OK
Oklahoma Senate Bill SB1790

Oklahoma 2022 Regular Session

Oklahoma Senate Bill SB1790 Compare Versions

Only one version of the bill is available at this time.
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5353 STATE OF OKLAHOMA
5454
5555 2nd Session of the 58th Legislature (2022)
5656
5757 SENATE BILL 1790 By: Garvin
5858
5959
6060
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6363 AS INTRODUCED
6464
6565 An Act relating to income tax adjustments; am ending
6666 68 O.S. 2021, Section 2358, which relates to
6767 determination of taxable income; modify ing exemption
6868 for military retirement benefits; and providing an
6969 effective date.
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7575 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
7676 SECTION 1. AMENDATORY 68 O.S. 2 021, Section 2358, is
7777 amended to read as follows:
7878 Section 2358. For all tax years beginning after December 31,
7979 1981, taxable income and adjusted gross income shall be adjusted to
8080 arrive at Oklahoma taxable income and O klahoma adjusted gross income
8181 as required by this section.
8282 A. The taxable income of any taxpayer shall be adjusted to
8383 arrive at Oklahoma taxable income for corporations and Oklahoma
8484 adjusted gross income for individuals, as follows:
8585 1. There shall be added interest income on obligations of any
8686 state or political subdivision thereto which is not otherwise
8787 exempted pursuant to other laws of this state, to the extent that
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139139 such interest is not included in taxable income and adjusted gross
140140 income.
141141 2. There shall be deducted amounts included in s uch income that
142142 the state is prohibited from taxing because of the provisions of the
143143 Federal Constitution, the State Constitution, federal laws or laws
144144 of Oklahoma.
145145 3. The amount of any federal net operating loss deduc tion shall
146146 be adjusted as follows:
147147 a. For carryovers and carrybacks to taxable years
148148 beginning before January 1, 1981, the amount of any
149149 net operating loss deduction allowed to a taxpayer for
150150 federal income tax purposes shall be reduced to an
151151 amount which is the same portion thereof as the lo ss
152152 from sources within this state, as determined pu rsuant
153153 to this section and Section 2362 of this title, for
154154 the taxable year in which such loss is sustained is of
155155 the total loss for such year;
156156 b. For carryovers and ca rrybacks to taxable years
157157 beginning after December 31, 1980, the amount of any
158158 net operating loss deduction allowed for the taxable
159159 year shall be an amount equal to the aggregate of the
160160 Oklahoma net operating loss carryovers and carrybacks
161161 to such year. Oklahoma net operating losses shall be
162162 separately determined by reference to Section 172 of
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214214 the Internal Revenue Code, 26 U.S.C., Section 172, as
215215 modified by the Oklahoma Income Tax Act, Section 2351
216216 et seq. of this title, and shall be allowed without
217217 regard to the existence of a federal net o perating
218218 loss. For tax years beginning after Decem ber 31,
219219 2000, and ending before January 1, 2008, the years to
220220 which such losses may be carried shall be determined
221221 solely by reference to Section 172 of the Internal
222222 Revenue Code, 26 U.S.C., Section 172, w ith the
223223 exception that the terms “net operating loss” and
224224 “taxable income” shall be replaced with “Oklahoma net
225225 operating loss” and “Oklahoma taxable income ”. For
226226 tax years beginning after December 31, 2007, and
227227 ending before January 1, 2009, years to whi ch such
228228 losses may be carried back shall be limited to two (2)
229229 years. For tax years beginning after December 31,
230230 2008, the years to which such losses may be carried
231231 back shall be determined solely by reference to
232232 Section 172 of the Internal Revenue Code, 26 U.S.C.,
233233 Section 172, with the exception that the terms “net
234234 operating loss” and “taxable income” shall be replaced
235235 with “Oklahoma net operating loss ” and “Oklahoma
236236 taxable income”.
