipment, in the
563563 proportion that miles traveled in Oklahoma by
564564 such equipment bears to total miles traveled,
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591591 (2) Property owned by the taxpayer is valued at its
592592 original cost. Property rented by the ta xpayer
593593 is valued at eight times t he net annual rental
594594 rate. Net annual rental rate is the annual
595595 rental rate paid by the taxpa yer, less any annual
596596 rental rate received by the taxpayer from
597597 subrentals,
598598 (3) The average value of property shall be determined
599599 by averaging the values at the be ginning and
600600 ending of the tax period but the Oklahoma Tax
601601 Commission may require the averaging of monthly
602602 values during the tax period if r easonably
603603 required to reflect properly the average value of
604604 the taxpayer's property;
605605 b. The payroll factor is a fract ion, the numerator of
606606 which is the total compensation for services rendered
607607 in the state during the tax period, and the
608608 denominator of which is the total compensation for
609609 services rendered everywhere during the tax period .
610610 "Compensation", as used in this subsection means those
611611 paid-for services to the extent related to the unitary
612612 business but does not include officers ' salaries,
613613 wages and other compensation.
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640640 (1) In the case of a transportation enterprise, the
641641 numerator of the fraction shall include a port ion
642642 of such expenditure in connection with employees
643643 operating equipment over a fixed route, s uch as
644644 railroad employees, airline pilots, or bus
645645 drivers, in this state only a part of the time,
646646 in the proportion that milea ge traveled in
647647 Oklahoma bears to tot al mileage traveled by such
648648 employees,
649649 (2) In any case the numerator of the fraction shall
650650 include a portion of such expenditures in
651651 connection with itinerant employees, such as
652652 traveling salespersons, in this state onl y a part
653653 of the time, in the proporti on that time spent in
654654 Oklahoma bears to total time spent in furtherance
655655 of the enterprise by s uch employees;
656656 c. The sales factor is a fract ion, the numerator of which
657657 is the total sales or gross revenue of the taxpayer in
658658 this state during the tax period, and the denominator
659659 of which is the total sales or gross revenue of the
660660 taxpayer everywhere du ring the tax period. "Sales",
661661 as used in this subsection does not include sales or
662662 gross revenue which are separately alloc ated in
663663 paragraph 4 of this subsection .
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690690 (1) Sales of tangible personal property have a situs
691691 in this state if the property is delive red or
692692 shipped to a purchaser other than the United
693693 States government, within this state regardless
694694 of the FOB point or oth er conditions of the sale;
695695 or the property is shipped from an office, store,
696696 warehouse, factory or other place of storage in
697697 this state and (a) the purchaser is the United
698698 States government or (b) the taxpayer is not
699699 doing business in the state of the dest ination of
700700 the shipment.
701701 (2) In the case of a railroad or interurban railway
702702 enterprise, the numerator of the fraction shall
703703 not be less than the allocation of revenues to
704704 this state as shown in its annual report to the
705705 Corporation Commission.
706706 (3) In the case of an airline, truck or bus
707707 enterprise or freight car, tank car, refrigerator
708708 car or other railroad equipment enterprise, the
709709 numerator of the fraction shall include a portio n
710710 of revenue from interstate transportation in the
711711 proportion that interstat e mileage traveled in
712712 Oklahoma bears to total interstate mileage
713713 traveled.
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740740 (4) In the case of an oil, gasoline or gas pipeline
741741 enterprise, the numerator of the fraction shall
742742 be either the total of traffic units of the
743743 enterprise within Oklahoma or the re venue
744744 allocated to Oklahoma based upon mil es moved, at
745745 the option of the taxpayer, and the denominator
746746 of which shall be the total of tr affic units of
747747 the enterprise or the revenue of the enterprise
748748 everywhere as appropriate to the numerator . A
749749 "traffic unit" is hereby defined as the
750750 transportation for a distance of one (1) mile of
751751 one (1) barrel of oil, one (1) gallon of gasoline
752752 or one thousand (1,000) cubic feet of natural or
753753 casinghead gas, as the case may be.
754754 (5) In the case of a telephone or telegra ph or other
755755 communication enterprise, the n umerator of the
756756 fraction shall include that portion of the
757757 interstate revenue as is allocated pursuant to
758758 the accounting procedures prescri bed by the
759759 Federal Communications Commission; provided that
760760 in respect to each corporation or business entity
761761 required by the Federal Communications Commission
762762 to keep its books and records in accordance with
763763 a uniform system of accounts prescribed by such
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790790 Commission, the intrastate net income shall be
791791 determined separately in t he manner provided by
792792 such uniform system o f accounts and only the
793793 interstate income shall be subject to allocation
794794 pursuant to the provi sions of this subsection .
795795 Provided further, that the gross revenue factors
796796 shall be those as are determined pursuant t o the
797797 accounting procedures prescribed by t he Federal
798798 Communications Commission.
799799 In any case where the apportionment of the three factors
800800 prescribed in this paragraph attributes to O klahoma a portion of net
801801 income of the enterprise out of all appropriate proportion to the
802802 property owned and/or busi ness transacted within this state, because
803803 of the fact that one or more of the factors so pres cribed are not
804804 employed to any appreciable ex tent in furtherance of the enterprise;
805805 or because one or more factors not so prescribed are employed to a
806806 considerable extent in furtherance of the enterprise; or because of
807807 other reasons, the Tax Commission is empowered to permit, after a
808808 showing by taxpayer that an excessive portion of net income has been
809809 attributed to Oklaho ma, or require, when in its judgment an
810810 insufficient portion of net income has been attributed to Oklahoma,
811811 the elimination, substitution, or use of additional factors, or
812812 reduction or increase in the weight of such prescribed factors .
813813 Provided, however, that any such variance from such prescribed
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839839
840840 factors which has the effect of increasing the portion of net income
841841 attributable to Oklahoma must not be inherently arbitrary, and
842842 application of the recomputed final apportionment to the net income
843843 of the enterprise must attribute to Oklahoma only a reas onable
844844 portion thereof.
845845 6. For calendar years 1997 and 1998, the owner of a new or
846846 expanded agricultural commodity processing facility in this state
847847 may exclude from Oklahoma taxable income, or in the case of a n
848848 individual, the Oklahoma adjusted gross inc ome, fifteen percent
849849 (15%) of the investment by the owner in the new or expanded
850850 agricultural commodity processing facility . For calendar year 1999,
851851 and all subsequent years, the percentage, not to exceed fifte en
852852 percent (15%), available to the owner of a new or expanded
853853 agricultural commodity processing facility in this state claiming
854854 the exemption shall be adjusted annually so that the tot al estimated
855855 reduction in tax liability does not exceed One Million Doll ars
856856 ($1,000,000.00) annually . The Tax Commission shall promulgate rules
857857 for determining the percentage of the investment which each eligib le
858858 taxpayer may exclude . The exclusion provided by this paragraph
859859 shall be taken in the taxable year when the invest ment is made. In
860860 the event the total reducti on in tax liability authorized by this
861861 paragraph exceeds One Million Dollars ($1,000,000.00) i n any
862862 calendar year, the Tax Commission shall permit any excess over One
863863 Million Dollars ($1,000,000.00) and shall fa ctor such excess into
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890890 the percentage for subs equent years. Any amount of the exemption
891891 permitted to be excluded pursuant to the provisions of this
892892 paragraph but not used in any year m ay be carried forward as an
893893 exemption from income pursuant to the provis ions of this paragraph
894894 for a period not excee ding six (6) years following the year in which
895895 the investment was originally made.
896896 For purposes of this paragraph:
897897 a. "Agricultural commodi ty processing facility " means
898898 building, structures, fixtures and impro vements used
899899 or operated primarily for the proc essing or production
900900 of marketable products from agricultural commodities .
901901 The term shall also mean a dairy operation that
902902 requires a depreciable investment of at least Two
903903 Hundred Fifty Thousand Dollars ($25 0,000.00) and which
904904 produces milk from dairy co ws. The term does not
905905 include a facility that provides only, and nothing
906906 more than, storage, cleaning, drying or transportation
907907 of agricultural commodities, and
908908 b. "Facility" means each part of the facility which is
909909 used in a process primarily for:
910910 (1) the processing of agricultural commodities,
911911 including receiving or storing agricultural
912912 commodities, or the production of milk at a dairy
913913 operation,
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940940 (2) transporting the agricultural commodities or
941941 product before, during or after the processing,
942942 or
943943 (3) packaging or otherwise preparing the product for
944944 sale or shipment.
