OK
Oklahoma Senate Bill SB1686

Oklahoma 2022 Regular Session

Oklahoma Senate Bill SB1686 Compare Versions

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2853 STATE OF OKLAHOMA
2954
3055 2nd Session of the 58th Legislature (2022)
3156
32-COMMITTEE SUBSTITUTE
33-FOR
3457 SENATE BILL 1686 By: Stephens
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40-COMMITTEE SUBSTITUTE
63+AS INTRODUCED
4164
42-An Act relating to income tax; providing a credit for
43-certain adoption related expenses; providing
44-refundability of credit; limiting amount of credit;
45-authorizing the Oklahoma Tax Commission to promulgate
46-rules and prescribe form for verification; amending
47-68 O.S. 2021, Section 2358, which relates to
48-adjustments to arrive at Oklahoma taxable income and
49-Oklahoma adjusted gross income; modifying period of
50-deduction for adoption related expens es; providing
51-for codification; and providing an effective date .
65+An Act relating to income tax credit; providing a
66+credit for certain adoption related expenses;
67+providing refundability of credit; limiting amount of
68+credit; authorizing the Oklahoma Tax Commission to
69+promulgate rules and prescribe form for verification;
70+providing for codification; and providing an
71+effective date.
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5677 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
5778 SECTION 1. NEW LAW A new section of law to be codified
5879 in the Oklahoma Statutes as Section 2358.13 of Title 68, unless
5980 there is created a duplication in numb ering, reads as follows:
6081 A. For tax year 2023 and subsequent tax years, there sha ll be
6182 allowed a credit against the tax imposed pursuant to Section 2355 of
62-Title 68 of the Oklahoma Statutes in an amount equal to twenty-five
63-percent (25%) of adoption related costs to adoptive parents of a
83+Title 68 of the Oklahoma Statutes in an amount equal to fifty
84+percent (50%) of adoption related costs to adoptive parents of a
6485 resident of this state or a child born to a resident o f this state
6586 that results in the filing of a certificate of decree of adoption ,
87+after the effective date of this act, as provided in Section 7505 -
88+6.6 of Title 10 of the Oklahoma Statutes. Adoption related costs
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92-after the effective date of this act, as provided in Section 7505 -
93-6.6 of Title 10 of the Oklahoma Statutes. Adoption related costs
94140 shall include relevant court fees, fees paid to adoption service
95141 agencies, prenatal and natal medical expenses of the biological
96142 mother pursuant to an adoption agreement, and costs for home study
97143 as may be required pursuant to Section 7505-5.1 of Title 10 of the
98144 Oklahoma Statutes.
99145 B. If the credit provided in this section exceeds the tax
100146 imposed by Section 2355 of Title 68 of the Oklahoma Statutes, the
101147 excess amount shall be refunded to the taxpayer. The credit
102148 provided in this section shall not ex ceed Five Thousand Dollars
103149 ($5,000.00) for each certificate of decree of adoption.
104150 C. The total amount of credits authorized by this sect ion used
105151 to offset tax shall be adjusted annually to limit the annual amount
106152 of credits to Five Million Dollars ( $5,000,000.00). The Oklahoma
107153 Tax Commission shall annua lly calculate and publish a percentage by
108154 which the credits authorized by this section shall be reduced so the
109155 total amount of credits used to offset tax does not exceed Five
110156 Million Dollars ($5,000,000.00) per year. The formula to be used
111157 for the percentage adjustment shall be Five Million Dollars
112158 ($5,000,000.00) divided by the credits cla imed in the second
113159 preceding year.
160+D. The Oklahoma Tax Commission may promul gate rules or
161+prescribe forms to verify costs and taxpayer qualification for the
162+credit provided in this section.
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140-D. The Oklahoma Tax Commission may promul gate rules or
141-prescribe forms to verify costs and taxpayer qualification for the
142-credit provided in this section.
143-SECTION 2. AMENDATORY 68 O.S. 2021, Section 2358, is
144-amended to read as follows:
145-Section 2358. For all tax years beginning after December 31,
146-1981, taxable income and adjusted gross income shall be adjusted to
147-arrive at Oklahoma taxable income and Oklahoma adjusted gross income
148-as required by this section.
149-A. The taxable income of any taxpayer sh all be adjusted to
150-arrive at Oklahoma taxable income fo r corporations and Oklahoma
151-adjusted gross income for individuals, as follows:
152-1. There shall be added interest income on obligations of any
153-state or political subdivision thereto which is not otherwi se
154-exempted pursuant to other laws of this state, to th e extent that
155-such interest is not inclu ded in taxable income and adjusted gross
156-income.
157-2. There shall be deducted amounts included in such income that
158-the state is prohibited from taxing because of the provisions of the
159-Federal Constitution, the State C onstitution, federal laws , or laws
160-of Oklahoma.
161-3. The amount of any federal net operating loss deduction shall
162-be adjusted as follows:
215+SECTION 2. This act shall become effective Novem ber 1, 2022.
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189-a. For carryovers and carrybacks to taxable years
190-beginning before January 1, 1981, the amount of any
191-net operating loss deduction allowed to a taxpayer for
192-federal income tax purposes shall be reduced to an
193-amount which is the same portion thereof as the loss
194-from sources within this state, as determined pursuant
195-to this section and Section 2362 of this title, for
196-the taxable year in which such loss is sustaine d is of
197-the total loss for such year;
198-b. For carryovers and carryba cks to taxable years
199-beginning after December 31, 1980, the amount of any
200-net operating loss de duction allowed for the taxable
201-year shall be an amoun t equal to the aggregate of the
202-Oklahoma net operating loss carryovers and carrybacks
203-to such year. Oklahoma net operating losses shall be
204-separately determined by reference to Section 172 of
205-the Internal Revenue Code, 26 U.S.C., Section 172, as
206-modified by the Oklahoma Income Tax Act, Section 2351
207-et seq. of this title, and shall be allowed without
208-regard to the existence of a federal net operating
209-loss. For tax years beginning after December 31,
210-2000, and ending before January 1, 2008, the years to
211-which such losses may be carried shall be de termined
212-solely by reference to Section 172 of the Internal
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239-Revenue Code, 26 U.S.C., Section 172, with the
240-exception that the terms “net operating loss” and
241-“taxable income” shall be replaced with “Oklahoma net
242-operating loss” and “Oklahoma taxable income ”. For
243-tax years beginning after December 31, 2007, and
244-ending before January 1, 2009, years to which such
245-losses may be carried back shall be limited to two (2)
246-years. For tax years beginning after December 31,
247-2008, the years to which such losses may be carried
248-back shall be determined solely by reference to
249-Section 172 of the Internal Revenue Code, 26 U.S.C.,
250-Section 172, with the exception that the terms “net
251-operating loss” and “taxable income” shall be replaced
252-with “Oklahoma net operating loss ” and “Oklahoma
253-taxable income”.
254-4. Items of the following nature shall be allocated as
255-indicated. Allowable deductions attributable to items separately
256-allocable in subparagraphs a, b, and c of this paragraph, whether o r
257-not such items of income were actually received, shall be allocated
258-on the same basis as those items:
259-a. Income from real and tangible personal property, such
260-as rents, oil and mining production or roy alties, and
261-gains or losses from sales of such proper ty, shall be
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288-allocated in accordance wit h the situs of such
289-property;
290-b. Income from intangible personal pro perty, such as
291-interest, dividends, patent or copyright royalties,
292-and gains or losses from sal es of such property, shall
293-be allocated in accordance with the domiciliary situs
294-of the taxpayer, except that:
295-(1) where such property has acquired a nonunitary
296-business or commercial situs apart from the
297-domicile of the taxpayer such income shall be
298-allocated in accordance with such business or
299-commercial situs; interest income from
300-investments held to generate working capital for
301-a unitary business enterprise sh all be included
302-in apportionable income; a resident trust or
303-resident estate shall be treated a s having a
304-separate commercial or business situs inso far as
305-undistributed income is concerned , but shall not
306-be treated as having a separate commercial or
307-business situs insofar as distributed income is
308-concerned,
309-(2) for taxable years beginning after Dece mber 31,
310-2003, capital or ordinary gains or losses fr om
311-the sale of an ownership interest in a publicly
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338-traded partnership, as defined by Section 7704(b)
339-of the Internal Revenue Code, shall be allocated
340-to this state in the ratio of the original cost
341-of such partnership’s tangible property in this
342-state to the original cost of such partnership ’s
343-tangible property everywhere, as determined at
344-the time of the sale; if more than fifty percent
345-(50%) of the value of the partnership ’s assets
346-consists of intangibl e assets, capital or
347-ordinary gains or losses from th e sale of an
348-ownership interest in the p artnership shall be
349-allocated to this state in accordance with the
350-sales factor of the partnership for its first
351-full tax period immediately preceding its tax
352-period during which the ownership interest in the
353-partnership was sold; the provisions of this
354-division shall only apply if the capital or
355-ordinary gains or losses f rom the sale of an
356-ownership interest in a partnership do not
357-constitute qualifying gain receiv ing capital
358-treatment as defined in subparagraph a of
359-paragraph 2 of subsection F of this sec tion,
360-(3) income from such property which is required to be
361-allocated pursuant to the provisions of paragraph
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388-5 of this subsection shall be allocated as herein
389-provided;
390-c. Net income or loss from a business activity which is
391-not a part of business carried on within or without
392-the state of a unitary character shall be sepa rately
393-allocated to the state in which such activity is
394-conducted;
395-d. In the case of a manufact uring or processing
396-enterprise the business of which in Oklahoma consists
397-solely of marketing its products by:
398-(1) sales having a situs without this state, shipp ed
399-directly to a point from without the state to a
400-purchaser within the state, commonly known as
401-interstate sales,
402-(2) sales of the product stored i n public warehouses
403-within the state pur suant to “in transit”
404-tariffs, as prescribed and allowed by the
405-Interstate Commerce Commission, to a purchaser
406-within the state,
407-(3) sales of the product stored in public warehouses
408-within the state where the shipmen t to such
409-warehouses is not covered by “in transit”
410-tariffs, as prescribed and allowed by the
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437-Interstate Commerce Commission, to a purchaser
438-within or without the state,
439-the Oklahoma net income shall , at the option of the
440-taxpayer, be that portion of the t otal net income of
441-the taxpayer for fede ral income tax purposes derived
442-from the manufacture and/or processi ng and sales
443-everywhere as determined by the ratio of the sales
444-defined in this section mad e to the purchaser within
445-the state to the total sales ev erywhere. The term
446-“public warehouse” as used in this subparagraph means
447-a licensed public warehouse, the p rincipal business of
448-which is warehousing merchandise for the public;
449-e. In the case of insurance companies, Oklahoma taxable
450-income shall be taxabl e income of the taxpayer for
451-federal tax purposes, as adjusted for the adjustments
452-provided pursuant to the provisions of paragraphs 1
453-and 2 of this subsection, apportioned as follows:
454-(1) except as otherwise provided by division (2) of
455-this subparagraph, taxable income of an insurance
456-company for a taxable year shall be apportioned
457-to this state by multiplying such income by a
458-fraction, the numerator of which is the direct
459-premiums written for insu rance on property or
460-risks in this state, and the denominat or of which
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487-is the direct premiums writt en for insurance on
488-property or risks everywhere. For purposes of
489-this subsection, the term “direct premiums
490-written” means the total amount of direct
491-premiums written, assessments and annuity
492-considerations as repo rted for the taxable year
493-on the annual statement filed by the company with
494-the Insurance Commissioner in th e form approved
495-by the National Association of Insurance
496-Commissioners, or such other for m as may be
497-prescribed in lieu thereof,
498-(2) if the principal source of premiums written by an
499-insurance company consists of premiums for
500-reinsurance accepted by it, th e taxable income of
501-such company shall be apportioned to this state
502-by multiplying such income by a fraction, the
503-numerator of which is the sum of ( a) direct
504-premiums written for insurance on property or
505-risks in this state, plus (b) premiums written
506-for reinsurance accepted in respect of property
507-or risks in this state, and the denominator o f
508-which is the sum of (c) direct premiums written
509-for insurance on property or risks everywhere,
510-plus (d) premiums written for reinsurance
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537-accepted in respect of proper ty or risks
538-everywhere. For purposes of this paragraph,
539-premiums written for reinsuranc e accepted in
540-respect of property or risks in this state,
541-whether or not otherwise determinable, may at the
542-election of the company be determined on the
543-basis of the proportion which premiums written
544-for insurance accepted from companies
545-commercially domiciled in Oklahoma bears to
546-premiums written for reinsurance a ccepted from
547-all sources, or alternative ly in the proportion
548-which the sum of the direct premiums written fo r
549-insurance on property or risks in this state by
550-each ceding company from which reinsur ance is
551-accepted bears to the sum of the total direct
552-premiums written by each such ceding company f or
553-the taxable year.