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288288 4. Items of the following nature s hall be allocated as
289289 indicated. Allowable deductions attributable to items separately
290290 allocable in subparagraphs a, b and c of this paragraph, whether or
291291 not such items of income were actually received, shall be allocated
292292 on the same basis as those items:
293293 a. Income from real and tangible per sonal property, such
294294 as rents, oil and mining produ ction or royalties, and
295295 gains or losses from sales of such property, shall be
296296 allocated in accordance with the situs of such
297297 property;
298298 b. Income from intangible persona l property, such as
299299 interest, dividends, patent or copyright royalties,
300300 and gains or losses from sales of such property, shall
301301 be allocated in accordance with the domiciliary situs
302302 of the taxpayer, except that:
303303 (1) where such property has acquired a nonuni tary
304304 business or commercial situs apa rt from the
305305 domicile of the taxpayer such income sh all be
306306 allocated in accordance with such business or
307307 commercial situs; interest income from
308308 investments held to generate working capital for
309309 a unitary business enterpri se shall be included
310310 in apportionable income; a resident trust or
311311 resident estate shall be treated as having a
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363363 separate commercial or business situs insofar as
364364 undistributed income is concerned, but shall not
365365 be treated as having a separate commercial or
366366 business situs insofar as distributed income is
367367 concerned,
368368 (2) for taxable years beginnin g after December 31,
369369 2003, capital or ordinary gains or losses from
370370 the sale of an ownership interest in a publicly
371371 traded partnership, as defined by Section 7704(b)
372372 of the Internal Revenue Code, shall be allocated
373373 to this state in the ratio of the origina l cost
374374 of such partnership’s tangible property in this
375375 state to the original cost of such partnership ’s
376376 tangible property everywhere, as determined at
377377 the time of the sale; if more than fifty percent
378378 (50%) of the value of the partnership ’s assets
379379 consists of intangible assets, capital or
380380 ordinary gains or losses from the sale of an
381381 ownership interest in the partnership shall be
382382 allocated to this state in accordance with the
383383 sales factor of the partnership f or its first
384384 full tax period immediately preceding its tax
385385 period during which the ownership interest in the
386386 partnership was sold; the provisions of this
387387
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438438 division shall only apply if the capital or
439439 ordinary gains or los ses from the sale of an
440440 ownership interest in a partnership do not
441441 constitute qualifying gain receiving capital
442442 treatment as defined in subparagraph a of
443443 paragraph 2 of subsection F of this section,
444444 (3) income from such property which is required to be
445445 allocated pursuant to the provisions of paragraph
446446 5 of this subsection shall be allocated a s herein
447447 provided;
448448 c. Net income or loss from a business activity which is
449449 not a part of business carried on within or without
450450 the state of a unitary character shall be separately
451451 allocated to the state in which such activity is
452452 conducted;
453453 d. In the case of a manufacturing or processing
454454 enterprise the business of which in Oklahoma consists
455455 solely of marketing its products by:
456456 (1) sales having a situs without this state, shipped
457457 directly to a point from with out the state to a
458458 purchaser within the state, comm only known as
459459 interstate sales,
460460 (2) sales of the product stored in public warehouses
461461 within the state pursuant to “in transit”
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513513 tariffs, as prescribed and allowed by the
514514 Interstate Commerce Commission, to a purchaser
515515 within the state,
516516 (3) sales of the product stored in public warehouses
517517 within the state where the shipment to such
518518 warehouses is not covered by “in transit”
519519 tariffs, as prescribed and allowed by the
520520 Interstate Commerce Commission, to a purchaser
521521 within or without the state,
522522 the Oklahoma net inco me shall, at the option of the
523523 taxpayer, be that portion of the total net income of
524524 the taxpayer for federal income tax purposes derived
525525 from the manufacture and/or pro cessing and sales
526526 everywhere as determined by the ratio of the sales
527527 defined in this section made to the purchaser within
528528 the state to the total sales everywhere . The term
529529 “public warehouse” as used in this subparagraph means
530530 a licensed public warehouse, the principal business of
531531 which is warehousing merchandise for the public;
532532 e. In the case of insurance companies, Oklahoma taxable
533533 income shall be taxable income of the taxpayer for
534534 federal tax purposes, as adjusted for the adjustments
535535 provided pursuant to the provisions of paragraphs 1
536536 and 2 of this subsection, apportioned as follows:
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588588 (1) except as otherwise provided by division (2) of
589589 this subparagraph, taxable income of an insurance
590590 company for a taxable year shall be apportioned
591591 to this state by multipl ying such income by a
592592 fraction, the numerator of which is the direct
593593 premiums written for insurance on property or
594594 risks in this state, and the denominator of which
595595 is the direct premiums written for insurance on
596596 property or risks everywhere . For purposes of
597597 this subsection, the term “direct premiums
598598 written” means the total amount of direct
599599 premiums written, assessments and annuity
600600 considerations as reported for the taxable year
601601 on the annual statement filed by the company with
602602 the Insurance Commissioner in the form approved
603603 by the National Association of Insurance
604604 Commissioners, or such oth er form as may be
605605 prescribed in lieu thereof,
606606 (2) if the principal source of premiums written by an
607607 insurance company consists of premiums for
608608 reinsurance accepted by i t, the taxable income of
609609 such company shall be apportioned to this state
610610 by multiplying such income by a fraction, the
611611 numerator of which is the sum of (a) direct
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663663 premiums written for insurance on property or
664664 risks in this state, plus (b) premiums written
665665 for reinsurance accepted in respect o f property
666666 or risks in this state, and the denomina tor of
667667 which is the sum of (c) direct premiums written
668668 for insurance on property or risks everywhere,
669669 plus (d) premiums written for reinsurance
670670 accepted in respect of p roperty or risks
671671 everywhere. For purposes of this paragraph,
672672 premiums written for reins urance accepted in
673673 respect of property or risks in this state,
674674 whether or not otherwise determinable, may at the
675675 election of the company be determined on the
676676 basis of the proportion which premiums written
677677 for insurance accepted from companies
678678 commercially domiciled in Oklahoma bears to
679679 premiums written for reinsurance accepted from
680680 all sources, or alternatively in the proportion
681681 which the sum of the direct premiums writt en for
682682 insurance on property or risks in this state by
683683 each ceding company from which re insurance is
684684 accepted bears to the sum of the total direct
685685 premiums written by each such ceding company for
686686 the taxable year.