945945 7. Despite any provision to the contrary in paragraph 3 of this
946946 subsection, for taxable years beginning after December 31, 1999, in
947947 the case of a taxpayer which has a farming loss, such farming loss
948948 shall be considered a net operating loss carryback in accordance
949949 with and to the extent of the Internal Revenue Code, 26 U.S.C.,
950950 Section 172(b)(G). However, the amount of the net operating loss
951951 carryback shall not exceed the lesser of:
952952 a. Sixty Thousand Dollars ($60,000.00), or
953953 b. the loss properly shown on Schedule F of the Internal
954954 Revenue Service Form 1040 reduced by one -half (1/2) of
955955 the income from all other sources other than reflected
956956 on Schedule F.
957957 8. In taxable years beginning after Decembe r 31, 1995, all
958958 qualified wages equal to the federal income tax credit set forth in
959959 26 U.S.C.A., Section 45A, shall be deducted from taxabl e income.
960960 The deduction allowed pursuant to this paragraph sh all only be
961961 permitted for the tax years in which the fe deral tax credit pursuant
962962 to 26 U.S.C.A., Section 45A, is allowed . For purposes of this
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989989 paragraph, "qualified wages" means those wages use d to calculate the
990990 federal credit pursuant to 26 U.S.C.A., Sec tion 45A.
991991 9. In taxable years beginning after December 31, 2005, an
992992 employer that is eligible for and utilizes the Safety Pays OSHA
993993 Consultation Service provided by the Oklahoma Department of L abor
994994 shall receive an exemption from taxable income in the am ount of One
995995 Thousand Dollars ($1,000.00) for the tax yea r that the service is
996996 utilized.
997997 10. For taxable years beginning on or after January 1, 2010,
998998 there shall be added to Oklahoma taxable inco me an amount equal to
999999 the amount of deferred income not incl uded in such taxable income
10001000 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
10011001 as amended by Section 1231 of the American Recovery and Reinvestment
10021002 Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
10031003 Oklahoma taxable income an amo unt equal to the amount of deferred
10041004 income included in su ch taxable income pursuant to Section 108(i)(1)
10051005 of the Internal Revenue Code by Section 1231 o f the American
10061006 Recovery and Reinvestment Act of 2009 (P.L. No. 111 -5).
10071007 11. For taxable years beginning on or after January 1, 2019,
10081008 there shall be subtracted fro m Oklahoma taxable income or adjusted
10091009 gross income any item of income or gain, and there shall be added to
10101010 Oklahoma taxable income or adjus ted gross income any item of loss or
10111011 deduction that in the absence of an election pursuant to the
10121012 provisions of the Pass-Through Entity Tax Equity Act of 2019 would
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10391039 be allocated to a member or to an indirect mem ber of an electing
10401040 pass-through entity pursua nt to Section 2351 et seq. of this title,
10411041 if (i) the electing pass-through entity has accounted for such item
10421042 in computing its Oklahoma net entity income or loss pursuant to the
10431043 provisions of the Pass -Through Entity Tax Equity Act of 2019, and
10441044 (ii) the total amount of tax attributable to any resulting Oklahoma
10451045 net entity income has been paid . The Oklahoma Tax Commission shall
10461046 promulgate rules for the reporting of such exclusion to direct and
10471047 indirect members of the electing pass-through entity. As used in
10481048 this paragraph, "electing pass-through entity", "indirect member",
10491049 and "member" shall be defined in the same manner as prescribed by
10501050 Section 2355.1P-2 of this title. Notwithstanding the application of
10511051 this paragraph, the adjusted tax basis of any ownersh ip interest in
10521052 a pass-through entity for purposes of Sectio n 2351 et seq. of this
10531053 title shall be equal to its adjuste d tax basis for federal income
10541054 tax purposes.
10551055 B. 1. The taxable income of any corporation sha ll be further
10561056 adjusted to arrive at Oklahoma taxable income, except those
10571057 corporations electing treatme nt as provided in subchapter S of the
10581058 Internal Revenue Code , 26 U.S.C., Section 1361 et seq., and Section
10591059 2365 of this title, deductions pursuant to the provisions of the
10601060 Accelerated Cost Recovery S ystem as defined and allowed in the
10611061 Economic Recovery Tax Act of 1981, Public Law 97 -34, 26 U.S.C.,
10621062 Section 168, for depreciation of assets placed into service after
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10891089 December 31, 1981, shall not be allowed in ca lculating Oklahoma
10901090 taxable income. Such corporations shall be allowed a deduction for
10911091 depreciation of assets placed into service after December 31, 1981,
10921092 in accordance with provisions of the Internal Revenue Code, 26
10931093 U.S.C., Section 1 et seq., in effect i mmediately prior to the
10941094 enactment of the Acce lerated Cost Recovery System . The Oklahoma tax
10951095 basis for all such assets placed into service after December 31,
10961096 1981, calculated in this section shall be retained and utilized for
10971097 all Oklahoma income tax purpos es through the final disposition of
10981098 such assets.
10991099 Notwithstanding any other provisions of the Oklahoma Income Tax
11001100 Act, Section 2351 et seq. of this title, or of th e Internal Revenue
11011101 Code to the contrary, this subsection shall control calculation of
11021102 depreciation of assets placed into service after Dece mber 31, 1981,
11031103 and before January 1, 1983.
11041104 For assets placed in service and held by a corporation in which
11051105 accelerated cost recovery system was previously disallowed, an
11061106 adjustment to taxable income is required in the first taxable year
11071107 beginning after December 31, 1982, to reconcile the basis of such
11081108 assets to the basis allowed in the Internal Revenue Code . The
11091109 purpose of this adjustment is to equalize the basis and allowance
11101110 for depreciation accounts between t hat reported to the Internal
11111111 Revenue Service and that reported to Oklahoma.
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11381138 2. For tax years beginn ing on or after January 1, 2009, and
11391139 ending on or before Decem ber 31, 2009, there shall be added to
11401140 Oklahoma taxable income any amount in excess of One Hund red Seventy-
11411141 five Thousand Dollars ($175,000.0 0) which has been deducted as a
11421142 small business expense under Internal Revenue Code, Section 179 as
11431143 provided in the American Recovery and Reinvestment Act of 2009.
11441144 C. 1. For taxable years beginning after Decemb er 31, 1987, the
11451145 taxable income of any corpor ation shall be further adjusted to
11461146 arrive at Oklahoma taxable income for transfers of technology to
11471147 qualified small businesses located in Oklahoma. Such transferor
11481148 corporation shall be allowed an exemption from taxable income of an
11491149 amount equal to the amo unt of royalty payment received as a result
11501150 of such transfer; provided, however, such amount shall not exceed
11511151 ten percent (10%) of the amount of gross proceeds received by such
11521152 transferor corporation as a result of the technology transfer . Such
11531153 exemption shall be allowed for a period not to exceed ten (10) y ears
11541154 from the date of receipt of the first royalty payment accr uing from
11551155 such transfer. No exemption may be claimed for transfers of
11561156 technology to qualified small businesses made prior to January 1,
11571157 1988.
11581158 2. For purposes of this subsection:
11591159 a. "Qualified small business" means an entity, whether
11601160 organized as a corpor ation, partnership, or
11611161 proprietorship, organized for profit with its
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11881188 principal place of busine ss located within this state
11891189 and which meets the following criteria:
11901190 (1) Capitalization of not m ore than Two Hundred Fifty
11911191 Thousand Dollars ($250,000.00),
11921192 (2) Having at least fifty percent (50%) of its
11931193 employees and assets located in Oklahoma at the
11941194 time of the transfer, and
11951195 (3) Not a subsidiary or a ffiliate of the transferor
11961196 corporation;
11971197 b. "Technology" means a proprietary process, formula,
11981198 pattern, device or comp ilation of scientific or
11991199 technical information which is not in the public
12001200 domain;
12011201 c. "Transferor corporation" means a corporation which is
12021202 the exclusive and undisputed owner of the techn ology
12031203 at the time the transfer is made; and
12041204 d. "Gross proceeds" means the total amount of
12051205 consideration for the transfer of technology, whether
12061206 the consideration is in money or otherwise.