554-5. The net income or loss remaining after the separate
555-allocation in paragraph 4 of this subsection, being that which is
556-derived from a unitary business enterprise, shall be apportioned to
557-this state on the basis of the arithmetical a verage of three factors
558-consisting of property, payroll, and sales or gross revenue
559-enumerated as subparagraphs a, b , and c of this paragraph . Net
560-income or loss as used in this paragraph includes that derived from
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587-patent or copyright royalties, purchase discounts, and interest on
588-accounts receivable relating to or arising from a business activity,
589-the income from which is apportioned pursuant to this subsect ion,
590-including the sale or other disposition of such proper ty and any
591-other property used in the un itary enterprise. Deductions used in
592-computing such net income or los s shall not include taxes based on
593-or measured by income . Provided, for corporations w hose property
594-for purposes of the tax imposed by Section 23 55 of this title has an
595-initial investment cost equaling or exceeding Two Hund red Million
596-Dollars ($200,000,00 0.00) and such investment is made on or after
597-July 1, 1997, or for corporations which e xpand their property or
598-facilities in this state and such e xpansion has an investment cost
599-equaling or exceeding Two Hundred Million Doll ars ($200,000,000.00)
600-over a period not to exceed three (3) years, and such expansion is
601-commenced on or after January 1, 2000, the three factors shall be
602-apportioned with proper ty and payroll, each comprising twenty -five
603-percent (25%) of the apportionment factor and sales comprising fif ty
604-percent (50%) of the apportionment factor . The apportionment
605-factors shall be compu ted as follows:
606-a. The property factor is a fraction, the n umerator of
607-which is the average value o f the taxpayer’s real and
608-tangible personal property owned or rented a nd used in
609-this state during the tax period and the denominator
610-of which is the averag e value of all the taxpayer’s
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637-real and tangible personal pro perty everywhere owned
638-or rented and used during the tax period.
639-(1) Property, the income from which is separa tely
640-allocated in paragraph 4 of this subsection,
641-shall not be included in determinin g this
642-fraction. The numerator of the fraction shall
643-include a portion of the investment in
644-transportation and other equipment having no
645-fixed situs, such as rolling stoc k, buses,
646-trucks, and trailers, including machinery and
647-equipment carried thereon, air planes,
648-salespersons’ automobiles, and other similar
649-equipment, in the proportion that miles travele d
650-in Oklahoma by such equipment bears to total
651-miles traveled,
652-(2) Property owned by the taxpayer is valued at its
653-original cost. Property rented by the ta xpayer
654-is valued at eight times the net annual rental
655-rate. Net annual rental rate is the annual
656-rental rate paid by the taxpayer, less any annual
657-rental rate received by the taxpayer from
658-subrentals,
659-(3) The average value of property shall be determined
660-by averaging the values at the beginning and
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687-ending of the tax period, but the Oklahoma Tax
688-Commission may require the averaging of monthly
689-values during the tax period if r easonably
690-required to reflect properly the average value of
691-the taxpayer’s property;
692-b. The payroll factor is a fraction, the numerator of
693-which is the total compensation for services rendered
694-in the state during the tax per iod, and the
695-denominator of which is the total compensation for
696-services rendered everywhere during the tax period .
697-“Compensation”, as used in this subsection means those
698-paid-for services to the extent related to the unitary
699-business but does not include officers’ salaries,
700-wages, and other compensation.
701-(1) In the case of a transportation enterprise, the
702-numerator of the fraction shall include a portion
703-of such expenditure i n connection with employees
704-operating equipment over a fixed route, such as
705-railroad employees, airline pilots, or bus
706-drivers, in this state only a part of the time,
707-in the proportion that milea ge traveled in
708-Oklahoma bears to total mileage traveled by su ch
709-employees,
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736-(2) In any case the numera tor of the fraction shall
737-include a portion of such expenditures in
738-connection with itinerant employees, such as
739-traveling salespersons, in this state onl y a part
740-of the time, in the proportion that time spent in
741-Oklahoma bears to total time spent in furth erance
742-of the enterprise by such employee s;
743-c. The sales factor is a fract ion, the numerator of which
744-is the total sales or gross revenue of the taxpayer in
745-this state during the tax period, and the denominator
746-of which is the total sales or gross revenue of the
747-taxpayer everywhere during the tax period. “Sales”,
748-as used in this subsection does not include sales or
749-gross revenue which are separately alloc ated in
750-paragraph 4 of this subsection.
751-(1) Sales of tangible personal property have a situs
752-in this state if the property is delivered or
753-shipped to a purchaser other than the United
754-States government, within this state regardless
755-of the FOB point or oth er conditions of the sale;
756-or the property is shipped from an of fice, store,
757-warehouse, factory, or other place of storage in
758-this state and (a) the purchaser is the United
759-States government or (b) the taxpayer is not
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786-doing business in the state of the dest ination of
787-the shipment.
788-(2) In the case of a railroad or inter urban railway
789-enterprise, the numerator of the fraction shall
790-not be less than the allocation of revenues to
791-this state as shown in its annual report to the
792-Corporation Commission.
793-(3) In the case of an airline, truck, or bus
794-enterprise or freight car, tan k car, refrigerator
795-car, or other railroad equipment enterprise, the
796-numerator of the fraction shall include a portio n
797-of revenue from interstate transportation in the
798-proportion that interstat e mileage traveled in
799-Oklahoma bears to total interstate mileag e
800-traveled.
801-(4) In the case of an oil, g asoline or gas pipeline
802-enterprise, the numerator of the fraction shall
803-be either the total of traffic units of the
804-enterprise within Oklahoma or the re venue
805-allocated to Oklahoma based upon miles moved, at
806-the option of the taxpayer, and the denominator
807-of which shall be the total of traffic uni ts of
808-the enterprise or the revenue of the enterprise
809-everywhere as appropriate to the numerator . A
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836-“traffic unit” is hereby defined as the
837-transportation for a distance of o ne (1) mile of
838-one (1) barrel of oil, on e (1) gallon of
839-gasoline, or one thousand (1,000) cubic feet of
840-natural or casinghead gas, as the case may be.
841-(5) In the case of a telephone or telegra ph or other
842-communication enterprise, the numerator of the
843-fraction shall include that portion of the
844-interstate revenue as is allocated pursuant to
845-the accounting procedures prescri bed by the
846-Federal Communications Commission; provided that
847-in respect to each corporation or b usiness entity
848-required by the Federal Comm unications Commission
849-to keep its books and records in accordance with
850-a uniform system of accounts prescribed by such
851-Commission, the intrastate net income shall be
852-determined separately in t he manner provided by
853-such uniform system of accounts and only t he
854-interstate income shall be subject to allocation
855-pursuant to the provisions of this subsection.
856-Provided further, that the gross revenue factors
857-shall be those as are determined pursuant t o the
858-accounting procedures prescribed by the Federal
859-Communications Commission.
860-
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886-In any case where the a pportionment of the three factors
887-prescribed in this paragraph attributes to O klahoma a portion of net
888-income of the enterprise out of all appropriate proportion to the
889-property owned and/or business transacted withi n this state, because
890-of the fact that one or more of the factors so prescribed a re not
891-employed to any appreciable ex tent in furtherance of the enterprise;
892-or because one or more factors not so prescribed are emp loyed to a
893-considerable extent in furtheran ce of the enterprise; or because of
894-other reasons, the Tax Commission is empowere d to permit, after a
895-showing by taxpayer that an excessive portion of net income has been
896-attributed to Oklaho ma, or require, when i n its judgment an
897-insufficient portion of n et income has been attributed to Oklahom a,
898-the elimination, substitution, or use of additional factors, or
899-reduction or increase in the weight of such prescribed factors .
900-Provided, however, that any such variance from such prescribed
901-factors which has the effect of increasing the portion of net income
902-attributable to Oklahoma must not be inherently arbitrary, and
903-application of the recomputed final apportionment to the net income
904-of the enterprise must attribute t o Oklahoma only a reasonable
905-portion thereof.
906-6. For calendar years 1997 and 1998, the owner of a new or
907-expanded agricultural commodity processing facility in this state
908-may exclude from Oklahoma taxable income, or in the case of a n
909-individual, the Oklah oma adjusted gross income, fifteen percent
910-
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935-
936-(15%) of the investment by the owner in the new or expanded
937-agricultural commodit y processing facility. For calendar year 1999,
938-and all subsequent years, the percentage, not to exceed fifte en
939-percent (15%), avail able to the owner of a new or expanded
940-agricultural commodity processing facility i n this state claiming
941-the exemption shall be adjusted annually so that the tot al estimated
942-reduction in tax liability does not exceed One Million Doll ars
943-($1,000,000.00) annually. The Tax Commission shall promulgate rules
944-for determining the percentage of the investment which each eligible
945-taxpayer may exclude. The exclusion provided by this paragraph
946-shall be taken in the taxable year when the invest ment is made. In
947-the event the total reduction in tax liability a uthorized by this
948-paragraph exceeds One Million Dollars ($1,000,000.00) in any
949-calendar year, the Tax Commission shall permit any excess over One
950-Million Dollars ($1,000,000.00) and shall fa ctor such excess into
951-the percentage for subsequent years . Any amount of the exemption
952-permitted to be excluded pursuant to the provisions of this
953-paragraph but not used in any year m ay be carried forward as an
954-exemption from income pursuant to the provis ions of this paragraph
955-for a period not exceeding six (6) years fo llowing the year in which
956-the investment was originally made.