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738738 5. The net income or loss remaining after the separate
739739 allocation in paragraph 4 of this subsection, being that which is
740740 derived from a unitary business enterprise, shall be apportioned to
741741 this state on the basis of the arithmetical average of three factors
742742 consisting of property, payroll and sal es or gross revenue
743743 enumerated as subparagraphs a, b and c of this paragraph . Net
744744 income or loss as used in this paragraph includes that derived from
745745 patent or copyright royalties, purchase discounts, and interest on
746746 accounts receivable relating to or ari sing from a business activity,
747747 the income from which is apportioned pursuant to this sub section,
748748 including the sale or other disposition of such property and any
749749 other property used in the unitary enterprise . Deductions used in
750750 computing such net income o r loss shall not include taxes based on
751751 or measured by income . Provided, for corporatio ns whose property
752752 for purposes of the tax imposed by Section 2355 of this title has an
753753 initial investment cost equaling or exceeding Two Hundred Million
754754 Dollars ($200,000,000.00) and such investment is mad e on or after
755755 July 1, 1997, or for corporations whi ch expand their property or
756756 facilities in this state and such expansion has an investment cost
757757 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
758758 over a period not to exceed three (3) year s, and such expansion is
759759 commenced on or after Janu ary 1, 2000, the three factors shall be
760760 apportioned with property and payroll, each comprising twenty -five
761761 percent (25%) of the apportionment factor and sales comprisin g fifty
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813813 percent (50%) of the apportio nment factor. The apportionment
814814 factors shall be computed as follows:
815815 a. The property factor is a fraction, the numerator of
816816 which is the average value of the taxpayer ’s real and
817817 tangible personal property owned or ren ted and used in
818818 this state during the tax period and the denominator
819819 of which is the average value of all the taxpayer’s
820820 real and tangible personal property everywhere owned
821821 or rented and used during the tax period.
822822 (1) Property, the income from which is s eparately
823823 allocated in paragraph 4 of this subsection,
824824 shall not be included in determin ing this
825825 fraction. The numerator of the fraction shall
826826 include a portion of the investment in
827827 transportation and other equipment having no
828828 fixed situs, such as rolling stock, buses, trucks
829829 and trailers, including machinery and equipment
830830 carried thereon, airplanes, salespersons’
831831 automobiles and other similar equipment, in the
832832 proportion that miles traveled in Oklahoma by
833833 such equipment bears to total miles traveled,
834834 (2) Property owned by the taxpayer is val ued at its
835835 original cost. Property rented by the t axpayer
836836 is valued at eight times the net annual rental
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888888 rate. Net annual rental rate is the annual
889889 rental rate paid by the taxpayer, less any annual
890890 rental rate received by the taxpayer from
891891 subrentals,
892892 (3) The average value of property shall be determined
893893 by averaging the values at the beginning and
894894 ending of the tax period but the Oklahoma Tax
895895 Commission may require the averaging of monthly
896896 values during the tax period if reasonably
897897 required to reflect pr operly the average value of
898898 the taxpayer’s property;
899899 b. The payroll factor is a fraction, the numerator of
900900 which is the total compensation for services rendered
901901 in the state during the tax period, and the
902902 denominator of which is the total compensation for
903903 services rendered everywhere during the tax period .
904904 “Compensation”, as used in this subsection means those
905905 paid-for services to the extent related to the unitary
906906 business but does not include officers ’ salaries,
907907 wages and other compensation.
908908 (1) In the case of a transportation enterprise, the
909909 numerator of the fraction shall include a portion
910910 of such expenditure in connection with employees
911911 operating equipment over a fixed route, such as
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963963 railroad employees, airline pilot s, or bus
964964 drivers, in this state only a part of the time,
965965 in the proportion that milea ge traveled in
966966 Oklahoma bears to total mileage traveled by such
967967 employees,
968968 (2) In any case the numerator of the fraction shall
969969 include a portion of such expenditures in
970970 connection with itinerant employees, s uch as
971971 traveling salespersons, in this state onl y a part
972972 of the time, in the proportion that time spent in
973973 Oklahoma bears to total time spent in furtherance
974974 of the enterprise by such employees;
975975 c. The sales factor is a fraction, the numerator of which
976976 is the total sales or gross revenue of the taxpayer in
977977 this state during the tax period, and the denominator
978978 of which is the total sales or gross revenue of the
979979 taxpayer everywhere during the tax period . “Sales”,
980980 as used in this subsection does not include sa les or
981981 gross revenue which are separately alloc ated in
982982 paragraph 4 of this subsection.