12071207 D. 1. For taxable years beginning after December 31, 2005, the
12081208 taxable income of any corporation, estate or trust, shall be further
12091209 adjusted for qualifying gains receiving capital treatment . Such
12101210 corporations, estates or trusts s hall be allowed a deduction from
12111211 Oklahoma taxable income for the amount of qualifying gain s receiving
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12381238 capital treatment earned by the corporation, estate or trust during
12391239 the taxable year and included in the federal taxable income of such
12401240 corporation, estate or trust.
12411241 2. As used in this subsection:
12421242 a. "qualifying gains receiving capital treat ment" means
12431243 the amount of net capital gains, as defined in Section
12441244 1222(11) of the Internal Revenue Code, included in the
12451245 federal income tax return of the corporation, estate
12461246 or trust that result from:
12471247 (1) the sale of real property or tangible personal
12481248 property located within Oklahoma that has been
12491249 directly or indirectly owned b y the corporation,
12501250 estate or trust for a holding period of at least
12511251 five (5) years prior to th e date of the
12521252 transaction from which such net capital gains
12531253 arise,
12541254 (2) the sale of stock or on the sale of an ownership
12551255 interest in an Oklahoma company, limited
12561256 liability company, or partnership where such
12571257 stock or ownership interest has been directly or
12581258 indirectly owned by the corporation, estate or
12591259 trust for a holding period of at least t hree (3)
12601260 years prior to the date of the transaction from
12611261 which the net capital gains arise, or
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12881288 (3) the sale of real property, tangible personal
12891289 property or intangible per sonal property located
12901290 within Oklahoma as par t of the sale of all or
12911291 substantially all of the assets of an Oklahoma
12921292 company, limited liability company, or
12931293 partnership where such property has been directly
12941294 or indirectly owned by such entity owned by the
12951295 owners of such entity, and used in or derived
12961296 from such entity for a period of at least three
12971297 (3) years prior to the date of the transaction
12981298 from which the net capit al gains arise,
12991299 b. "holding period" means an uninterrupted period of
13001300 time. The holding period shall include any additional
13011301 period when the property was held by another
13021302 individual or entity, if such additional period is
13031303 included in the taxpayer 's holding period for the
13041304 asset pursuant to the Internal Revenue Code,
13051305 c. "Oklahoma company", "limited liability company", or
13061306 "partnership" means an entity whose primary
13071307 headquarters have been located in Oklahoma for at
13081308 least three (3) uninterrupted years prior to the date
13091309 of the transaction from which the net capital gains
13101310 arise,
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13371337 d. "direct" means the taxpayer directly owns the asset,
13381338 and
13391339 e. "indirect" means the taxpayer owns an interest in a
13401340 pass-through entity (or chain of pass -through
13411341 entities) that sells the asset that gives rise to the
13421342 qualifying gains receiving capital treatment.
13431343 (1) With respect to sale s of real property or
13441344 tangible personal prope rty located within
13451345 Oklahoma, the deduction described in this
13461346 subsection shall not apply unless the pass -
13471347 through entity that makes the sale has held the
13481348 property for not less than five (5) uninterrupted
13491349 years prior to the date of the transaction that
13501350 created the capital gain, and each pass -through
13511351 entity included in the chain of ownership has
13521352 been a member, partner, or sh areholder of the
13531353 pass-through entity in the tier immediately below
13541354 it for an uninterrupted per iod of not less than
13551355 five (5) years.
13561356 (2) With respect to sales of stock or owne rship
13571357 interest in or sales of all or substantially all
13581358 of the assets of an Oklahoma company, limited
13591359 liability company, or partnership, the deduction
13601360 described in this subsectio n shall not apply
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13871387 unless the pass-through entity that makes the
13881388 sale has held the stock or ownership interest or
13891389 the assets for not less than three (3)
13901390 uninterrupted years prior to the date of the
13911391 transaction that created the capital gain, and
13921392 each pass-through entity included in the chain of
13931393 ownership has been a member, partner or
13941394 shareholder of the pass -through entity in the
13951395 tier immediately below it for an unint errupted
13961396 period of not less than three (3) years.
13971397 E. The Oklahoma adjusted gross income of an y individual
13981398 taxpayer shall be further adjust ed as follows to arrive at Oklaho ma
13991399 taxable income:
14001400 1. a. In the case of individuals, there shall be added or
14011401 deducted, as the case may be, the difference necessary
14021402 to allow personal exemptions of One Thousand D ollars
14031403 ($1,000.00) in lieu of the personal ex emptions allowed
14041404 by the Internal Revenue Code.
14051405 b. There shall be allowed an additional exemption of One
14061406 Thousand Dollars ($1,000.00) for each taxpayer or
14071407 spouse who is blind at the close of the tax year . For
14081408 purposes of this subparagraph, an individual is blind
14091409 only if the central visu al acuity of the individual
14101410 does not exceed 20/200 in the better eye with
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14371437 correcting lenses, or if the visual acuity of the
14381438 individual is greater than 20/200, but is accompanied
14391439 by a limitation in the fields of vision such th at the
14401440 widest diameter of the v isual field subtends an angle
14411441 no greater than twenty (20) degrees.
14421442 c. There shall be allowed an additional exemption of One
14431443 Thousand Dollars ($1,000.00) for each taxpayer or
14441444 spouse who is sixty-five (65) years of age or older at
14451445 the close of the tax year based upon the filing status
14461446 and federal adjusted gross income of the taxpayer .
14471447 Taxpayers with the following filing status may claim
14481448 this exemption if the federal adjusted gross in come
14491449 does not exceed:
14501450 (1) Twenty-five Thousand Dollars ($25,000.00) if
14511451 married and filing jointly;
14521452 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
14531453 if married and filing separately;
14541454 (3) Fifteen Thousand Dollars ($15,000.00) if single;
14551455 and
14561456 (4) Nineteen Thousand Dollars ($19,000.00) if a
14571457 qualifying head of household.
14581458 Provided, for taxable years beginning after December
14591459 31, 1999, amounts included in the calculati on of
14601460 federal adjusted gross income pursuant to the
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14871487 conversion of a traditional individual ret irement
14881488 account to a Roth individual retireme nt account shall
14891489 be excluded from federal adjusted gross income for
14901490 purposes of the income thresholds provided in thi s
14911491 subparagraph.
14921492 2. a. For taxable years beginning on or before December 31,
14931493 2005, in the case of individuals who use the standard
14941494 deduction in determining taxable income, there shall
14951495 be added or deducted, as the case may be, the
14961496 difference necessary to all ow a standard deduction in
14971497 lieu of the standard deduction allowed by the Internal
14981498 Revenue Code, in an amount equal to the larger of
14991499 fifteen percent (15%) of the Ok lahoma adjusted gross
15001500 income or One Thousand Dollars ($1,000.00), but not to
15011501 exceed Two Thousand Dollars ($2,000.00), except that
15021502 in the case of a married individual filing a separate
15031503 return such deduction shall be the larger of fif teen
15041504 percent (15%) of such Oklahoma adjusted gross income
15051505 or Five Hundred Dollars ($500.00), but not to exceed
15061506 the maximum amount of One Thousand Dollars
15071507 ($1,000.00).
15081508 b. For taxable years beginning on or after J anuary 1,
15091509 2006, and before January 1, 2007, i n the case of
15101510 individuals who use the standard deduction in
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15371537 determining taxable income, there shall be added or
15381538 deducted, as the case may be, the difference necessary
15391539 to allow a standard deduction in lieu of the standard
15401540 deduction allowed by the Internal R evenue Code, in an
15411541 amount equal to:
15421542 (1) Three Thousand Dollars ($3,000.00), if the filing
15431543 status is married filing jo int, head of household
15441544 or qualifying widow; or
15451545 (2) Two Thousand Dollars ($2,000.00), if the fi ling
15461546 status is single or married filing separ ate.