957-For purposes of this paragraph:
958-a. “Agricultural commodi ty processing facility ” means
959-building, structures, fixtures and impro vements used
960-
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985-
986-or operated primarily for the processing or production
987-of marketable products from agricultural commodities.
988-The term shall also mean a dairy operation that
989-requires a depreciable investment of at least Two
990-Hundred Fifty Thousand Dollars ($25 0,000.00) and which
991-produces milk from dairy cows. The term does not
992-include a facility that provides only, and nothing
993-more than, storage, cleaning , drying or transportation
994-of agricultural commodities, and
995-b. “Facility” means each part of the facility which is
996-used in a process primarily for:
997-(1) the processing of agric ultural commodities,
998-including receiving or storing agricultural
999-commodities, or the production of milk at a dairy
1000-operation,
1001-(2) transporting the agricultural commodities or
1002-product before, during or after the pr ocessing,
1003-or
1004-(3) packaging or otherwise pre paring the product for
1005-sale or shipment.
1006-7. Despite any provision to the contrar y in paragraph 3 of this
1007-subsection, for taxable years beginning after December 31, 1999, in
1008-the case of a taxpayer which has a farm ing loss, such farming loss
1009-shall be considered a net operating loss carryback in a ccordance
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1036-with and to the extent of the I nternal Revenue Code, 26 U.S.C.,
1037-Section 172(b)(G). However, the amount of the net operating loss
1038-carryback shall not exceed the le sser of:
1039-a. Sixty Thousand Dollars ($60,000 .00), or
1040-b. the loss properly shown on S chedule F of the Internal
1041-Revenue Service Form 1040 reduced by one-half (1/2) of
1042-the income from all other sources other than reflected
1043-on Schedule F.
1044-8. In taxable years beginning after December 31, 1995, all
1045-qualified wages equal to the federal income t ax credit set forth in
1046-26 U.S.C.A., Section 45A, shall be deducted from taxabl e income.
1047-The deduction allowed pursuant to this paragraph sh all only be
1048-permitted for the tax years in which the federal tax credit purs uant
1049-to 26 U.S.C.A., Section 45A, is all owed. For purposes of this
1050-paragraph, “qualified wages” means those wages use d to calculate the
1051-federal credit pursuant to 26 U.S.C.A., Sec tion 45A.
1052-9. In taxable years beginning after December 31, 2005, an
1053-employer that is eligible for and utilizes the Safety Pays OSHA
1054-Consultation Service pro vided by the Oklahoma Department of Labor
1055-shall receive an exemption from taxable income in the am ount of One
1056-Thousand Dollars ($1,0 00.00) for the tax year that the service is
1057-utilized.
1058-10. For taxable years beginn ing on or after January 1, 2010,
1059-there shall be added to Oklahoma taxable inco me an amount equal to
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1085-
1086-the amount of deferred income not incl uded in such taxable income
1087-pursuant to Section 108(i)(1) of the Internal Reve nue Code of 1986
1088-as amended by Section 1 231 of the American Recovery and Reinvest ment
1089-Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
1090-Oklahoma taxable income an amo unt equal to the amount of deferred
1091-income included in such taxable income pur suant to Section 108(i)(1)
1092-of the Internal Revenue Code by Section 1231 of the Am erican
1093-Recovery and Reinvestment Act of 2009 (P.L. No. 111 -5).
1094-11. For taxable years beginning on or after January 1, 2019,
1095-there shall be subtracted from Oklahoma taxable in come or adjusted
1096-gross income any item o f income or gain, and there shall be adde d to
1097-Oklahoma taxable income or adjus ted gross income any item of loss or
1098-deduction that in the absence of an election pursuant to t he
1099-provisions of the Pass-Through Entity Tax Equity Act of 2019 would
1100-be allocated to a member or to an indirect member of a n electing
1101-pass-through entity pursua nt to Section 2351 et seq. of this title,
1102-if (i) the electing pass-through entity has accounted for such item
1103-in computing its Oklahoma ne t entity income or loss pursuant to the
1104-provisions of the Pass-Through Entity Tax Equity Act of 2019, and
1105-(ii) the total amount of tax attributable to any resulting Oklahoma
1106-net entity income has been paid . The Oklahoma Tax Commission shall
1107-promulgate rules for the reporting of such exclusion t o direct and
1108-indirect members of the elec ting pass-through entity. As used in
1109-this paragraph, “electing pass-through entity”, “indirect member”,
1110-
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1135-
1136-and “member” shall be defined in the same manner as prescribed by
1137-Section 2355.1P-2 of this title. Notwithstanding the application of
1138-this paragraph, the adjusted tax basis of any ownersh ip interest in
1139-a pass-through entity for purposes of Sectio n 2351 et seq. of this
1140-title shall be equal to its adjusted tax basis for feder al income
1141-tax purposes.
1142-B. 1. The taxable income of any corporation shall be fu rther
1143-adjusted to arrive at Oklahoma taxable income, except those
1144-corporations electing treatme nt as provided in subchapter S of the
1145-Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
1146-2365 of this title, deductions pursuant to the provisio ns of the
1147-Accelerated Cost Recovery S ystem as defined and allowed in the
1148-Economic Recovery Tax Act of 1981, Public Law 97 -34, 26 U.S.C.,
1149-Section 168, for depreciation of asset s placed into service after
1150-December 31, 1981, shall not be allowed in calculatin g Oklahoma
1151-taxable income. Such corporations shall be allowed a deduction for
1152-depreciation of assets placed into service after Dece mber 31, 1981,
1153-in accordance with provision s of the Internal Revenue Code, 26
1154-U.S.C., Section 1 et seq., in effect immediate ly prior to the
1155-enactment of the Acce lerated Cost Recovery System . The Oklahoma tax
1156-basis for all such assets placed into service a fter December 31,
1157-1981, calculated in this section shall be retained and utilized f or
1158-all Oklahoma income tax purposes throu gh the final disposition of
1159-such assets.
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1186-Notwithstanding any other provisions of the Oklahoma Income Tax
1187-Act, Section 2351 et seq. o f this title, or of the Internal Revenue
1188-Code to the contrary, this subsection shal l control calculation of
1189-depreciation of assets placed into service after Dece mber 31, 1981,
1190-and before January 1, 1983.
1191-For assets placed in service and held by a corporati on in which
1192-accelerated cost recovery syste m was previously disallowed, an
1193-adjustment to taxable income is required in the f irst taxable year
1194-beginning after December 31, 1982, to reconcile the basis of such
1195-assets to the basis allowed in the Internal Reve nue Code. The
1196-purpose of this adjustment i s to equalize the basis and allowance
1197-for depreciation accounts between that repo rted to the Internal
1198-Revenue Service and that reported to Oklahoma.
1199-2. For tax years beginn ing on or after January 1, 2009, and
1200-ending on or before December 31, 2009, there s hall be added to
1201-Oklahoma taxable income any amount in excess of One Hundred Seve nty-
1202-five Thousand Dollars ($175,000.0 0) which has been deducted as a
1203-small business expense under Internal Revenue Code, Section 179 as
1204-provided in the American Recovery and R einvestment Act of 2009.
1205-C. 1. For taxable years beginning after December 31, 1 987, the
1206-taxable income of any corpor ation shall be further adjusted to
1207-arrive at Oklahoma taxable income for transfers of technolog y to
1208-qualified small businesses located in Oklahoma. Such transferor
1209-corporation shall be allowed an exemption from taxable income of an
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1235-
1236-amount equal to the amo unt of royalty payment received as a result
1237-of such transfer; provided, however, such amount sh all not exceed
1238-ten percent (10%) of the amo unt of gross proceeds received by such
1239-transferor corporation as a result of the technology transfer. Such
1240-exemption shall be allowed for a period not to exceed ten (10) y ears
1241-from the date of receipt of the firs t royalty payment accruing from
1242-such transfer. No exemption may be claimed for tra nsfers of
1243-technology to qualified small b usinesses made prior to January 1,
1244-1988.
1245-2. For purposes of this subsection:
1246-a. “Qualified small business” means an entity, whether
1247-organized as a corporation, partnership, o r
1248-proprietorship, organized for profit w ith its
1249-principal place of business locat ed within this state
1250-and which meets the following criteria:
1251-(1) Capitalization of not m ore than Two Hundred Fifty
1252-Thousand Dollars ($250,000.00),
1253-(2) Having at least fifty pe rcent (50%) of its
1254-employees and assets located in Oklahoma at the
1255-time of the transfer, and
1256-(3) Not a subsidiary or a ffiliate of the transferor
1257-corporation;
1258-b. “Technology” means a proprietary process, formula,
1259-pattern, device, or compilation of scientifi c or
1260-
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1285-
1286-technical information which is not in the public
1287-domain;
1288-c. “Transferor corporation” means a corporation which is
1289-the exclusive and undisputed owner of the techn ology
1290-at the time the transfer is made; and
1291-d. “Gross proceeds” means the total amount of
1292-consideration for the transfer of techno logy, whether
1293-the consideration is in mon ey or otherwise.
1294-D. 1. For taxable years beginning after December 31, 2005, the
1295-taxable income of any corporation, estate , or trust, shall be
1296-further adjusted for qualifying gains receiving capital treatment .
1297-Such corporations, estates, or trusts shall be allowed a deduction
1298-from Oklahoma taxable income for the amount of qualifying gain s
1299-receiving capital treatment earned by the corpor ation, estate, or
1300-trust during the taxab le year and included in the federal taxa ble
1301-income of such corporation, estate, or trust.