983983 (1) Sales of tangible personal property have a situs
984984 in this state if the property is delivered or
985985 shipped to a purchaser other than the United
986986 States government, within this state regardless
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10381038 of the FOB point or oth er conditions of the sale;
10391039 or the property is shipped from an office, store,
10401040 warehouse, factory or other place of storage in
10411041 this state and (a) the purchaser is the United
10421042 States government or (b) the taxpayer is not
10431043 doing business in the state of the dest ination of
10441044 the shipment.
10451045 (2) In the case of a railroad or interurban railway
10461046 enterprise, the numerator of the fraction shall
10471047 not be less than the allocation of revenues to
10481048 this state as shown in its annual repo rt to the
10491049 Corporation Commission.
10501050 (3) In the case of an airline, truck or bus
10511051 enterprise or freight car, tank car, refrigerator
10521052 car or other railroad equipment enterprise, the
10531053 numerator of the fraction shall include a p ortion
10541054 of revenue from interstate tra nsportation in the
10551055 proportion that interstat e mileage traveled in
10561056 Oklahoma bears to total interstate mileage
10571057 traveled.
10581058 (4) In the case of an oil, gasoline or gas pipeline
10591059 enterprise, the numerator of the fraction shall
10601060 be either the total of traffic units of the
10611061 enterprise within Oklahoma or the re venue
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11131113 allocated to Oklahoma based upon miles moved, at
11141114 the option of the taxpayer, and the denominator
11151115 of which shall be the total of traffic units of
11161116 the enterprise or the rev enue of the enterprise
11171117 everywhere as appropriate to the numerator . A
11181118 “traffic unit” is hereby defined as the
11191119 transportation for a distance of one (1) mile of
11201120 one (1) barrel of oil, one (1) gallon of gasoline
11211121 or one thousand (1,000) cubic feet of natural o r
11221122 casinghead gas, as the case may be.
11231123 (5) In the case of a telephone or telegra ph or other
11241124 communication enterprise, the numerator of the
11251125 fraction shall include that portion of the
11261126 interstate revenue as is allocated pursuant to
11271127 the accounting procedures pr escribed by the
11281128 Federal Communication s Commission; provided that
11291129 in respect to each corporation or business entity
11301130 required by the Federal Communications Commission
11311131 to keep its books and records in accordance with
11321132 a uniform system of accounts prescribed by such
11331133 Commission, the intrastate net income shall be
11341134 determined separately in t he manner provided by
11351135 such uniform system of accounts and only the
11361136 interstate income shall be subject to allocation
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11881188 pursuant to the provisions of this subsection .
11891189 Provided further, that the gross revenue factors
11901190 shall be those as are determined pursuant t o the
11911191 accounting procedures prescribed by the Federal
11921192 Communications Commission.
11931193 In any case where the apportionment of the three factors
11941194 prescribed in this paragraph attributes to Oklahoma a portion of net
11951195 income of the enterprise out of all appropriate proportion to the
11961196 property owned and/or business transacted within this state, because
11971197 of the fact that one or more of the factors so prescribed are not
11981198 employed to any appreciab le extent in furtherance of the enter prise;
11991199 or because one or more factors not so prescribed are employed to a
12001200 considerable extent in furtherance of the enterprise; or because of
12011201 other reasons, the Tax Commission is empowered to permit, after a
12021202 showing by taxpayer that an excessive portion of net income has been
12031203 attributed to Oklaho ma, or require, when in its judgment an
12041204 insufficient portion of net income has been attributed to Oklahoma,
12051205 the elimination, substitution, or use of additional factors, or
12061206 reduction or increase in the weight of such prescribed factors.
12071207 Provided, however, that any such variance from such prescribed
12081208 factors which has the effect of increasing the portion of net income
12091209 attributable to Oklahoma must not be inherently arbitrary, and
12101210 application of the recomputed final app ortionment to the net income
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12621262 of the enterprise must attribute to Oklahoma only a reasonable
12631263 portion thereof.