15471547 c. For the taxable year beginning on January 1, 2007, and
15481548 ending December 31, 2007, in the case of individuals
15491549 who use the standard deduction in determining taxable
15501550 income, there shall be added or deducted, as the case
15511551 may be, the difference necessary to allow a standard
15521552 deduction in lieu of the standard deduction allowed by
15531553 the Internal Revenue Code, in an amount e qual to:
15541554 (1) Five Thousand Five Hundred Dollars ($5,500.00),
15551555 if the filing status is married f iling joint or
15561556 qualifying widow; or
15571557 (2) Four Thousand One Hundred Twenty-five Dollars
15581558 ($4,125.00) for a head of household; or
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15851585 (3) Two Thousand Seven Hundred Fifty Dollars
15861586 ($2,750.00), if the filing status is single or
15871587 married filing separate.
15881588 d. For the taxable year beginning on January 1, 2008, and
15891589 ending December 31, 2008, in the case of individuals
15901590 who use the standard deduction in determining taxable
15911591 income, there shall be added or deducted, as the case
15921592 may be, the difference necessary to allow a standa rd
15931593 deduction in lieu of the standard deductio n allowed by
15941594 the Internal Revenue Code, in an amount equal to:
15951595 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
15961596 the filing status is married filing joint or
15971597 qualifying widow, or
15981598 (2) Four Thousand Eight Hund red Seventy-five Dollars
15991599 ($4,875.00) for a he ad of household, or
16001600 (3) Three Thousand Two Hundred Fifty Dollars
16011601 ($3,250.00), if the filing status is single or
16021602 married filing separate.
16031603 e. For the taxable year beginning on January 1, 2009, and
16041604 ending December 31, 2009, in the case of individuals
16051605 who use the standard deduction in determining taxable
16061606 income, there shall be added or deducted, as the case
16071607 may be, the difference necessary to allow a standard
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16341634 deduction in lieu of the standard deduction allowed by
16351635 the Internal Revenue Code, in an amount equal to :
16361636 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
16371637 if the filing status is married filing joint or
16381638 qualifying widow, or
16391639 (2) Six Thousand Three Hundred Seventy -five Dollars
16401640 ($6,375.00) for a head of household , or
16411641 (3) Four Thousand Two Hundred Fifty Doll ars
16421642 ($4,250.00), if the filing status is single or
16431643 married filing separate.
16441644 Oklahoma adjusted gross income shall be i ncreased by
16451645 any amounts paid for motor vehicle excise taxes which
16461646 were deducted as allowed by the Internal Revenue Code.
16471647 f. For taxable years beginning on or after January 1,
16481648 2010, and ending on December 31, 2016, in the case of
16491649 individuals who use the sta ndard deduction in
16501650 determining taxable income, there shall be added or
16511651 deducted, as the case m ay be, the difference necessary
16521652 to allow a standard deduction equal to the standard
16531653 deduction allowed by the Internal Revenue Code, based
16541654 upon the amount and fili ng status prescribed by such
16551655 Code for purposes of filing federal individual income
16561656 tax returns.
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16831683 g. For taxable years beginning on or after January 1,
16841684 2017, in the case of individuals who use the standard
16851685 deduction in determining taxable income, there shall
16861686 be added or deducted, as the case may be, the
16871687 difference necessary to allow a standard deduct ion in
16881688 lieu of the standard deduction allowed by the Internal
16891689 Revenue Code, as follows:
16901690 (1) Six Thousand Three Hundred Fifty Dollars
16911691 ($6,350.00) for single or mar ried filing
16921692 separately,
16931693 (2) Twelve Thousand Seven Hundred Dollars
16941694 ($12,700.00) for married fil ing jointly or
16951695 qualifying widower with depend ent child, and
16961696 (3) Nine Thousand Three Hundred Fifty Dollars
16971697 ($9,350.00) for head of household.
16981698 3. a. In the case of resident and part-year resident
16991699 individuals having adjusted gross income from sources
17001700 both within and without the state, the itemized or
17011701 standard deductions and personal exemptions shall be
17021702 reduced to an amount which is the same portion of the
17031703 total thereof as Oklahoma adjusted gross income is of
17041704 adjusted gross income . To the extent itemized
17051705 deductions include allowable moving expense, prora tion
17061706 of moving expense shall not be required or permitted
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17331733 but allowable moving expense shall be fully deductible
17341734 for those taxpayers moving within or into Oklahoma and
17351735 no part of moving expense shall be deductib le for
17361736 those taxpayers moving without or out of Oklahoma.
17371737 All other itemized or standard deductions and personal
17381738 exemptions shall be subject to proration as prov ided
17391739 by law.
17401740 b. For taxable years beginning on or after January 1,
17411741 2018, the net amount of ite mized deductions allowable
17421742 on an Oklahoma income tax return, subject to the
17431743 provisions of paragraph 24 of this subsection, shall
17441744 not exceed Seventeen Thousand Dol lars ($17,000.00).
17451745 For purposes of this subparagraph, charitable
17461746 contributions and medical ex penses deductible for
17471747 federal income tax purp oses shall be excluded from the
17481748 amount of Seventeen Thousand Dollars ($17,000.00) as
17491749 specified by this subparagraph.
17501750 4. A resident individual with a physical disability
17511751 constituting a substantial handicap to em ployment may deduct from
17521752 Oklahoma adjusted gr oss income such expenditures to modify a motor
17531753 vehicle, home or workplace as are necessary to compensate for his or
17541754 her handicap. A veteran certified by the Department of Veterans
17551755 Affairs of the federal governm ent as having a service -connected
17561756 disability shall be conclusively presumed to be an individual with a
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17831783 physical disability constituting a substantial handicap to
17841784 employment. The Tax Commission shall promulgate rules containing a
17851785 list of combinations of co mmon disabilities and modifications which
17861786 may be presumed to qualify for this deduction . The Tax Commission
17871787 shall prescribe necessary requirements for verificati on.
17881788 5. a. Before July 1, 2010, the first One Thousand Five
17891789 Hundred Dollars ($1,500.00) receive d by any person
17901790 from the United States as sa lary or compensation in
17911791 any form, other than retirement benefits, as a member
17921792 of any component of the Armed Forces of the United
17931793 States shall be deducted from taxable income.
17941794 b. On or after July 1, 2010, one hund red percent (100%)
17951795 of the income received b y any person from the United
17961796 States as salary or compensation in any form, other
17971797 than retirement benefits, as a member of any component
17981798 of the Armed Forces of the United States shall be
17991799 deducted from taxable incom e.
18001800 c. Whenever the filing of a timely inco me tax return by a
18011801 member of the Armed Forces of the United States is
18021802 made impracticable or impossible of accomplishment by
18031803 reason of:
18041804 (1) absence from the United States, which term
18051805 includes only the states and the District of
18061806 Columbia;
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18331833 (2) absence from the State of Oklahoma while on
18341834 active duty; or
18351835 (3) confinement in a hospital within the United
18361836 States for treatment of wou nds, injuries or
18371837 disease,
18381838 the time for filing a return and paying an income tax
18391839 shall be and is hereby extended without incurring
18401840 liability for interest or penalties, to the fifteenth
18411841 day of the third month following the month in which:
18421842 (a) Such individual shall return to the United
18431843 States if the extension is granted pursuant
18441844 to subparagraph a of t his paragraph, return
18451845 to the State of Oklahoma if the extension is
18461846 granted pursuant to subparagraph b of this
18471847 paragraph or be discharged from such
18481848 hospital if the extension is granted
18491849 pursuant to subparagraph c of this
18501850 paragraph; or
18511851 (b) An executor, administrator, or conservator
18521852 of the estate of the taxpayer is appointed,
18531853 whichever event occurs the earliest.
18541854 Provided, that the Tax Commission may, in its discretion, grant
18551855 any member of the Armed Forces of the United States an extension of
18561856 time for filing of income tax returns and payment of i ncome tax
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18831883 without incurring liabilities for interest or penalties . Such
18841884 extension may be granted only when in the judgment of the Tax
18851885 Commission a good cause exists therefor and may be for a period in
18861886 excess of six (6) months. A record of every such exte nsion granted,
18871887 and the reason therefor, shall be kept.
18881888 6. Before July 1, 2010, the salary or any other form of
18891889 compensation, received from the United States by a member of any
18901890 component of the Armed Forces of the United States, shall be
18911891 deducted from taxable income during the time in which the person is
18921892 detained by the enemy in a conflict, is a prisoner of war or is
18931893 missing in action and not deceased; provided, after July 1, 2010,
18941894 all such salary or compensation shall be subject to the deduction as
18951895 provided pursuant to paragraph 5 of this subsection.