1302-2. As used in this subsection:
1303-a. “qualifying gains receiving capital treat ment” means
1304-the amount of net capital gains, as defi ned in Section
1305-1222(11) of the Interna l Revenue Code, included in the
1306-federal income tax return of the corporation, est ate,
1307-or trust that result from:
1308-(1) the sale of real property or tangible personal
1309-property located within Oklahoma that has been
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1336-directly or indirectly owned by the corporati on,
1337-estate, or trust for a holding perio d of at least
1338-five (5) years prior to the date of the
1339-transaction from which such net capital gains
1340-arise,
1341-(2) the sale of stock or on the sale of an ownership
1342-interest in an Oklahoma company, limited
1343-liability company, or partnership where such
1344-stock or ownership interest has been directly or
1345-indirectly owned by the corporation, estate , or
1346-trust for a holding period of at least t hree (3)
1347-years prior to the date of the transaction from
1348-which the net capital gains aris e, or
1349-(3) the sale of real property, tan gible personal
1350-property, or intangible personal property located
1351-within Oklahoma as par t of the sale of all or
1352-substantially all of the assets of an Oklahoma
1353-company, limited liab ility company, or
1354-partnership where such property has been directly
1355-or indirectly owned by such entity owned by the
1356-owners of such entity, and used in or derived
1357-from such entity for a period of at least three
1358-(3) years prior to the date of the transaction
1359-from which the net capital gains ari se,
1360-
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1385-
1386-b. “holding period” means an uninterrupted period of
1387-time. The holding period shall include any additional
1388-period when the property was held by another
1389-individual or entity, if such additional period is
1390-included in the taxpayer’s holding period for the
1391-asset pursuant to the Internal Revenue Code,
1392-c. “Oklahoma company”, “limited liability company”, or
1393-“partnership” means an entity whose primary
1394-headquarters have been located in Oklahoma for at
1395-least three (3) uninterrupted years prior to the date
1396-of the transaction from which the net capital gains
1397-arise,
1398-d. “direct” means the taxpayer directly owns the asset,
1399-and
1400-e. “indirect” means the taxpayer owns an interest in a
1401-pass-through entity (or chain of pass -through
1402-entities) that sells the asset that gi ves rise to the
1403-qualifying gains receiving c apital treatment.
1404-(1) With respect to sales of real property or
1405-tangible personal prope rty located within
1406-Oklahoma, the deduction described in this
1407-subsection shall not apply unless the pass-
1408-through entity that m akes the sale has held the
1409-property for not less than five (5) uninterrupted
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1436-years prior to the date of the transaction that
1437-created the capital gain, and each pass -through
1438-entity included in the chain of ownership has
1439-been a member, partner, or shareholde r of the
1440-pass-through entity in the tier imm ediately below
1441-it for an uninterrupted pe riod of not less than
1442-five (5) years.
1443-(2) With respect to sales of stock or owne rship
1444-interest in or sales of all or substantially al l
1445-of the assets of an Oklahoma company , limited
1446-liability company, or partnership, the deduction
1447-described in this subsecti on shall not apply
1448-unless the pass-through entity that makes the
1449-sale has held the stock or ownership interest or
1450-the assets for not less than three (3)
1451-uninterrupted years prior to the date of the
1452-transaction that created the capital gain, and
1453-each pass-through entity included in the chain of
1454-ownership has been a member, partner or
1455-shareholder of the pass -through entity in the
1456-tier immediately below it for an uninterrupted
1457-period of not less than three (3) years.
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1483-
1484-E. The Oklahoma adjusted gross income of a ny individual
1485-taxpayer shall be further adjust ed as follows to arrive at Oklaho ma
1486-taxable income:
1487-1. a. In the case of individuals, t here shall be added or
1488-deducted, as the case may be, the difference necessary
1489-to allow personal exemptions of One Thousand Dollars
1490-($1,000.00) in lieu of the personal ex emptions allowed
1491-by the Internal Revenue Code.
1492-b. There shall be allowed an additional exemption of One
1493-Thousand Dollars ($1, 000.00) for each taxpayer or
1494-spouse who is blind at the close of the tax year . For
1495-purposes of this subparagraph, an individual is blind
1496-only if the central visu al acuity of the individual
1497-does not exceed 20/200 in th e better eye with
1498-correcting lenses, o r if the visual acuity of the
1499-individual is greater than 20/200, but is accompanied
1500-by a limitation in the fields of vision such th at the
1501-widest diameter of the v isual field subtends an angle
1502-no greater than twenty (20 ) degrees.
1503-c. There shall be allowed a n additional exemption of One
1504-Thousand Dollars ($1,000.00) for each taxpayer or
1505-spouse who is sixty-five (65) years of age or older at
1506-the close of the tax year based upon the filing status
1507-and federal adjusted gross i ncome of the taxpayer.
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1529-21
1530-22
1531-23
1532-24
1533-
1534-Taxpayers with the following filing status may claim
1535-this exemption if the federal adjusted gross i ncome
1536-does not exceed:
1537-(1) Twenty-five Thousand Dollars ($25,000.00) if
1538-married and filing jointly;
1539-(2) Twelve Thousand Five Hundred Dollars ($12,500.00)
1540-if married and filing separately;
1541-(3) Fifteen Thousand Dollar s ($15,000.00) if single;
1542-and
1543-(4) Nineteen Thousand Dollars ($19,000.00) if a
1544-qualifying head of household.
1545-Provided, for taxable years beginning after December
1546-31, 1999, amounts included in the calculation of
1547-federal adjusted gross income pursuant to the
1548-conversion of a traditional individual re tirement
1549-account to a Roth individual retireme nt account shall
1550-be excluded from federal adjusted gross income for
1551-purposes of the income thresholds provided in this
1552-subparagraph.
1553-2. a. For taxable years beginning on or before December 31,
1554-2005, in the case of individuals who use the standard
1555-deduction in determining taxable income, there shall
1556-be added or deducted, as the case may be, t he
1557-difference necessary to allow a sta ndard deduction in
1558-
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1579-21
1580-22
1581-23
1582-24
1583-
1584-lieu of the standard dedu ction allowed by the Internal
1585-Revenue Code, in an amount equal to the larger of
1586-fifteen percent (15%) of the Ok lahoma adjusted gross
1587-income or One Thousand Dollars ($1,000.00 ), but not to
1588-exceed Two Thousand Doll ars ($2,000.00), except that
1589-in the case of a married individual filing a separate
1590-return such deduction shall be the larger of fif teen
1591-percent (15%) of such Oklahoma adjusted gross income
1592-or Five Hundred Dollars ($500 .00), but not to exceed
1593-the maximum amount of One Thousand Dollars
1594-($1,000.00).
1595-b. For taxable years beginning on or after January 1,
1596-2006, and before January 1, 2007, i n the case of
1597-individuals who use the standard deduction in
1598-determining taxable income, there shall be added or
1599-deducted, as the case may be, the difference necessary
1600-to allow a standard deduction in lieu of th e standard
1601-deduction allowed by the Internal R evenue Code, in an
1602-amount equal to:
1603-(1) Three Thousand Dollars ($3,000.00), if the fili ng
1604-status is married filing joint, hea d of
1605-household, or qualifying widow; or
1606-(2) Two Thousand Dollars ($2,000.00), if the filing
1607-status is single or married filing separ ate.
1608-
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1615-7
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1621-13
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1625-17
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1629-21
1630-22
1631-23
1632-24
1633-
1634-c. For the taxable year beginning on January 1, 2007, and
1635-ending December 31, 200 7, in the case of individuals
1636-who use the standard deduction in determining taxabl e
1637-income, there shall be added or deducte d, as the case
1638-may be, the difference necessary to allow a standard
1639-deduction in lieu of the standard deduction allowed by
1640-the Internal Revenue Code, in an amount equal to :
1641-(1) Five Thousand Five Hundred Dollars ($5 ,500.00),
1642-if the filing status is married filing joint or
1643-qualifying widow; or
1644-(2) Four Thousand One Hundred Twenty-five Dollars
1645-($4,125.00) for a head of household; or
1646-(3) Two Thousand Seven Hundred Fifty Dollar s
1647-($2,750.00), if the filing status is singl e or
1648-married filing separate.
1649-d. For the taxable year beginning on January 1, 2008, and
1650-ending December 31, 2008, in the case of individuals
1651-who use the standard deduction in determining taxable
1652-income, there shall be added or deducted, as the case
1653-may be, the difference necessary to allow a stan dard
1654-deduction in lieu of the standard deductio n allowed by
1655-the Internal Revenue Code, in an amount equal to:
1656-
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1671-15
1672-16
1673-17
1674-18
1675-19
1676-20
1677-21
1678-22
1679-23
1680-24
1681-
1682-(1) Six Thousand Five Hundred Dollars ($6,500.00), if
1683-the filing status is married filing joint or
1684-qualifying widow, or
1685-(2) Four Thousand Eight Hu ndred Seventy-five Dollars
1686-($4,875.00) for a he ad of household, or
1687-(3) Three Thousand Two Hundred Fifty Dollars
1688-($3,250.00), if the f iling status is single or
1689-married filing separate.
1690-e. For the taxable year beginni ng on January 1, 2009, and
1691-ending December 31, 2009, in the case of individuals
1692-who use the standard deduction in determining taxable
1693-income, there shall be added or deducted , as the case
1694-may be, the difference n ecessary to allow a standard
1695-deduction in lieu of the standard deduction allowed by
1696-the Internal Revenue Code, in an amount equal to :
1697-(1) Eight Thousand Five Hundred Dollars ($8,500.00),
1698-if the filing status is married filing joint or
1699-qualifying widow, or
1700-(2) Six Thousand Three Hundred Seventy -five Dollars
1701-($6,375.00) for a head of househo ld, or
1702-(3) Four Thousand Two Hundred Fifty Doll ars
1703-($4,250.00), if the filing status is single or
1704-married filing separate.
1705-
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1729-24
1730-
1731-Oklahoma adjusted gross income shall be increase d by
1732-any amounts paid for motor vehicle exci se taxes which
1733-were deducted as allowed b y the Internal Revenue Code.
1734-f. For taxable years beginning on or after January 1,
1735-2010, and ending on December 31, 2016, in the case of
1736-individuals who use the standard d eduction in
1737-determining taxable income, ther e shall be added or
1738-deducted, as the case may be, the difference necessary
1739-to allow a standard deduction equal to the standard
1740-deduction allowed by the Internal Revenue Code, based
1741-upon the amount and filing stat us prescribed by such
1742-Code for purposes of f iling federal individual income
1743-tax returns.
1744-g. For taxable years beginning on or after January 1,
1745-2017, in the case of individuals who use the standard
1746-deduction in determin ing taxable income, there shall
1747-be added or deducted, as the case may be, the
1748-difference necessary to allow a standard dedu ction in
1749-lieu of the standard deduction allowed by the Internal
1750-Revenue Code, as follows:
1751-(1) Six Thousand Three Hundred Fifty Dollar s
1752-($6,350.00) for single or married fi ling
1753-separately,
1754-
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1758-4
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1769-15
1770-16
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1772-18
1773-19
1774-20
1775-21
1776-22
1777-23
1778-24
1779-
1780-(2) Twelve Thousand Seven H undred Dollars
1781-($12,700.00) for married f iling jointly or
1782-qualifying widower with depend ent child, and
1783-(3) Nine Thousand Three Hundred Fifty Dollars
1784-($9,350.00) for head of h ousehold.