12641264 6. For calendar years 1997 and 1998, the owner of a new or
12651265 expanded agricultural commodity processing facilit y in this state
12661266 may exclude from Okla homa taxable income, or in the case of a n
12671267 individual, the Oklahoma adjusted gross income, fifteen percent
12681268 (15%) of the investment by the owner in the new or expanded
12691269 agricultural commodity processing facility . For calendar year 1999,
12701270 and all subsequent ye ars, the percentage, not to exceed fifte en
12711271 percent (15%), available to the owner of a new or expanded
12721272 agricultural commodity processing facility in this state claiming
12731273 the exemption shall be adjusted annually so that th e total estimated
12741274 reduction in tax liability does not exceed One Million Doll ars
12751275 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
12761276 for determining the percentage of the investment which each eligible
12771277 taxpayer may exclude . The exclusion provided by this paragraph
12781278 shall be taken in the taxable year when the invest ment is made. In
12791279 the event the total reduction in tax liability authorized by this
12801280 paragraph exceeds One Million Dollars ($1,000,000.00) in any
12811281 calendar year, the Tax Commission shall permit any excess over One
12821282 Million Dollars ($1,000,000.00) and shall fa ctor such excess into
12831283 the percentage for subsequent years . Any amount of the exemption
12841284 permitted to be excluded pursuant to the provisions of this
12851285 paragraph but not used in any y ear may be carried forward as an
12861286
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13371337 exemption from income pursuant to the provis ions of this paragraph
13381338 for a period not exceeding six (6) years following the year in which
13391339 the investment was originally made.
13401340 For purposes of this paragraph:
13411341 a. “Agricultural commodity processing facility ” means
13421342 building, structures, fixtures and impro vements used
13431343 or operated primarily for the processing or production
13441344 of marketable products from agricultural commodities .
13451345 The term shall also mean a dairy operation that
13461346 requires a depreciable investment of at least T wo
13471347 Hundred Fifty Thousand Dollars ($25 0,000.00) and which
13481348 produces milk from dairy cows . The term does not
13491349 include a facility that provides only, and nothing
13501350 more than, storage, cleaning, drying or transportation
13511351 of agricultural commodities, and
13521352 b. “Facility” means each part of the facility which is
13531353 used in a process primarily for:
13541354 (1) the processing of agricultural commodities ,
13551355 including receiving or storing agricultural
13561356 commodities, or the production of milk at a dair y
13571357 operation,
13581358 (2) transporting the agr icultural commodities or
13591359 product before, during or after the processing,
13601360 or
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14121412 (3) packaging or otherwise preparing the product for
14131413 sale or shipment.
14141414 7. Despite any provision to the contrary in paragraph 3 of this
14151415 subsection, for taxable years beginning afte r December 31, 1999, in
14161416 the case of a taxpayer which has a farming loss, such farming loss
14171417 shall be considered a net operating loss carryback in accordance
14181418 with and to the extent of the Internal Revenue Code, 26 U.S.C.,
14191419 Section 172(b)(G). However, the amount of the net operating loss
14201420 carryback shall not exceed the lesser of:
14211421 a. Sixty Thousand Dollars ($60,000.00), or
14221422 b. the loss properly shown on Schedule F of the Internal
14231423 Revenue Service Form 1040 reduced by one -half (1/2) of
14241424 the income from all other sou rces other than reflected
14251425 on Schedule F.
14261426 8. In taxable years beginning after December 31, 1995, all
14271427 qualified wages equal to the federal income tax credit set forth in
14281428 26 U.S.C.A., Section 45A, shall be deducted from t axable income.
14291429 The deduction allowed pursuant to this paragraph sh all only be
14301430 permitted for the tax years in which the federal tax credit pursuant
14311431 to 26 U.S.C.A., Section 45A, is allowed . For purposes of this
14321432 paragraph, “qualified wages” means those wages used to calculate the
14331433 federal credit pursuant to 26 U.S.C.A., Sec tion 45A.
14341434 9. In taxable years beginning after December 31, 2005, an
14351435 employer that is eligible for and utilizes the Safety Pays OSHA
14361436
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14871487 Consultation Service provided by the Oklahoma Department of Labor
14881488 shall receive an exemption from taxable income in the am ount of One
14891489 Thousand Dollars ($1,000.00) for the tax year that the service is
14901490 utilized.
14911491 10. For taxable years beginning on or after January 1, 2010,
14921492 there shall be added to Oklahoma taxable income an amount equal to
14931493 the amount of deferred income not incl uded in such taxable in come
14941494 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
14951495 as amended by Section 1231 of the American Recovery and Reinvestment
14961496 Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
14971497 Oklahoma taxable income an amo unt equal to the amount of deferred
14981498 income included in such taxable income pursuant to Section 108(i)(1)