18961896 7. a. An individual taxpayer, whether resident or
18971897 nonresident, may deduct an amou nt equal to the federal
18981898 income taxes paid by the taxpayer during the taxable
18991899 year.
19001900 b. Federal taxes as described in subparagra ph a of this
19011901 paragraph shall be deductible by any individual
19021902 taxpayer, whether resident or nonresident, only to the
19031903 extent they relate to income subject to taxation
19041904 pursuant to the provisions of the Oklahoma Income Tax
19051905 Act. The maximum amount allowable in the preceding
19061906 paragraph shall be prorated on the ratio of the
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19321932
19331933 Oklahoma adjusted gross income to federal adjusted
19341934 gross income.
19351935 c. For the purpose of this paragraph, "federal income
19361936 taxes paid" shall mean federal income taxe s, surtaxes
19371937 imposed on incomes or excess profits taxes, as though
19381938 the taxpayer was on the accrual basis . In determining
19391939 the amount of deduction for federal incom e taxes for
19401940 tax year 2001, the amount of the deduction shall not
19411941 be adjusted by the amount of any accelerated ten
19421942 percent (10%) tax rate bracket credit or advanced
19431943 refund of the credit received during the tax year
19441944 provided pursuant to the federal Economic Growth and
19451945 Tax Relief Reconciliation Act of 2001, P.L. No. 107 -
19461946 16, and the advanced refund of such credit shall not
19471947 be subject to taxation.
19481948 d. The provisions of this paragraph shall apply to all
19491949 taxable years ending after December 31, 1978, and
19501950 beginning before January 1, 2006.
19511951 8. Retirement benefits not to exceed Five Thousand Five Hundred
19521952 Dollars ($5,500.00) for the 2004 ta x year, Seven Thousand Five
19531953 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
19541954 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
19551955 years, which are received by an individual from the civil service of
19561956 the United States, the Okl ahoma Public Employees Retirement System,
19571957
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19821982
19831983 the Teachers' Retirement System of Oklahoma, the Oklahoma Law
19841984 Enforcement Retirement System , the Oklahoma Firefighters Pension and
19851985 Retirement System, the Oklahoma Police Pension and Ret irement
19861986 System, the employee retirement systems created by counties pursuant
19871987 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the
19881988 Uniform Retirement S ystem for Justices and Judges, the Oklahoma
19891989 Wildlife Conservation Department Retirement Fund, the Oklahoma
19901990 Employment Security Commission Retirement Plan, or the employee
19911991 retirement systems created by municipalities pursuant to Section 48 -
19921992 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
19931993 from taxable income.
19941994 9. In taxable years begi nning after December 3l, 198 4, Social
19951995 Security benefits received by an individual shall be exempt from
19961996 taxable income, to the extent such benefits are included in the
19971997 federal adjusted gross income pursuant to the provisions of Section
19981998 86 of the Internal Re venue Code, 26 U.S.C., Secti on 86.
19991999 10. For taxable years beginning after December 31, 1994, lump -
20002000 sum distributions from employer plans of deferred compensation,
20012001 which are not qualified plans within the meaning of Section 401(a)
20022002 of the Internal Revenue Cod e, 26 U.S.C., Section 401(a ), and which
20032003 are deposited in and accounted for within a separate bank account or
20042004 brokerage account in a financial institution within t his state,
20052005 shall be excluded from taxable income in the same manner as a
20062006 qualifying rollover c ontribution to an individua l retirement account
20072007
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20332033 within the meaning of Section 408 of the Internal Revenue Code, 26
20342034 U.S.C., Section 408. Amounts withdrawn from su ch bank or brokerage
20352035 account, including any earnings thereon, shall be included in
20362036 taxable income when withdrawn in the s ame manner as withdrawals from
20372037 individual retirement accounts within the meaning of Section 408 of
20382038 the Internal Revenue Code.
20392039 11. In taxable years beginning after December 31, 1995,
20402040 contributions made to and interest received fr om a medical savings
20412041 account established pursuant to Sections 2621 through 2623 of Title
20422042 63 of the Oklahoma Statutes shall be exempt from taxable income.
20432043 12. For taxable years beginning after December 31, 1996, the
20442044 Oklahoma adjusted gross income of any in dividual taxpayer who is a
20452045 swine or poultry producer may be further adjusted for the deduction
20462046 for depreciation allowed for new construction or expansion costs
20472047 which may be computed using the same depreciation method elected for
20482048 federal income tax purposes except that the useful l ife shall be
20492049 seven (7) years for purposes of this paragraph . If depreciation is
20502050 allowed as a deduction in determining the adjusted gross income of
20512051 an individual, any depreciation calculated and claimed pursuant to
20522052 this section shall in no event be a dupli cation of any deprec iation
20532053 allowed or permitted on the federal income tax return of the
20542054 individual.
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20812081 13. a. In taxable years beginning aft er December 31, 2002,
20822082 nonrecurring adoption expenses paid by a resident
20832083 individual taxpayer in connection with:
20842084 (1) the adoption of a minor , or
20852085 (2) a proposed adoption of a minor which did not
20862086 result in a decreed adoption,
20872087 may be deducted from the Oklahoma adjusted gross
20882088 income.
20892089 b. The deductions for adoptions and proposed adoptions
20902090 authorized by this paragraph shall not exceed Twenty
20912091 Thousand Dollars ($20,000.00) per calendar year.
20922092 c. The Tax Commission shall promulgate rules to implement
20932093 the provisions of this paragraph which shall contain a
20942094 specific list of nonrecurring adoption expenses which
20952095 may be presumed to qualify for the deduction . The Tax
20962096 Commission shall prescribe necessary requirements for
20972097 verification.
20982098 d. "Nonrecurring adoption expenses " means adoption fees,
20992099 court costs, medical expenses, attorney fees and
21002100 expenses which are directly r elated to the legal
21012101 process of adoption of a child including, but not
21022102 limited to, costs relating to the adoption study,
21032103 health and psychological examinations, tra nsportation
21042104 and reasonable costs of lodging and food for the child
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21312131 or adoptive parents which a re incurred to complete the
21322132 adoption process and are not reimbursed by other
21332133 sources. The term "nonrecurring adoption expenses "
21342134 shall not include attorney fees i ncurred for the
21352135 purpose of litigating a contested adoption, from and
21362136 after the point of the in itiation of the contest,
21372137 costs associated wit h physical remodeling, renovation
21382138 and alteration of the adoptive parents ' home or
21392139 property, except for a special need s child as
21402140 authorized by the court.
21412141 14. a. In taxable years beginning before January 1, 2005,
21422142 retirement benefits not to exceed the amounts
21432143 specified in this paragraph, which are received by an
21442144 individual sixty-five (65) years of age or older and
21452145 whose Oklahoma adjusted gross income is Twenty -five
21462146 Thousand Dollars ($25,000.00) or less if the filing
21472147 status is single, head of household, or marr ied filing
21482148 separate, or Fifty Thousand Dollars ($50,000.00) or
21492149 less if the filing status is married filing joint or
21502150 qualifying widow, shall be exempt from taxable income .
21512151 In taxable years beginning after Decemb er 31, 2004,
21522152 retirement benefits not to excee d the amounts
21532153 specified in this paragraph, which are received by an
21542154 individual whose Oklahoma adjusted gross income i s
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21812181 less than the qualifying amount specified in this
21822182 paragraph, shall be exempt from taxable in come.