1785-3. a. In the case of residen t and part-year resident
1786-individuals having adjusted gross income from sources
1787-both within and without the state, the itemized or
1788-standard deductions and personal exemptions shall be
1789-reduced to an amount which is the s ame portion of the
1790-total thereof as Oklahoma adjusted gross income is of
1791-adjusted gross income. To the extent itemized
1792-deductions include allowable moving expense, prora tion
1793-of moving expense shall not be required or permitted
1794-but allowable moving expense shall be fully deductible
1795-for those taxpayers moving within or into Oklahoma and
1796-no part of moving expense shall be deduct ible for
1797-those taxpayers moving without or out of Oklahoma.
1798-All other itemized or standard deductions and personal
1799-exemptions shall be subject to proration as provided
1800-by law.
1801-b. For taxable years beginning on or a fter January 1,
1802-2018, the net amount of i temized deductions allowable
1803-on an Oklahoma income tax return, subject to the
1804-
1805-Req. No. 3568 Page 37 1
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1807-3
1808-4
1809-5
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1811-7
1812-8
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1814-10
1815-11
1816-12
1817-13
1818-14
1819-15
1820-16
1821-17
1822-18
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1824-20
1825-21
1826-22
1827-23
1828-24
1829-
1830-provisions of paragraph 24 of this subsection, shall
1831-not exceed Seventeen Thousand Dollars ($ 17,000.00).
1832-For purposes of this subparagra ph, charitable
1833-contributions and medical expenses deductible for
1834-federal income tax purp oses shall be excluded from the
1835-amount of Seventeen Thousand Dollars ($17,000.00) as
1836-specified by this subparagraph.
1837-4. A resident individual with a physical disabilit y
1838-constituting a substantial handicap to employment may deduct from
1839-Oklahoma adjusted gr oss income such expenditures to modify a motor
1840-vehicle, home, or workplace as are nece ssary to compensate for his
1841-or her handicap. A veteran certified by the Departmen t of Veterans
1842-Affairs of the federal gove rnment as having a service-connected
1843-disability shall be conclusively presumed to be an individual with a
1844-physical disability constit uting a substantial handicap to
1845-employment. The Tax Commission shall promulgate r ules containing a
1846-list of combinations of common disabilities and modifications which
1847-may be presumed to qualify for this deduction . The Tax Commission
1848-shall prescribe neces sary requirements for verification.
1849-5. a. Before July 1, 2010, the first One Thous and Five
1850-Hundred Dollars ($1,500.00) rece ived by any person
1851-from the United States as sa lary or compensation in
1852-any form, other than retirement benefits, as a member
1853-
1854-Req. No. 3568 Page 38 1
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1856-3
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1858-5
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1869-16
1870-17
1871-18
1872-19
1873-20
1874-21
1875-22
1876-23
1877-24
1878-
1879-of any component of the Armed Forces of the Un ited
1880-States shall be deducted from taxable i ncome.
1881-b. On or after July 1, 2010, one h undred percent (100%)
1882-of the income received b y any person from the United
1883-States as salary or compensation in any form, other
1884-than retirement benefits, as a member of any component
1885-of the Armed Forces of the United States shall be
1886-deducted from taxable in come.
1887-c. Whenever the filing of a timely inco me tax return by a
1888-member of the Armed Forces of the United States is
1889-made impracticable or impossible of accomplishment by
1890-reason of:
1891-(1) absence from the United States, which term
1892-includes only the states and the District of
1893-Columbia;
1894-(2) absence from the State of Oklahoma this state
1895-while on active duty; or
1896-(3) confinement in a hospital within the United
1897-States for treatment of wo unds, injuries, or
1898-disease,
1899-the time for filing a return and paying an income tax
1900-shall be and is hereby exte nded without incurring
1901-liability for interest or penalties, to the fifteenth
1902-day of the third month following the month in which:
1903-
1904-Req. No. 3568 Page 39 1
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1906-3
1907-4
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1910-7
1911-8
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1918-15
1919-16
1920-17
1921-18
1922-19
1923-20
1924-21
1925-22
1926-23
1927-24
1928-
1929-(a) Such individual shall return to the United
1930-States if the extension is granted pursuant
1931-to subparagraph a of this paragraph , return
1932-to the State of Oklahoma this state if the
1933-extension is granted pursuant to
1934-subparagraph b of this pa ragraph or be
1935-discharged from such hospital if the
1936-extension is granted pursu ant to
1937-subparagraph c of this paragraph; or
1938-(b) An executor, administrator, or c onservator
1939-of the estate of the taxpayer is appointed,
1940-whichever event occurs the earliest.
1941-Provided, that the Tax Commission may, in its discretion, grant
1942-any member of the Ar med Forces of the United States an extens ion of
1943-time for filing of income tax re turns and payment of i ncome tax
1944-without incurring liabilities for interest or penalties . Such
1945-extension may be granted only when in the judgment of the Tax
1946-Commission a good cause exists therefor and may be for a per iod in
1947-excess of six (6) months . A record of every such exte nsion granted,
1948-and the reason therefor, shall be kept.
1949-6. Before July 1, 2010, the salary or any other form of
1950-compensation, received from the United Sta tes by a member of any
1951-component of the Armed Forces of the United States, shall be
1952-deducted from taxable income during the time in which the person is
1953-
1954-Req. No. 3568 Page 40 1
1955-2
1956-3
1957-4
1958-5
1959-6
1960-7
1961-8
1962-9
1963-10
1964-11
1965-12
1966-13
1967-14
1968-15
1969-16
1970-17
1971-18
1972-19
1973-20
1974-21
1975-22
1976-23
1977-24
1978-
1979-detained by the enemy in a conflict, is a prisoner of war or is
1980-missing in action and not deceased; prov ided, after July 1, 2010,
1981-all such salary or compensation shall be subject to th e deduction as
1982-provided pursuant to paragraph 5 of this subsection.
1983-7. a. An individual taxpayer, w hether resident or
1984-nonresident, may deduct an amount equal to the federal
1985-income taxes paid by the taxpayer during the taxable
1986-year.
1987-b. Federal taxes as desc ribed in subparagraph a of this
1988-paragraph shall be deductible by any individual
1989-taxpayer, whether resident or nonresident, only to the
1990-extent they relate to income subject to t axation
1991-pursuant to the provisions of the Oklahoma Income Tax
1992-Act. The maximum amount allowable in the preceding
1993-paragraph shall be prorated on the ratio of the
1994-Oklahoma adjusted gross income to federal adjusted
1995-gross income.
1996-c. For the purpose of this pa ragraph, “federal income
1997-taxes paid” shall mean federal income taxes, surtaxes
1998-imposed on incomes or excess profits taxes, as though
1999-the taxpayer was on the accrual basis . In determining
2000-the amount of deduction for federal income taxes for
2001-tax year 2001, the amount of the deduction shall not
2002-be adjusted by the amount of any accelerat ed ten
2003-
2004-Req. No. 3568 Page 41 1
2005-2
2006-3
2007-4
2008-5
2009-6
2010-7
2011-8
2012-9
2013-10
2014-11
2015-12
2016-13
2017-14
2018-15
2019-16
2020-17
2021-18
2022-19
2023-20
2024-21
2025-22
2026-23
2027-24
2028-
2029-percent (10%) tax rate bracket credit or advanced
2030-refund of the credit received during the t ax year
2031-provided pursuant to the federal Economic Growth and
2032-Tax Relief Reconciliation Act of 2001, P.L. No. 107 -
2033-16, and the advanced refund of such credit s hall not
2034-be subject to taxation.
2035-d. The provisions of this paragraph shall apply to all
2036-taxable years ending after December 31, 1978, and
2037-beginning before January 1, 2006.
2038-8. Retirement benefits not to exceed Five Th ousand Five Hundred
2039-Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
2040-Hundred Dollars ($7,500.00) for the 2005 tax year and T en Thousand
2041-Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
2042-years, which are received by an individu al from the civil service of
2043-the United States, the Oklahoma Public Employees Retirement System,
2044-the Teachers’ Retirement System of Oklaho ma, the Oklahoma Law
2045-Enforcement Retirement System, the Oklahoma Firefighters Pension and
2046-Retirement System, the Oklah oma Police Pension and Retirement
2047-System, the employee retirement systems created by counties pursuant
2048-to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the
2049-Uniform Retirement System for Justices and Judg es, the Oklahoma
2050-Wildlife Conservation De partment Retirement Fund, the Oklahoma
2051-Employment Security Commission Retirement Plan, or the employee
2052-retirement systems created by munic ipalities pursuant to Section 48-
2053-
2054-Req. No. 3568 Page 42 1
2055-2
2056-3
2057-4
2058-5
2059-6
2060-7
2061-8
2062-9
2063-10
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2066-13
2067-14
2068-15
2069-16
2070-17
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2073-20
2074-21
2075-22
2076-23
2077-24
2078-
2079-101 et seq. of Title 11 of the Oklahoma Stat utes shall be exempt
2080-from taxable income.
2081-9. In taxable years beginning after D ecember 3l, 1984, Social
2082-Security benefits received by an individual shall be exempt from
2083-taxable income, to the extent such benefits are included in the
2084-federal adjusted gross income pursuant to the provisions of Sec tion
2085-86 of the Internal Revenue Code, 2 6 U.S.C., Section 86.
2086-10. For taxable years beginning after December 31, 1994, lump -
2087-sum distributions from employer plans of deferred compensation,
2088-which are not qualified pla ns within the meaning of Section 401(a)
2089-of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which
2090-are deposited in and accounted for within a separate bank account or
2091-brokerage account in a financial institution within this state,
2092-shall be excluded from taxable income in the same manner as a
2093-qualifying rollover contribution t o an individual retirement account
2094-within the meaning of Section 408 of the Internal Revenue Code, 26
2095-U.S.C., Section 408. Amounts withdrawn from such bank or brokerage
2096-account, including any earnings thereon, shall be included in
2097-taxable income when with drawn in the same manner as withdrawals from
2098-individual retirement accounts within the meaning of S ection 408 of
2099-the Internal Revenue Code.
2100-11. In taxable years beginning afte r December 31, 1995,
2101-contributions made t o and interest received from a medical savings
2102-
2103-Req. No. 3568 Page 43 1
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2105-3
2106-4
2107-5
2108-6
2109-7
2110-8
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2115-13
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2118-16
2119-17
2120-18
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2122-20
2123-21
2124-22
2125-23
2126-24
2127-
2128-account established pursuant to Sections 2621 through 2623 of Title
2129-63 of the Oklahoma Stat utes shall be exempt from taxable income.