14991499 of the Internal Revenue Code by Section 1231 of the American
15001500 Recovery and Reinvestment Act of 2009 (P.L. No. 111 -5).
15011501 11. For taxable years beginning on or after January 1, 2 019,
15021502 there shall be subtracted from Oklahoma taxable income or adjusted
15031503 gross income any item of income or gain, and there shall be added to
15041504 Oklahoma taxable income or adjusted gross income any item of los s or
15051505 deduction that in the absence of an election p ursuant to the
15061506 provisions of the Pass -Through Entity Tax Equity Act of 2019 would
15071507 be allocated to a member or to an indirect member of an electing
15081508 pass-through entity pursuant to Section 2351 et seq. of th is title,
15091509 if (i) the electing pass-through entity has accounted for such item
15101510 in computing its Oklahoma net entity income or loss pursuant to the
15111511
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15621562 provisions of the Pass -Through Entity Tax Equity Act of 2019, and
15631563 (ii) the total amount of tax attributable to any resulting Oklahoma
15641564 net entity income has been paid. The Oklahoma Tax Commission shall
15651565 promulgate rules for the reporting of such exclusion to direct and
15661566 indirect members of the electing pass -through entity. As used in
15671567 this paragraph, “electing pass-through entity”, “indirect member”,
15681568 and “member” shall be defined in the same manner as prescribed by
15691569 Section 2355.1P-2 of this title. Notwithstanding the application of
15701570 this paragraph, the adjusted tax basis of any ow nership interest in
15711571 a pass-through entity for purposes of Sectio n 2351 et seq. of this
15721572 title shall be equal to its adjusted tax basis for federal income
15731573 tax purposes.
15741574 B. 1. The taxable income of any corporation shall be further
15751575 adjusted to arrive at Okla homa taxable income, except those
15761576 corporations electing treatme nt as provided in subchap ter S of the
15771577 Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
15781578 2365 of this title, deductions pursuant to the provisions of the
15791579 Accelerated Cost Recov ery System as defined and allowed in the
15801580 Economic Recovery Tax Act of 1981, Public Law 9 7-34, 26 U.S.C.,
15811581 Section 168, for depreciation of assets placed into service after
15821582 December 31, 1981, shall not be allowed in calculating Oklahoma
15831583 taxable income. Such corporations shall be allowed a dedu ction for
15841584 depreciation of assets placed into servic e after December 31, 1981,
15851585 in accordance with provisions of the Internal Revenue Code, 26
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16371637 U.S.C., Section 1 et seq., in effect immediately prior to the
16381638 enactment of the Accelerated Cost Recovery System . The Oklahoma tax
16391639 basis for all such assets placed in to service after December 31,
16401640 1981, calculated in this section shall be retained and utilized for
16411641 all Oklahoma income tax purposes through the final disposition of
16421642 such assets.
16431643 Notwithstanding any other pr ovisions of the Oklahoma Income Tax
16441644 Act, Section 2351 et seq. of this title, or of the Internal Revenue
16451645 Code to the contrary, this subsection shall control calculation of
16461646 depreciation of assets placed into service after December 31, 1981,
16471647 and before January 1, 1983.
16481648 For assets placed in service and held by a corporation in which
16491649 accelerated cost recovery system was previously disallowed, an
16501650 adjustment to taxable income is required in the first taxable year
16511651 beginning after December 31, 1982, to reconcile the basis of such
16521652 assets to the basis allowed in the I nternal Revenue Code. The
16531653 purpose of this adjustment is to equalize the basis and allowance
16541654 for depreciation accounts between that reported to the Internal
16551655 Revenue Service and that reported to Oklahoma.
16561656 2. For tax years beginn ing on or after January 1, 2 009, and
16571657 ending on or before December 31, 2009, there shall be added to
16581658 Oklahoma taxable income any amount in excess of One Hundred Seventy -
16591659 five Thousand Dollars ($175, 000.00) which has been deducted as a
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17111711 small business expense under Internal Revenue Code, Section 179 as
17121712 provided in the American Recovery and Reinvestment Act of 2009.
17131713 C. 1. For taxable years beginning after December 31, 1987, the
17141714 taxable income of any c orporation shall be further adjusted to
17151715 arrive at Oklahoma taxable income for transfers of technology to
17161716 qualified small businesses located in Oklahoma . Such transferor
17171717 corporation shall be allowed an exemption from taxable income of an
17181718 amount equal to the amount of royalty payment received as a result
17191719 of such transfer; provided, however, su ch amount shall not exceed
17201720 ten percent (10%) of the amount of gross proceeds received by such
17211721 transferor corporation as a result of the technology transfer . Such
17221722 exemption shall be allowed for a period no t to exceed ten (10) y ears
17231723 from the date of receipt of the first royalty payment accruing from
17241724 such transfer. No exemption may be claimed for transfers of
17251725 technology to qualified small businesses made prior to January 1,
17261726 1988.