21832183 b. For purposes of this paragraph, the qualifying amount
21842184 shall be as follows:
21852185 (1) in taxable years beginning after December 31,
21862186 2004, and prior to January 1 , 2007, the
21872187 qualifying amount shall be Thirty -seven Thousand
21882188 Five Hundred Dollars ($37,500.00) or less if the
21892189 filing status is single, head of household, or
21902190 married filing separate, or Seventy -five Thousand
21912191 Dollars ($75,000.00) or less if the filing status
21922192 is married filing jointly or qualifying widow,
21932193 (2) in the taxable year beginning January 1, 2 007,
21942194 the qualifying amount shall be Fifty Tho usand
21952195 Dollars ($50,000.00) or less if the filing status
21962196 is single, head of household, or married filing
21972197 separate, or One Hundred Thousand Dollars
21982198 ($100,000.00) or less if the filing status is
21992199 married filing jointly or qualifying widow,
22002200 (3) in the taxable year beginning January 1, 2008,
22012201 the qualifying amount shall be Sixty -two Thousand
22022202 Five Hundred Dollars ($62,500.00) or less if the
22032203 filing status is single, head of household, or
22042204 married filing separate, or One Hu ndred Twenty-
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22312231 five Thousand Dollars ($125,000. 00) or less if
22322232 the filing status is married filing jointly or
22332233 qualifying widow,
22342234 (4) in the taxable year beginning Jan uary 1, 2009,
22352235 the qualifying amount shall be One Hundred
22362236 Thousand Dollars ($100,000.00) or les s if the
22372237 filing status is single, head of hou sehold, or
22382238 married filing separate, or Two Hundred Thousand
22392239 Dollars ($200,000.00) or less if the filing
22402240 status is married filing jointly or qualifying
22412241 widow, and
22422242 (5) in the taxable year beginning January 1, 2010 ,
22432243 and subsequent taxable years, there shall b e no
22442244 limitation upon the qualifying amount.
22452245 c. For purposes of this paragraph, "retirement benefits"
22462246 means the total distributions or withdrawals from the
22472247 following:
22482248 (1) an employee pension benefit plan which sa tisfies
22492249 the requirements of Section 401 of th e Internal
22502250 Revenue Code, 26 U.S.C., Section 401,
22512251 (2) an eligible deferred compensation plan that
22522252 satisfies the requir ements of Section 457 of the
22532253 Internal Revenue Code, 26 U.S.C., Section 457,
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22802280 (3) an individual retirement account, annuity or
22812281 trust or simplified employee pension that
22822282 satisfies the requirements of Section 408 of the
22832283 Internal Revenue Code, 26 U.S.C., Sectio n 408,
22842284 (4) an employee annuity subject to the provisions of
22852285 Section 403(a) or (b) of the Inter nal Revenue
22862286 Code, 26 U.S.C., Section 403(a) o r (b),
22872287 (5) United States Retirement Bonds which satisfy the
22882288 requirements of Section 86 of the Internal
22892289 Revenue Code, 26 U.S.C., Section 86, or
22902290 (6) lump-sum distributions from a retirement plan
22912291 which satisfies the requirements of Section
22922292 402(e) of the Internal Revenue Code, 26 U.S.C.,
22932293 Section 402(e).
22942294 d. The amount of the exemption provided by this paragraph
22952295 shall be limited to Five Thousand Five Hundred Dollars
22962296 ($5,500.00) for the 2004 tax year, Seven Thousand Fiv e
22972297 Hundred Dollars ($7,500.00) for the 2005 ta x year and
22982298 Ten Thousand Dollars ($10,000.00) for the tax year
22992299 2006 and for all subsequent tax years . Any individual
23002300 who claims the exemption provided for in paragraph 8
23012301 of this subsection shall not be permitted to claim a
23022302 combined total exemption pursuant to this paragraph
23032303 and paragraph 8 of this subsection in an amount
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23302330 exceeding Five Thousand Five Hundred Dollars
23312331 ($5,500.00) for the 2004 tax year, Seven Thousand Five
23322332 Hundred Dollars ($7,500.00) for the 2005 tax year and
23332333 Ten Thousand Dollars ($10,000.00) f or the 2006 tax
23342334 year and all subsequent tax years.
23352335 15. In taxable years beginning after December 31, 1999, for an
23362336 individual engaged in production agriculture who has filed a
23372337 Schedule F form with the taxpayer 's federal income tax return for
23382338 such taxable year, there shall be excluded from taxable income any
23392339 amount which was included as federal taxable income or federal
23402340 adjusted gross income and which consists of the discharge of an
23412341 obligation by a creditor of the taxpayer incurred to finance the
23422342 production of agricultural products.
23432343 16. In taxable years beginning December 31, 2000, an amount
23442344 equal to one hundred percent ( 100%) of the amount of any scholarship
23452345 or stipend received from participation in the Oklahoma Police Corps
23462346 Program, as established in Secti on 2-140.3 of Title 47 of the
23472347 Oklahoma Statutes shall be exempt from taxable income.
23482348 17. a. In taxable years beginnin g after December 31, 2001,
23492349 and before January 1, 2005, there shall be allowed a
23502350 deduction in the amount of contributions to accounts
23512351 established pursuant to the Oklahoma College Savings
23522352 Plan Act. The deduction shall equal the amount of
23532353 contributions to accounts, but in no event shall the
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23802380 deduction for each contributor exceed Two Thousand
23812381 Five Hundred Dollars ($2,500.00) each taxable year for
23822382 each account.
23832383 b. In taxable years beginning after December 31, 2004,
23842384 each taxpayer shall be allowed a deduction for
23852385 contributions to accounts established pursuant to the
23862386 Oklahoma College Savings Plan Act . The maximum annual
23872387 deduction shall equal the amou nt of contributions to
23882388 all such accounts plus any contributions to such
23892389 accounts by the taxpayer for prior taxable ye ars after
23902390 December 31, 2004, which were not deducted, but in no
23912391 event shall the deduction for each tax year exceed Ten
23922392 Thousand Dollars ($1 0,000.00) for each individual
23932393 taxpayer or Twenty Thousand Dollars ($20,000.00) for
23942394 taxpayers filing a joint return . Any amount of a
23952395 contribution that is not deducted by the taxpayer in
23962396 the year for which the c ontribution is made may be
23972397 carried forward as a deduction from income for the
23982398 succeeding five (5) years . For taxable years
23992399 beginning after December 31, 2005, dedu ctions may be
24002400 taken for contributions and rollovers made during a
24012401 taxable year and up to Apri l 15 of the succeeding
24022402 year, or the due date o f a taxpayer's state income tax
24032403 return, excluding extensions, whichever is later .
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24302430 Provided, a deduction for the same contribution may
24312431 not be taken for two (2) different taxable years.
24322432 c. In taxable years begi nning after December 31, 2006,
24332433 deductions for contributions made pursuant to
24342434 subparagraph b of this paragraph shall be limited as
24352435 follows:
24362436 (1) for a taxpayer who qu alified for the five-year
24372437 carryforward election and who takes a rollover or
24382438 nonqualified withdrawal during that period, the
24392439 tax deduction otherwise available pursuant to
24402440 subparagraph b of this paragraph shall be reduced
24412441 by the amount which is equal to the rollover or
24422442 nonqualified withdrawal, and
24432443 (2) for a taxpayer who elects to take a rollover or
24442444 nonqualified withdrawal within the same tax ye ar
24452445 in which a contribution was made to the
24462446 taxpayer's account, the tax deduction otherwise
24472447 available pursuant to subp aragraph b of this
24482448 paragraph shall be reduced by the amount of the
24492449 contribution which is e qual to the rollover or
24502450 nonqualified withdrawal.
24512451 d. If a taxpayer elects to take a rollover on a
24522452 contribution for which a deduction has been taken
24532453 pursuant to subparagraph b of this paragraph within
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24802480 one (1) year of the date of contribution, the amount
24812481 of such rollover shall be included in the adjusted
24822482 gross income of the taxpayer in the taxable year of
24832483 the rollover.
24842484 e. If a taxpayer makes a nonqualified withdrawal of
24852485 contributions for which a deduction was taken pursuant
24862486 to subparagraph b of this paragrap h, such nonqualified
24872487 withdrawal and any earnings th ereon shall be included
24882488 in the adjusted gross income of the taxpayer in the
24892489 taxable year of the nonqualified withdraw al.