2130-12. For taxable years beginning af ter December 31, 1996, the
2131-Oklahoma adjusted gross income of any individual taxp ayer who is a
2132-swine or poultry producer may be further adjusted for the deduction
2133-for depreciation allowed for new construction or expansion costs
2134-which may be computed using t he same depreciation method elected for
2135-federal income tax purposes except that the useful life shall be
2136-seven (7) years for purposes of this paragraph . If depreciation is
2137-allowed as a deduction in determining the adjusted gross income of
2138-an individual, any depreciation calculated and claimed pu rsuant to
2139-this section shall in no even t be a duplication of any deprec iation
2140-allowed or permitted on the federal income tax return of the
2141-individual.
2142-13. a. In taxable years beginning after December 31, 2002 For
2143-tax years 2003 through 2022 , nonrecurring adoption
2144-expenses paid by a resident individual taxpayer in
2145-connection with:
2146-(1) the adoption of a minor , or
2147-(2) a proposed adoption of a minor which did not
2148-result in a decreed adoption,
2149-may be deducted from the Oklahoma adjusted gross
2150-income.
2151-
2152-Req. No. 3568 Page 44 1
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2154-3
2155-4
2156-5
2157-6
2158-7
2159-8
2160-9
2161-10
2162-11
2163-12
2164-13
2165-14
2166-15
2167-16
2168-17
2169-18
2170-19
2171-20
2172-21
2173-22
2174-23
2175-24
2176-
2177-b. The deductions for adoptions and proposed adoptions
2178-authorized by this paragraph shall not exceed Twenty
2179-Thousand Dollars ($20,000.00) per calendar year.
2180-c. The Tax Commission sha ll promulgate rules to implement
2181-the provisions of this paragraph which shall contain a
2182-specific list of nonrecurring adoption expenses which
2183-may be presumed to qualify for the deduction . The Tax
2184-Commission shall prescribe necessary requirements for
2185-verification.
2186-d. “Nonrecurring adoption expenses” means adoption fees,
2187-court costs, medical expenses, attorney fees , and
2188-expenses which are directly related to the legal
2189-process of adoption of a child including, but not
2190-limited to, costs relating to the adoptio n study,
2191-health and psychological examinations, transportation,
2192-and reasonable costs o f lodging and food for the child
2193-or adoptive parents which are incurred t o complete the
2194-adoption process and are not reimbursed by other
2195-sources. The term “nonrecurring adoption expenses”
2196-shall not include attorney fees incurred for the
2197-purpose of litigating a contested adoption, from and
2198-after the point of the initiation of t he contest,
2199-costs associated wit h physical remodeling, renovation ,
2200-and alteration of the adoptive parents’ home or
2201-
2202-Req. No. 3568 Page 45 1
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2204-3
2205-4
2206-5
2207-6
2208-7
2209-8
2210-9
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2212-11
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2214-13
2215-14
2216-15
2217-16
2218-17
2219-18
2220-19
2221-20
2222-21
2223-22
2224-23
2225-24
2226-
2227-property, except for a special needs child as
2228-authorized by the cour t.
2229-14. a. In taxable years beginning before January 1, 2005,
2230-retirement benefits not to exceed the amounts
2231-specified in this paragraph, which are received by an
2232-individual sixty-five (65) years of age or older and
2233-whose Oklahoma adjusted gross income is Tw enty-five
2234-Thousand Dollars ($25,000.00) or less if the filing
2235-status is single, head of household, or marr ied filing
2236-separate, or Fifty Thousand Dollars ($50,000.00) or
2237-less if the filing status is married filing joint or
2238-qualifying widow, shall be exempt from taxable income.
2239-In taxable years beginning after December 31, 2004,
2240-retirement benefits not to excee d the amounts
2241-specified in this paragraph, which are received by an
2242-individual whose Oklahoma adjusted gross income is
2243-less than the qualifying amount specified in this
2244-paragraph, shall be exempt from taxable income.
2245-b. For purposes of this paragraph, the qualifying amount
2246-shall be as follows:
2247-(1) in taxable years begi nning after December 31,
2248-2004, and prior to January 1, 2007, the
2249-qualifying amount sha ll be Thirty-seven Thousand
2250-Five Hundred Dollars ($37,500.00) or less if t he
2251-
2252-Req. No. 3568 Page 46 1
2253-2
2254-3
2255-4
2256-5
2257-6
2258-7
2259-8
2260-9
2261-10
2262-11
2263-12
2264-13
2265-14
2266-15
2267-16
2268-17
2269-18
2270-19
2271-20
2272-21
2273-22
2274-23
2275-24
2276-
2277-filing status is single, head of household, or
2278-married filing separate, or Seventy -five Thousand
2279-Dollars ($75,000.00) or less if the filing status
2280-is married filing jointly or qua lifying widow,
2281-(2) in the taxable year beginning January 1, 2007,
2282-the qualifying amount shall be Fifty Tho usand
2283-Dollars ($50,000.00) or less if the filing status
2284-is single, head of household, or married filing
2285-separate, or One Hundred Thousand Dollars
2286-($100,000.00) or less if the filing status is
2287-married filing jointly or qualif ying widow,
2288-(3) in the taxable year beginning January 1, 2008,
2289-the qualifying amount shall be Si xty-two Thousand
2290-Five Hundred Dollars ($62,500.00) or less if the
2291-filing status is sin gle, head of household, or
2292-married filing separate, or One Hundred Twenty -
2293-five Thousand Dollars ($125,000. 00) or less if
2294-the filing status is married filing jointly or
2295-qualifying widow,
2296-(4) in the taxable year beginning January 1, 2009,
2297-the qualifying amount shall be One Hundred
2298-Thousand Dollars ($100,000.00) or less if the
2299-filing status is single, head of hou sehold, or
2300-married filing separate, or Two Hundred Thousand
2301-
2302-Req. No. 3568 Page 47 1
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2304-3
2305-4
2306-5
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2309-8
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2314-13
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2316-15
2317-16
2318-17
2319-18
2320-19
2321-20
2322-21
2323-22
2324-23
2325-24
2326-
2327-Dollars ($200,000.00) or less if the filing
2328-status is married filing jointly or qualifying
2329-widow, and
2330-(5) in the taxable year beginning January 1, 2010,
2331-and subsequent taxable years, there shall b e no
2332-limitation upon the qualifying amount.
2333-c. For purposes of this paragraph, “retirement benefits”
2334-means the total distributions or withdrawals from the
2335-following:
2336-(1) an employee pension benefit plan which satisfies
2337-the requirements of Section 401 of th e Internal
2338-Revenue Code, 26 U.S.C., Section 401,
2339-(2) an eligible deferred compensation plan that
2340-satisfies the requirements of Section 457 of the
2341-Internal Revenue Code, 26 U.S.C., Section 457,
2342-(3) an individual retirem ent account, annuity, or
2343-trust or simplified employee pension that
2344-satisfies the requirements of Secti on 408 of the
2345-Internal Revenue Code, 26 U.S.C., Section 408,
2346-(4) an employee annuity s ubject to the provisions of
2347-Section 403(a) or (b) of the Internal Re venue
2348-Code, 26 U.S.C., Section 403(a) o r (b),
2349-
2350-Req. No. 3568 Page 48 1
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2352-3
2353-4
2354-5
2355-6
2356-7
2357-8
2358-9
2359-10
2360-11
2361-12
2362-13
2363-14
2364-15
2365-16
2366-17
2367-18
2368-19
2369-20
2370-21
2371-22
2372-23
2373-24
2374-
2375-(5) United States Retirement Bonds which satisfy the
2376-requirements of Section 86 of the Internal
2377-Revenue Code, 26 U.S.C., Section 86, or
2378-(6) lump-sum distributions from a retirement plan
2379-which satisfies the re quirements of Section
2380-402(e) of the Internal Revenue Code, 26 U.S.C.,
2381-Section 402(e).
2382-d. The amount of the exemption provided by this paragraph
2383-shall be limited to Five Thousand Five Hundred Dollars
2384-($5,500.00) for the 2004 tax year, Seven Thousand Five
2385-Hundred Dollars ($7,500.00) for the 2005 ta x year and
2386-Ten Thousand Dollars ($10,000.00) for the tax year
2387-2006 and for all subsequent tax years. Any individual
2388-who claims the exemption provide d for in paragraph 8
2389-of this subsection shall not be permitted to claim a
2390-combined total exemption pursuant to this paragraph
2391-and paragraph 8 of this subsection in an amo unt
2392-exceeding Five Thousand Five Hundred Dollars
2393-($5,500.00) for the 2004 tax year, Se ven Thousand Five
2394-Hundred Dollars ($7,500.00) for the 2005 tax ye ar and
2395-Ten Thousand Dollars ($10,000.00) f or the 2006 tax
2396-year and all subsequent tax years.
2397-15. In taxable years beginning after December 31, 1999, for an
2398-individual engaged in production a griculture who has filed a
2399-
2400-Req. No. 3568 Page 49 1
2401-2
2402-3
2403-4
2404-5
2405-6
2406-7
2407-8
2408-9
2409-10
2410-11
2411-12
2412-13
2413-14
2414-15
2415-16
2416-17
2417-18
2418-19
2419-20
2420-21
2421-22
2422-23
2423-24
2424-
2425-Schedule F form with the taxpayer ’s federal income tax return for
2426-such taxable year, there shall be excluded from taxable income any
2427-amount which was included as federal taxable income or federal
2428-adjusted gross income and which c onsists of the discharge of an
2429-obligation by a creditor of the t axpayer incurred to finance the
2430-production of agricultural products.
2431-16. In taxable years beginning Decem ber 31, 2000, an amount
2432-equal to one hundred percent (100%) of the amount of any schol arship
2433-or stipend received from participation in the Oklahoma P olice Corps
2434-Program, as established in Secti on 2-140.3 of Title 47 of the
2435-Oklahoma Statutes shall be exempt from taxable income.
2436-17. a. In taxable years beginning after December 31, 2001,
2437-and before January 1, 2005, there shall be allowed a
2438-deduction in the amount of contributions to accounts
2439-established pursuant to the Oklahoma College Savings
2440-Plan Act. The deduction shall equal the amount of
2441-contributions to accounts, but in no event shall th e
2442-deduction for each contributor exceed Two Thousand
2443-Five Hundred Dollars ($2,500.00) each taxable year for
2444-each account.