17271727 2. For purposes of this sub section:
17281728 a. “Qualified small business” means an entity, whether
17291729 organized as a corporation, partnership, or
17301730 proprietorship, organized for profit with its
17311731 principal place of business located within this state
17321732 and which meets the following criteria:
17331733 (1) Capitalization of not more than Two Hundred Fifty
17341734 Thousand Dollars ($250,000.00),
17351735
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17861786 (2) Having at least fifty percent (50%) of its
17871787 employees and assets located in Oklahoma at the
17881788 time of the transfer, and
17891789 (3) Not a subsidiary or affiliate of the transferor
17901790 corporation;
17911791 b. “Technology” means a proprietary process , formula,
17921792 pattern, device or compilation of scientific or
17931793 technical information which is not in the public
17941794 domain;
17951795 c. “Transferor corporation ” means a corporation whic h is
17961796 the exclusive and undisputed own er of the technology
17971797 at the time the transfer is ma de; and
17981798 d. “Gross proceeds” means the total amount of
17991799 consideration for the transfer of technology, whether
18001800 the consideration is in money or otherwise.
18011801 D. 1. For taxable years beginning after December 31 , 2005, the
18021802 taxable income of any corporation, esta te or trust, shall be further
18031803 adjusted for qualifying gains receiving capital treatment . Such
18041804 corporations, estates or trusts shall be allowed a deduction from
18051805 Oklahoma taxable income for the amount of qu alifying gains receiving
18061806 capital treatment earned b y the corporation, estate or trust during
18071807 the taxable year and included in the federal taxable income of such
18081808 corporation, estate or trust.
18091809 2. As used in this subsecti on:
18101810
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18611861 a. “qualifying gains receiving ca pital treatment” means
18621862 the amount of net capital ga ins, as defined in Section
18631863 1222(11) of the Internal Revenue Code, included in the
18641864 federal income tax return of the corporation, estate
18651865 or trust that result from:
18661866 (1) the sale of real property or tangible p ersonal
18671867 property located within Oklahoma that has b een
18681868 directly or indirectly owned by the corporation,
18691869 estate or trust for a holding period of at least
18701870 five (5) years prior to the date of the
18711871 transaction from which suc h net capital gains
18721872 arise,
18731873 (2) the sale of stock or on the sale of an ownership
18741874 interest in an Oklahoma company, limited
18751875 liability company, or partnership where such
18761876 stock or ownership interest has been directly or
18771877 indirectly owned by the corporation, esta te or
18781878 trust for a holding period of a t least three (3)
18791879 years prior to the date of the tr ansaction from
18801880 which the net capital gains arise, or
18811881 (3) the sale of real property, tangible personal
18821882 property or intangible personal property located
18831883 within Oklahoma as part of the sale of all or
18841884 substantially all of the assets of an Oklahoma
18851885
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19361936 company, limited liability company, or
19371937 partnership where such property has been directly
19381938 or indirectly owned by such entity owned by the
19391939 owners of such entity, and used in or deriv ed
19401940 from such entity for a period of a t least three
19411941 (3) years prior to the date of the tr ansaction
19421942 from which the net capital gains arise,
19431943 b. “holding period” means an uninterrupted period of
19441944 time. The holding period shall include any additional
19451945 period when the property was held by another
19461946 individual or entity, if such additional period is
19471947 included in the taxpayer’s holding period for the
19481948 asset pursuant to the Internal Revenue Code,
19491949 c. “Oklahoma company”, “limited liability company ”, or
19501950 “partnership” means an entity whose primary
19511951 headquarters have been located in Oklahoma for at
19521952 least three (3) uninterrupted years prior to the date
19531953 of the transaction from which the net capital gains
19541954 arise,
19551955 d. “direct” means the taxpayer directly owns the asset,
19561956 and
19571957 e. “indirect” means the taxpayer owns an inter est in a
19581958 pass-through entity (or chain of pass -through
19591959
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20102010 entities) that sells the asset that gives rise to the
20112011 qualifying gains receiving capital treatment.
20122012 (1) With respect to sales of real property or
20132013 tangible personal property located within
20142014 Oklahoma, the deduction described in this
20152015 subsection shall not a pply unless the pass-
20162016 through entity that makes the sale has held the
20172017 property for not less than five (5) uninterrupted
20182018 years prior to the date of the transaction that
20192019 created the capital gain, and each pas s-through
20202020 entity included in the chain of ownership has
20212021 been a member, partner, or shareholder of the
20222022 pass-through entity in the tier immediately below
20232023 it for an uninterrupted period of not less than
20242024 five (5) years.
20252025 (2) With respect to sales of stock or ow nership
20262026 interest in or sales of all or substantiall y all
20272027 of the assets of an Oklahoma company, limited
20282028 liability company, or partnership, the deduction
20292029 described in this subsection shall not apply
20302030 unless the pass-through entity that makes the
20312031 sale has held the stock or ownership interest or
20322032 the assets for not less than three (3)
20332033 uninterrupted years prior to the date of the
20342034
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20852085 transaction that created the capital gain, and
20862086 each pass-through entity included in the chain of
20872087 ownership has been a member, partner or
20882088 shareholder of the pass -through entity in the
20892089 tier immediately below it for an uninterrupted
20902090 period of not less than three (3) years.