24902490 f. As used in this paragraph:
24912491 (1) "non-qualified withdrawal " means a withdrawal
24922492 from an Oklahoma College Savings Plan account
24932493 other than one of the following:
24942494 (a) a qualified withdrawal,
24952495 (b) a withdrawal made as a result of the death
24962496 or disability of the designated beneficiary
24972497 of an account,
24982498 (c) a withdrawal that is made on the accou nt of
24992499 a scholarship or the allowance or payment
25002500 described in Section 135(d)(1)(B) or (C) or
25012501 by the Internal Revenue Code, received by
25022502 the designated beneficiary to the exten t the
25032503 amount of the refund does not exceed the
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25302530 amount of the scholarship, allowance , or
25312531 payment, or
25322532 (d) a rollover or change of designated
25332533 beneficiary as permitted by subsection F of
25342534 Section 3970.7 of Title 70 of Oklahoma
25352535 Statutes, and
25362536 (2) "rollover" means the transfer of funds from the
25372537 Oklahoma College Savings Plan to any other plan
25382538 under Section 529 of the Internal Revenue Code.
25392539 18. For taxable years beginning after December 31, 2005,
25402540 retirement benefits received by an individual from any component of
25412541 the Armed Forces of the United States in an amount not to exceed the
25422542 greater of seventy-five percent (75%) of such benefits or Ten
25432543 Thousand Dollars ($10,000.00) shall be exempt from taxable income
25442544 but in no case less than the amount of the exemption provided by
25452545 paragraph 14 of this subsection.
25462546 19. For taxable years beginning after Dec ember 31, 2006,
25472547 retirement benefits received by federal civi l service retirees,
25482548 including survivor annuities, paid in lieu of Social Security
25492549 benefits shall be exempt from taxab le income to the extent such
25502550 benefits are included in the federal adjusted gros s income pursuant
25512551 to the provisions of Section 86 of the Int ernal Revenue Code, 26
25522552 U.S.C., Section 86, according to the following schedule:
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25792579 a. in the taxable year beginning Janu ary 1, 2007, twenty
25802580 percent (20%) of such benefits shall be exempt,
25812581 b. in the taxable year beginning January 1, 2008, forty
25822582 percent (40%) of such benefits shall be exempt,
25832583 c. in the taxable year beginning January 1, 2009, sixty
25842584 percent (60%) of such benefi ts shall be exempt,
25852585 d. in the taxable year beginning January 1, 2010, eight y
25862586 percent (80%) of such benefits shall be exempt, and
25872587 e. in the taxable year beginning January 1, 2011, and
25882588 subsequent taxable years, one hundred percent (100%)
25892589 of such benefits sha ll be exempt.
25902590 20. a. For taxable years beginning after December 31, 2007, a
25912591 resident individual may deduct up to Ten Thousand
25922592 Dollars ($10,000.00) from Oklahoma adjusted gross
25932593 income if the individual, or the dependent of the
25942594 individual, while living, dona tes one or more human
25952595 organs of the individual to another human being for
25962596 human organ transpla ntation. As used in this
25972597 paragraph, "human organ" means all or part of a liver,
25982598 pancreas, kidney, intestine, lung, or bone marrow . A
25992599 deduction that is claimed u nder this paragraph may be
26002600 claimed in the taxable year in which the human organ
26012601 transplantation occurs.
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26282628 b. An individual may claim this ded uction only once, and
26292629 the deduction may be claimed only for unreimbursed
26302630 expenses that are incurred by the individual and
26312631 related to the organ donation of the individual.
26322632 c. The Oklahoma Tax Commission shall pro mulgate rules to
26332633 implement the provisions of this paragraph which shall
26342634 contain a specific list of expenses which may be
26352635 presumed to qualify for the deduction . The Tax
26362636 Commission shall prescribe necessary requirements for
26372637 verification.
26382638 21. For taxable years beginning after December 31, 2009, there
26392639 shall be exempt from taxable income any amount received by the
26402640 beneficiary of the death benefit for an emergency medi cal technician
26412641 or a registered emergency medical responder provided by Section 1-
26422642 2505.1 of Title 63 of the Oklahoma Statutes.
26432643 22. For taxable years beginning after December 31, 2008,
26442644 taxable income shall be increased by any unemployment compensation
26452645 exempted under Section 85(c) of the Internal Revenue Code, 26
26462646 U.S.C., Section 85(c)(2009).
26472647 23. For taxable years beginning after December 31, 2 008, there
26482648 shall be exempt from taxable income any payment in an amount less
26492649 than Six Hundred Dollars ($600.00) recei ved by a person as an award
26502650 for participation in a competitive lives tock show event. For
26512651 purposes of this paragraph, the payment shall be treated as a
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26782678 scholarship amount paid by the entity sponsoring the event and the
26792679 sponsoring entity shall cause the pay ment to be categorized as a
26802680 scholarship in its books and records.
26812681 24. For taxable years begin ning on or after January 1, 2016,
26822682 taxable income shall be increased by any amount of state and local
26832683 sales or income taxes deducted under 26 U.S.C., Section 164 o f the
26842684 Internal Revenue Code. If the amount of state and local taxe s
26852685 deducted on the federal r eturn is limited, taxable income on the
26862686 state return shall be increased only by the amount actually deducted
26872687 after any such limitations are applied.
26882688 25. For taxable years beginning after December 31, 2020, each
26892689 taxpayer shall be allowed a deduction for co ntributions to accounts
26902690 established pursuant to the Achieving a Better Life Experience
26912691 (ABLE) Program as established in Section 4001.1 et seq. of Title 56
26922692 of the Oklahoma Statutes. For any tax year, the deduction provided
26932693 for in this paragraph shall not e xceed Ten Thousand Dollars
26942694 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
26952695 ($20,000.00) for taxpayers filing a joint return . Any amount of
26962696 contribution not deducted by the taxpayer in the tax year for which
26972697 the contribution is made may be carried forward as a deduction from
26982698 income for up to five (5) tax years . Deductions may be taken for
26992699 contributions made during the tax year and through April 15 of the
27002700 succeeding tax year, or through the due date of a taxpay er's state
27012701 income tax return excluding extensions, whichever is later.
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27282728 Provided, a deduction for the same contribution may not be taken in
27292729 more than one (1) tax year.
27302730 F. 1. For Except as otherwise provided by paragraph 3 of this
27312731 subsection with respect to livestock , for taxable years beginning
27322732 after ending not later than December 31, 2004 2023, a deduction from
27332733 the Oklahoma adjusted gross income of any individual taxpayer shall
27342734 be allowed for qualifying gains receiving capital treatment that are
27352735 included in the federal adjusted gros s income of such individual
27362736 taxpayer during the taxable year.
27372737 2. As used in this subsectio n:
27382738 a. "qualifying gains receiving capital treatment " means
27392739 the amount of net capital gains, as defined in Section
27402740 1222(11) of the Internal Revenue Code, included in an
27412741 individual taxpayer's federal income tax return that
27422742 result from:
27432743 (1) the sale of real property or tangible personal
27442744 property located within Oklahoma that has been
27452745 directly or indirectly owned by the individual
27462746 taxpayer for a holding period of at least five
27472747 (5) years prior to the date of the transaction
27482748 from which such net capital gains ari se,
27492749 (2) the sale of stock or the sale of a direct or
27502750 indirect ownership i nterest in an Oklahoma
27512751 company, limited liability company, or
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27782778 partnership where such stock or ownership
27792779 interest has been directly or indirectly owned by
27802780 the individual taxpayer for a holding period of
27812781 at least two (2) years prior to the date of the
27822782 transaction from which the net capital gains
27832783 arise, or
27842784 (3) the sale of real property, tangible perso nal
27852785 property or intangible personal property located
27862786 within Oklahoma as part of the sal e of all or
27872787 substantially all of the assets of an Oklahoma
27882788 company, limited liability company, or
27892789 partnership or an Oklahoma proprietorship
27902790 business enterprise where suc h property has been
27912791 directly or indirectly owned by such entity or
27922792 business enterprise or owned by the owners of
27932793 such entity or business enterprise for a period
27942794 of at least two (2) years prior to the date of
27952795 the transaction from which the net capital gains
27962796 arise,
27972797 b. "holding period" means an uninterrupted period of
27982798 time. The holding period shall include any additional
27992799 period when the property was held by another
28002800 individual or entity, if such additional period is
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28272827 included in the taxpayer 's holding period for the
28282828 asset pursuant to the Internal Revenue Code,
28292829 c. "Oklahoma company," "limited liability company," or
28302830 "partnership" means an entity whose primary
28312831 headquarters have been located in Oklahoma for at
28322832 least three (3) uninterrupted years prior to the date
28332833 of the transaction from which the net capital gains
28342834 arise,
28352835 d. "direct" means the individual taxpayer directly owns
28362836 the asset,
28372837 e. "indirect" means the individual tax payer owns an
28382838 interest in a pass-through entity (or chain of pass -
28392839 through entities) that sells the asset that gives rise
28402840 to the qualifying gains receiving capital treatment.