2445-b. In taxable years beginning after December 31, 2004,
2446-each taxpayer shall be allowed a deduction for
2447-contributions to accounts establ ished pursuant to the
2448-Oklahoma College Savings Plan Act . The maximum annual
2449-
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2451-2
2452-3
2453-4
2454-5
2455-6
2456-7
2457-8
2458-9
2459-10
2460-11
2461-12
2462-13
2463-14
2464-15
2465-16
2466-17
2467-18
2468-19
2469-20
2470-21
2471-22
2472-23
2473-24
2474-
2475-deduction shall equal the amou nt of contributions to
2476-all such accounts plus any contributions to such
2477-accounts by the taxpayer for prior taxable years after
2478-December 31, 2004, whi ch were not deducted, but in no
2479-event shall the deduction for each tax year exceed Ten
2480-Thousand Dollars ($1 0,000.00) for each individual
2481-taxpayer or Twenty Thousand Dolla rs ($20,000.00) for
2482-taxpayers filing a joint return. Any amount of a
2483-contribution that is not deducted by the taxpayer in
2484-the year for which the c ontribution is made may be
2485-carried forward as a deduction from income for the
2486-succeeding five (5) years . For taxable years
2487-beginning after December 31, 2005, deductions may be
2488-taken for contributions and rollovers made during a
2489-taxable year and up to Apri l 15 of the succeeding
2490-year, or the due date o f a taxpayer’s state income tax
2491-return, excluding extensions, w hichever is later.
2492-Provided, a deduction for the same contribution may
2493-not be taken for two (2) different taxable years.
2494-c. In taxable years begi nning after December 31, 2006,
2495-deductions for contributions made pursuant to
2496-subparagraph b of this paragraph shall be limited as
2497-follows:
2498-
2499-Req. No. 3568 Page 51 1
2500-2
2501-3
2502-4
2503-5
2504-6
2505-7
2506-8
2507-9
2508-10
2509-11
2510-12
2511-13
2512-14
2513-15
2514-16
2515-17
2516-18
2517-19
2518-20
2519-21
2520-22
2521-23
2522-24
2523-
2524-(1) for a taxpayer who qualified for the five-year
2525-carryforward election and who takes a rollover or
2526-nonqualified withdrawal during that period, the
2527-tax deduction otherwise available pursuant to
2528-subparagraph b of this paragraph shall be reduced
2529-by the amount which is equal to the rollover or
2530-nonqualified withdra wal, and
2531-(2) for a taxpayer who elects to take a rollover or
2532-nonqualified withdrawal within the same tax ye ar
2533-in which a contribution was made to the
2534-taxpayer’s account, the tax deduction otherwise
2535-available pursuant to subparagraph b of this
2536-paragraph shall be reduced by the amount of the
2537-contribution which is e qual to the rollover or
2538-nonqualified withdrawal.
2539-d. If a taxpayer elects to take a rollover on a
2540-contribution for which a deduction has been taken
2541-pursuant to subparagraph b of this paragraph within
2542-one (1) year of the date of contribution, the amount
2543-of such rollover shall be included in the adjusted
2544-gross income of the taxpayer in the taxable year of
2545-the rollover.
2546-e. If a taxpayer makes a nonqualified withdrawal of
2547-contributions for which a deducti on was taken pursuant
2548-
2549-Req. No. 3568 Page 52 1
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2552-4
2553-5
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2556-8
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2568-20
2569-21
2570-22
2571-23
2572-24
2573-
2574-to subparagraph b of this paragrap h, such nonqualified
2575-withdrawal and any earnings th ereon shall be included
2576-in the adjusted gross income of the tax payer in the
2577-taxable year of the nonqualified withdrawal.
2578-f. As used in this paragraph :
2579-(1) “non-qualified withdrawal ” means a withdrawal
2580-from an Oklahoma Colleg e Savings Plan account
2581-other than one of the following:
2582-(a) a qualified withdrawal,
2583-(b) a withdrawal made as a result of the death
2584-or disability of the designated beneficiary
2585-of an account,
2586-(c) a withdrawal that is made on the accou nt of
2587-a scholarship or the allowance or payment
2588-described in Section 135(d)(1)(B) or (C) or
2589-by the Internal Revenue Cod e, received by
2590-the designated beneficiary to the extent the
2591-amount of the refund does not exceed the
2592-amount of the scholarship, allowance , or
2593-payment, or
2594-(d) a rollover or change of designated
2595-beneficiary as permitted by subsection F of
2596-Section 3970.7 of Title 70 of Oklahoma
2597-Statutes, and
2598-
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2601-3
2602-4
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2606-8
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2610-12
2611-13
2612-14
2613-15
2614-16
2615-17
2616-18
2617-19
2618-20
2619-21
2620-22
2621-23
2622-24
2623-
2624-(2) “rollover” means the transfer of funds from the
2625-Oklahoma College Savings Plan to any other plan
2626-under Section 529 of the In ternal Revenue Code.
2627-18. For taxable years beginning after December 31, 2005,
2628-retirement benefits received by an individual from any component of
2629-the Armed Forces of the United Sta tes in an amount not to exceed the
2630-greater of seventy-five percent (75%) of such benefits or Ten
2631-Thousand Dollars ($10,000.00) shall be exempt from taxable income
2632-but in no case less than the amount of the exemption provided by
2633-paragraph 14 of this subsect ion.
2634-19. For taxable years beginning after Dec ember 31, 2006,
2635-retirement benefits received by federal civi l service retirees,
2636-including survivor annuities, paid in lieu of Social Security
2637-benefits shall be exempt from taxable income to the extent such
2638-benefits are included in the federal adjusted gros s income pursuant
2639-to the provisions of Section 86 of the Int ernal Revenue Code, 26
2640-U.S.C., Section 86, according to the fol lowing schedule:
2641-a. in the taxable year beginning January 1, 2007, twenty
2642-percent (20%) of such benefits shall be exempt,
2643-b. in the taxable year beginning Januar y 1, 2008, forty
2644-percent (40%) of such benefits shall be exempt,
2645-c. in the taxable year beginni ng January 1, 2009, sixty
2646-percent (60%) of such benefits shall be exempt,
2647-
2648-Req. No. 3568 Page 54 1
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2650-3
2651-4
2652-5
2653-6
2654-7
2655-8
2656-9
2657-10
2658-11
2659-12
2660-13
2661-14
2662-15
2663-16
2664-17
2665-18
2666-19
2667-20
2668-21
2669-22
2670-23
2671-24
2672-
2673-d. in the taxable year beginning January 1, 2010, eight y
2674-percent (80%) of such benefits shall be exempt, and
2675-e. in the taxable year beginning January 1, 2011, and
2676-subsequent taxable years, one hundred percent (100%)
2677-of such benefits shall be exempt.
2678-20. a. For taxable years beginning after December 31, 2007, a
2679-resident individual may deduct up to Ten Thousand
2680-Dollars ($10,000.00) from Oklahoma adjusted gross
2681-income if the individual, or the dependent of the
2682-individual, while living, donates one or more human
2683-organs of the individual to another human being for
2684-human organ transplantation . As used in this
2685-paragraph, “human organ” means all or part of a liver,
2686-pancreas, kidney, intestine , lung, or bone marrow. A
2687-deduction that is claimed under this paragraph may be
2688-claimed in the taxable year in which the human organ
2689-transplantation occurs.
2690-b. An individual may claim this ded uction only once, and
2691-the deduction may be claimed only for unr eimbursed
2692-expenses that are incurred by the individual and
2693-related to the organ donati on of the individual.
2694-c. The Oklahoma Tax Commission shall promulgate rules to
2695-implement the provisions of this paragraph which shall
2696-contain a specific list of expenses which may be
2697-
2698-Req. No. 3568 Page 55 1
2699-2
2700-3
2701-4
2702-5
2703-6
2704-7
2705-8
2706-9
2707-10
2708-11
2709-12
2710-13
2711-14
2712-15
2713-16
2714-17
2715-18
2716-19
2717-20
2718-21
2719-22
2720-23
2721-24
2722-
2723-presumed to qualify for the deduction. The Tax
2724-Commission shall prescrib e necessary requirements for
2725-verification.
2726-21. For taxable years beginning after December 31, 2009, there
2727-shall be exempt from taxable income any amount received by the
2728-beneficiary of the death benefit for an emergency medical technician
2729-or a registered emergency medical responder provided by Section 1-
2730-2505.1 of Title 63 of the Oklahoma Statutes.
2731-22. For taxable years beginning after December 31, 2008,
2732-taxable income shall be increased by any unemployment compensation
2733-exempted under Section 85(c) of the I nternal Revenue Code, 26
2734-U.S.C., Section 85(c)(2009).
2735-23. For taxable years beginning after December 31, 2 008, there
2736-shall be exempt from taxable income any payment in a n amount less
2737-than Six Hundred Dollars ($600.00) received by a person as an award
2738-for participation in a competitive lives tock show event. For
2739-purposes of this paragraph, the payment shall be treated as a
2740-scholarship amount paid by the entity sponsoring t he event and the
2741-sponsoring entity shall cause the payment to be categorized as a
2742-scholarship in its books and records.
2743-24. For taxable years beginning on or af ter January 1, 2016,
2744-taxable income shall be increased by any amount of state and local
2745-sales or income taxes deducted under 26 U.S.C., Section 164 of the
2746-Internal Revenue Code . If the amount of state and local taxe s
2747-
2748-Req. No. 3568 Page 56 1
2749-2
2750-3
2751-4
2752-5
2753-6
2754-7
2755-8
2756-9
2757-10
2758-11
2759-12
2760-13
2761-14
2762-15
2763-16
2764-17
2765-18
2766-19
2767-20
2768-21
2769-22
2770-23
2771-24
2772-
2773-deducted on the federal return is limi ted, taxable income on the
2774-state return shall be increased only by the amount actually deducted
2775-after any such limitations are applied.
2776-25. For taxable years beginning after Decemb er 31, 2020, each
2777-taxpayer shall be allowed a deduction for contributions t o accounts
2778-established pursuant to the Achieving a Better Life Experience
2779-(ABLE) Program as est ablished in Section 4001.1 et seq. of Title 56
2780-of the Oklahoma Statutes. For any tax year, the deduction provided
2781-for in this paragraph shall not exceed Ten Tho usand Dollars
2782-($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
2783-($20,000.00) for taxpayers filing a joint return. Any amount of
2784-contribution not deducted by the ta xpayer in the tax year for which
2785-the contribution is made may be carried fo rward as a deduction from
2786-income for up to five (5) tax years . Deductions may be taken for
2787-contributions made during the tax year and through April 15 of the
2788-succeeding tax year, o r through the due date of a taxpay er’s state
2789-income tax return excluding ex tensions, whichever is later.
2790-Provided, a deduction for the same contribution may not be taken in
2791-more than one (1) tax year.
2792-F. 1. For taxable years beginning after December 31, 2004, a
2793-deduction from the Oklaho ma adjusted gross income of any individual
2794-taxpayer shall be allowed for q ualifying gains receiving capital
2795-treatment that are included in the federal adjusted gross income of
2796-such individual taxpayer during the taxable ye ar.
2797-
2798-Req. No. 3568 Page 57 1
2799-2
2800-3
2801-4
2802-5
2803-6
2804-7
2805-8
2806-9
2807-10
2808-11
2809-12
2810-13
2811-14
2812-15
2813-16
2814-17
2815-18
2816-19
2817-20
2818-21
2819-22
2820-23
2821-24
2822-
2823-2. As used in this subsectio n:
2824-a. “qualifying gains receiving capital t reatment” means
2825-the amount of net capital gains, as defined in Section
2826-1222(11) of the Interna l Revenue Code, included in an
2827-individual taxpayer’s federal income tax return that
2828-result from:
2829-(1) the sale of real property or tangible personal
2830-property located within Oklahoma that has been
2831-directly or indirectly owned by the individual
2832-taxpayer for a holding period of at least five
2833-(5) years prior to the date of the transaction
2834-from which such net capital gains ari se,
2835-(2) the sale of stock or the sale of a di rect or
2836-indirect ownership inter est in an Oklahoma
2837-company, limited liability company, or
2838-partnership where such stock or ownership
2839-interest has been directly or indirectly owned b y
2840-the individual taxpayer for a holding period of
2841-at least two (2) years pri or to the date of the
2842-transaction from which the net capital gains
2843-arise, or
2844-(3) the sale of real property, tangible personal
2845-property or intangible personal property located
2846-within Oklahoma as part of the sal e of all or
2847-
2848-Req. No. 3568 Page 58 1
2849-2
2850-3
2851-4
2852-5
2853-6
2854-7
2855-8
2856-9
2857-10
2858-11
2859-12
2860-13
2861-14
2862-15
2863-16
2864-17
2865-18
2866-19
2867-20
2868-21
2869-22
2870-23
2871-24
2872-
2873-substantially all of the assets of an Oklahoma
2874-company, limited lia bility company, or
2875-partnership or an Oklahoma proprietorship
2876-business enterprise where such property has been
2877-directly or indirectly owned by such e ntity or
2878-business enterprise or owned by the owners of
2879-such entity or busine ss enterprise for a period
2880-of at least two (2) years prior to the date of
2881-the transaction from which the net capital gains
2882-arise,
2883-b. “holding period” means an uninterrupted peri od of
2884-time. The holding period shall include any additional
2885-period when the property was held by another
2886-individual or entity, if such a dditional period is
2887-included in the taxpayer’s holding period for the
2888-asset pursuant to the Internal Revenue Code,
2889-c. “Oklahoma company,” “limited liability company,” or
2890-“partnership” means an entity whose primary
2891-headquarters have been located in Oklahoma for at
2892-least three (3) uninterrupte d years prior to the date
2893-of the transaction from which the net capital gains
2894-arise,
2895-d. “direct” means the individual taxpayer directly owns
2896-the asset,
2897-
2898-Req. No. 3568 Page 59 1
2899-2
2900-3
2901-4
2902-5
2903-6
2904-7
2905-8
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2907-10
2908-11
2909-12
2910-13
2911-14
2912-15
2913-16
2914-17
2915-18
2916-19
2917-20
2918-21
2919-22
2920-23
2921-24
2922-
2923-e. “indirect” means the individual taxpayer owns an
2924-interest in a pass-through entity (or chain of pass -
2925-through entities) that sells the asset that gives rise
2926-to the qualifying gains rece iving capital treatment.
2927-(1) With respect to sales of real property or
2928-tangible personal property located within
2929-Oklahoma, the deduction described in this
2930-subsection shall not apply unless the pass -
2931-through entity that makes the sale has held the
2932-property for not less than five (5) u ninterrupted
2933-years prior to the date of the transaction tha t
2934-created the capital gain, and each pass-through
2935-entity included in the chain of owner ship has
2936-been a member, partner, or shareholder of the
2937-pass-through entity in the t ier immediately below
2938-it for an uninterrupted period of not less than
2939-five (5) years.
2940-(2) With respect to sales of stock or ownership
2941-interest in or sales of all or substant ially all
2942-of the assets of an Okl ahoma company, limited
2943-liability company, partners hip, or Oklahoma
2944-proprietorship business enterprise, the deduction
2945-described in this subsection shall not apply
2946-unless the pass-through entity that makes the
2947-
2948-Req. No. 3568 Page 60 1
2949-2
2950-3
2951-4
2952-5
2953-6
2954-7
2955-8
2956-9
2957-10
2958-11
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2960-13
2961-14
2962-15
2963-16
2964-17
2965-18
2966-19
2967-20
2968-21
2969-22
2970-23
2971-24
2972-
2973-sale has held the stock or ownership interest for
2974-not less than two (2) uninterrupted years prior
2975-to the date of the transact ion that created the
2976-capital gain, and each pass -through entity
2977-included in the chain of ownership has been a
2978-member, partner or shareholder of th e pass-
2979-through entity in the tier immediately below it
2980-for an uninterrupted period o f not less than two
2981-(2) years. For purposes of this division,
2982-uninterrupted ownershi p prior to July 1, 2007,
2983-shall be included in the d etermination of the
2984-required holding period prescribed by this
2985-division, and
2986-f. “Oklahoma proprietorship business enterp rise” means a
2987-business enterprise whose income and expenses have
2988-been reported on Sch edule C or F of an individual
2989-taxpayer’s federal income tax return, or any similar
2990-successor schedule published by the In ternal Revenue
2991-Service and whose primary headquart ers have been
2992-located in Oklahoma for at least three (3)
2993-uninterrupted years prior to the date of the
2994-transaction from which the net cap ital gains arise.
2995-G. 1. For purposes of computing its Oklahoma taxab le income
2996-under this section, the dividends -paid deduction otherwise allowed
2997-
2998-Req. No. 3568 Page 61 1
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3000-3
3001-4
3002-5
3003-6
3004-7
3005-8
3006-9
3007-10
3008-11
3009-12
3010-13
3011-14
3012-15
3013-16
3014-17
3015-18
3016-19
3017-20
3018-21
3019-22
3020-23
3021-24
3022-
3023-by federal law in computing net income of a real estate in vestment
3024-trust that is subject to federal income ta x shall be added back in
3025-computing the tax imposed by this state under this title if the real
3026-estate investment trust is a captive real estate investment trust.
3027-2. For purposes of computing its Oklahoma t axable income under
3028-this section, a taxpayer shall add back otherwise deductible rents
3029-and interest expenses paid to a ca ptive real estate investment trust
3030-that is not subject to the provisions of paragraph 1 of this
3031-subsection. As used in this subsection :
3032-a. the term “real estate investment trust” or “REIT”
3033-means the meaning ascribed to su ch term in Section 856
3034-of the Internal Revenue Code,
3035-b. the term “captive real estate investment trust” means
3036-a real estate investment trust, the shares or
3037-beneficial interests of which are not regularly traded
3038-on an established securities market and more than
3039-fifty percent (50%) of the vo ting power or value of
3040-the beneficial interests or shares of which are owned
3041-or controlled, directly or indirectly, or
3042-constructively, by a single entity that is:
3043-(1) treated as an association taxable as a
3044-corporation under the Internal Revenue Code, and
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3071-(2) not exempt from federal income tax pursuant to
3072-the provisions of Section 501(a) of the Internal
3073-Revenue Code.
3074-The term shall not inc lude a real estate investment
3075-trust that is intende d to be regularly traded on an
3076-established securities market, and that satisfies the
3077-requirements of Section 856(a)(5) a nd (6) of the U.S.
3078-Internal Revenue Code by reason of Section 856(h)(2)
3079-of the Internal Revenue Code,
3080-c. the term “association taxable a s a corporation” shall
3081-not include the following entities:
3082-(1) any real estate investment trust as defined in
3083-paragraph a of this subsection other than a
3084-“captive real estate investment trust ”, or
3085-(2) any qualified real estate investment trust
3086-subsidiary under Section 856(i) of the Internal
3087-Revenue Code, other than a qualifi ed REIT
3088-subsidiary of a “captive real estate inves tment
3089-trust”, or
3090-(3) any Listed Australian Property Trust (meaning an
3091-Australian unit trust registered as a “Managed
3092-Investment Scheme” under the Australian
3093-Corporations Act in which the principal class of
3094-units is listed on a recognized stock exchange in
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3121-Australia and is regularly traded on an
3122-established securities market), or an entity
3123-organized as a trust, provided that a Listed
3124-Australian Property Trust owns or controls ,
3125-directly or indirectly, seventy -five percent
3126-(75%) or more of the voting power or value of the
3127-beneficial interests or shares of such trust, or
3128-(4) any Qualified Foreign Entity, meaning a
3129-corporation, trust, associatio n, or partnership
3130-organized outside the laws of the United States
3131-and which satisfies the following criteria:
3132-(a) at least seventy-five percent (75%) of the
3133-entity’s total asset value at the close of
3134-its taxable year is represented by real
3135-estate assets, as defined in Section
3136-856(c)(5)(B) of the Internal Revenue Code,
3137-thereby including shares or certificates of
3138-beneficial interest in any real estate
3139-investment trust, cash and cash equivalents,
3140-and U.S. Government securities,
3141-(b) the entity receives a divide nd-paid
3142-deduction comparable to Sect ion 561 of the
3143-Internal Revenue Cod e, or is exempt from
3144-entity level tax,
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3171-(c) the entity is required to distribute at
3172-least eighty-five percent (85%) of its
3173-taxable income, as computed in the
3174-jurisdiction in which it is organized, to
3175-the holders of its sha res or certificates of
3176-beneficial interest on an annual basis,
3177-(d) not more than ten percent (10%) of the
3178-voting power or value in such entity is held
3179-directly or indirectly or constructively by
3180-a single entity or indivi dual, or the shares
3181-or beneficial interests of such entity are
3182-regularly traded on an established
3183-securities market, and
3184-(e) the entity is organized in a country which
3185-has a tax treaty with the United Stat es.
3186-3. For purposes of this subsection, the constr uctive ownership
3187-rules of Section 318(a) of the Internal Revenue Code, as modified by
3188-Section 856(d)(5) of the Internal R evenue Code, shall apply in
3189-determining the ownership of stock, assets, or net profi ts of any
3190-person.
3191-4. A real estate investment trus t that does not become
3192-regularly traded on an established securities ma rket within one (1)
3193-year of the date on which it f irst becomes a real estate investment
3194-trust shall be deemed not to have been regular ly traded on an
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3221-established securities market, retr oactive to the date it first
3222-became a real estate investment trust, and shall file an amended
3223-return reflecting such retr oactive designation for any tax year or
3224-part year occurring during its initial year of status as a real
3225-estate investment trust. For purposes of this subsection, a real
3226-estate investment trust becomes a re al estate investment trust on
3227-the first day it has both met the requirements of Section 856 of the
3228-Internal Revenue Code and has elect ed to be treated as a real estate
3229-investment trust pursuant to Section 856(c)(1) of the Internal
3230-Revenue Code.
3231-SECTION 3. This act shall become effective No vember 1, 2022.
3232-
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