28412841 (1) With respect to sales of real property or
28422842 tangible personal property located w ithin
28432843 Oklahoma, the deduction described in this
28442844 subsection shall not apply unless the pass -
28452845 through entity that makes the sale has held the
28462846 property for not less than five (5) u ninterrupted
28472847 years prior to the date of the transaction that
28482848 created the capital gain, and each pass-through
28492849 entity included in the chain of ownership has
28502850 been a member, partner, or shareholder of the
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28772877 pass-through entity in the tier immediately below
28782878 it for an uninterrupted period of not less than
28792879 five (5) years.
28802880 (2) With respect to sales of stock or ownership
28812881 interest in or sales of all or substantially all
28822882 of the assets of an Oklahoma company, limited
28832883 liability company, partnership or Oklahoma
28842884 proprietorship business enterprise, the deduction
28852885 described in this subsection shall not ap ply
28862886 unless the pass-through entity that makes the
28872887 sale has held the stock or ownership interes t for
28882888 not less than two (2) uninterrupted years prior
28892889 to the date of the transact ion that created the
28902890 capital gain, and each pass -through entity
28912891 included in the chain of ownership has been a
28922892 member, partner or shareholder of the pass -
28932893 through entity in the tier immediately below it
28942894 for an uninterrupted period of not less than two
28952895 (2) years. For purposes of this division,
28962896 uninterrupted ownership prior to July 1, 200 7,
28972897 shall be included in the determination of the
28982898 required holding period prescribed by this
28992899 division, and
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29262926 f. "Oklahoma proprietorship business enterprise " means a
29272927 business enterprise whose income and expenses have
29282928 been reported on Schedule C or F of an ind ividual
29292929 taxpayer's federal income tax return, or any similar
29302930 successor schedule published by t he Internal Revenue
29312931 Service and whose primary headquarters have been
29322932 located in Oklahoma for at least three (3)
29332933 uninterrupted years prior to the date of the
29342934 transaction from which the net capital gains arise.
29352935 3. For taxable years beginning on o r after January 1, 2023, the
29362936 capital gains exemptions authorized pursuant to the provisions of
29372937 this subsection shall only be applicable with respect to livestock
29382938 for which capital gains tax treatment is authorized for purposes of
29392939 the federal income tax return for the applicable tax year. The
29402940 exemption for such livestock shall be subject to the requirements of
29412941 this subsection with respect to the holding period and any o ther
29422942 requirement imposed as a condition of the exemption.
29432943 G. 1. For purposes of computing its Okla homa taxable income
29442944 under this section, the dividends -paid deduction otherwise allow ed
29452945 by federal law in computing net income of a real estate investment
29462946 trust that is subject to federal income tax shall be added back in
29472947 computing the tax imposed by this s tate under this title if the real
29482948 estate investment trust is a captive real estate i nvestment trust.
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29752975 2. For purposes of computing its Oklahoma taxable income und er
29762976 this section, a taxpayer shall add back otherwise deductible rents
29772977 and interest expenses pa id to a captive real estate investment trust
29782978 that is not subject to the provisions of paragraph 1 of this
29792979 subsection. As used in this subsection:
29802980 a. the term "real estate investment trust" or "REIT"
29812981 means the meaning ascribed to such term in Section 856
29822982 of the Internal Revenue Code,
29832983 b. the term "captive real estate investment trust " means
29842984 a real estate investment trust, the shares or
29852985 beneficial interests of which are not regularly traded
29862986 on an established securities market and more than
29872987 fifty percent (50%) of the voting power or value of
29882988 the beneficial interests or shares of which are owned
29892989 or controlled, directly or indirectly, or
29902990 constructively, by a single entit y that is:
29912991 (1) treated as an association taxable as a
29922992 corporation under the Internal Revenue C ode, and
29932993 (2) not exempt from federal income tax pursuant to
29942994 the provisions of Section 501(a) of the Internal
29952995 Revenue Code.
29962996 The term shall not include a real estat e investment
29972997 trust that is intended to be regularly traded on an
29982998 established securities market , and that satisfies the
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30253025 requirements of Section 856(a)(5) and (6) of the U.S.
30263026 Internal Revenue Code by reason of Section 856(h)(2)
30273027 of the Internal Revenue Code,
30283028 c. the term "association taxable as a corporation " shall
30293029 not include the following entities:
30303030 (1) any real estate investment trust as defined in
30313031 paragraph a of this subsec tion other than a
30323032 "captive real estate investment trust ", or
30333033 (2) any qualified real es tate investment trust
30343034 subsidiary under Section 856(i) of the Internal
30353035 Revenue Code, other than a qualified REIT
30363036 subsidiary of a "captive real estate investment
30373037 trust", or
30383038 (3) any Listed Australian Property Trust (meaning an
30393039 Australian unit trust registered as a "Managed
30403040 Investment Scheme" under the Australian
30413041 Corporations Act in which the principal class of
30423042 units is listed on a recognized stock exchange in
30433043 Australia and is regularly traded on an
30443044 established securities market), or an entity
30453045 organized as a trust, provided that a Listed
30463046 Australian Property Trust owns or controls,
30473047 directly or indirectly , seventy-five percent
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30743074 (75%) or more of the voting power or value of the
30753075 beneficial interests or shares of such trust, or
30763076 (4) any Qualified Foreign Entity, meanin g a
30773077 corporation, trust, association or partnership
30783078 organized outside the laws of the United St ates
30793079 and which satisfies the following criteria:
30803080 (a) at least seventy-five percent (75%) of the
30813081 entity's total asset value at the close of
30823082 its taxable year is rep resented by real
30833083 estate assets, as defined in Section
30843084 856(c)(5)(B) of the Internal Revenue Cod e,
30853085 thereby including shares or certificates of
30863086 beneficial interest in an y real estate
30873087 investment trust, cash and cash equivalents,
30883088 and U.S. Government securities,
30893089 (b) the entity receives a dividend -paid
30903090 deduction comparable to Section 561 of the
30913091 Internal Revenue Code, or is exempt from
30923092 entity level tax,
30933093 (c) the entity is required to distribute at
30943094 least eighty-five percent (85%) of its
30953095 taxable income, as computed in the
30963096 jurisdiction in which it is organized, to
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31233123 the holders of its shares or certificates of
31243124 beneficial interest on an annual basis,
31253125 (d) not more than ten percent ( 10%) of the
31263126 voting power or value in such entity is held
31273127 directly or indirectly or constructi vely by
31283128 a single entity or individual, or the shares
31293129 or beneficial interests of such entity ar e
31303130 regularly traded on an established
31313131 securities market, and
31323132 (e) the entity is organized in a country which
31333133 has a tax treaty with the United States.
31343134 3. For purposes of this subsection, the constructive ownership
31353135 rules of Section 318(a) of the Internal Reve nue Code, as modified by
31363136 Section 856(d)(5) of the Internal Revenue Code, shall apply in
31373137 determining the ownership of stock, assets, or net profits of any
31383138 person.
31393139 4. A real estate investment trust that does not become
31403140 regularly traded on an established sec urities market within one (1)
31413141 year of the date on which it first b ecomes a real estate investment
31423142 trust shall be deemed not to have been regularly traded on an
31433143 established securities market, retroactive to the date it first
31443144 became a real estate investment trust, and shall file an amended
31453145 return reflecting such retroactiv e designation for any tax year or
31463146 part year occurring during its initial year of status as a rea l
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31733173 estate investment trust. For purposes of this subsection, a real
31743174 estate investment trust be comes a real estate investment trust on
31753175 the first day it has both met the requirements of Section 856 of the
31763176 Internal Revenue Code and has elected to be treated a s a real estate
31773177 investment trust pursuant to Section 856(c)(1) of the Internal
31783178 Revenue Code.
31793179 SECTION 2. This act shall become effective November 1, 2022.
31803180
31813181 58-2-8728 MAH 01/13/22