20912091 E. The Oklahoma adjusted gross income of any individual
20922092 taxpayer shall be further a djusted as follows to arrive at Oklah oma
20932093 taxable income:
20942094 1. a. In the case of individual s, there shall be added or
20952095 deducted, as the case may be, the difference necessary
20962096 to allow personal exemptions of One Thousand Dollars
20972097 ($1,000.00) in lieu of the person al exemptions allowed
20982098 by the Internal Revenue Code.
20992099 b. There shall be allowed an additio nal exemption of One
21002100 Thousand Dollars ($1,000.00) for each taxpayer or
21012101 spouse who is blind at the close of the tax year . For
21022102 purposes of this subparagraph, an individu al is blind
21032103 only if the central visu al acuity of the individual
21042104 does not exceed 20/200 i n the better eye with
21052105 correcting lenses, or if the visual acuity of the
21062106 individual is greater than 20/200, but is accompanied
21072107 by a limitation in the fields of vision su ch that the
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21592159 widest diameter of the v isual field subtends an angle
21602160 no greater than twenty (20) degrees.
21612161 c. There shall be allowed an additional exemption of One
21622162 Thousand Dollars ($1,000.00) for each taxpayer or
21632163 spouse who is sixty-five (65) years of age or older at
21642164 the close of the tax year based upon the filing status
21652165 and federal adjusted gro ss income of the taxpayer.
21662166 Taxpayers with the following filing status may claim
21672167 this exemption if the federal adjusted gross income
21682168 does not exceed:
21692169 (1) Twenty-five Thousand Dollars ($25,000.00) if
21702170 married and filing jointly;
21712171 (2) Twelve Thousand Five Hund red Dollars ($12,500.00)
21722172 if married and filing separately;
21732173 (3) Fifteen Thousand Dollars ($15,000.00) if single;
21742174 and
21752175 (4) Nineteen Thousand Dollars ($19,000.00) if a
21762176 qualifying head of household.
21772177 Provided, for taxable years beginning after December
21782178 31, 1999, amounts included in the calculation of
21792179 federal adjusted gross income pursuant to the
21802180 conversion of a traditional individual retirement
21812181 account to a Roth individual ret irement account shall
21822182 be excluded from federal adjusted gross income for
21832183
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22342234 purposes of the income thresholds provided in this
22352235 subparagraph.
22362236 2. a. For taxable years beginning on or before December 31,
22372237 2005, in the case of individuals who use the standard
22382238 deduction in determining taxable income, there shall
22392239 be added or deducted, as the case may b e, the
22402240 difference necessary to allow a standard deduction in
22412241 lieu of the standard deduction allowed by the Internal
22422242 Revenue Code, in an amount equal to the larger of
22432243 fifteen percent (15%) of the Ok lahoma adjusted gross
22442244 income or One Thousand Dollars ($1,00 0.00), but not to
22452245 exceed Two Thousand Dollars ($2,000.00), except that
22462246 in the case of a married individual filing a separate
22472247 return such deduction shall be the larger o f fifteen
22482248 percent (15%) of such Oklahoma adjusted gross income
22492249 or Five Hundred Dollars ( $500.00), but not to exceed
22502250 the maximum amount of One Thousand Dollars
22512251 ($1,000.00).
22522252 b. For taxable years beginning on or after January 1,
22532253 2006, and before January 1, 20 07, in the case of
22542254 individuals who use the standard deduction in
22552255 determining taxable inc ome, there shall be added or
22562256 deducted, as the case may be, the difference necessary
22572257 to allow a standard deduction in lieu of the standard
22582258
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23092309 deduction allowed by the Inter nal Revenue Code, in an
23102310 amount equal to:
23112311 (1) Three Thousand Dollars ($3,000.00), if the filing
23122312 status is married filing joint, head of household
23132313 or qualifying widow; or
23142314 (2) Two Thousand Dollars ($2,000.00), if the filing
23152315 status is single or married filing separate.
23162316 c. For the taxable year beginning on January 1, 2007, and
23172317 ending December 31, 2007, in the case of individuals
23182318 who use the standard deduction in determining taxable
23192319 income, there shall be added or deducted, as the case
23202320 may be, the difference nece ssary to allow a standard
23212321 deduction in lieu of the standard deduction allowed by
23222322 the Internal Revenue Code, in an amount equal to:
23232323 (1) Five Thousand Five Hundred Dollars ($5,500.00),
23242324 if the filing status is married filing joint or
23252325 qualifying widow; or
23262326 (2) Four Thousand One Hundred Twenty-five Dollars
23272327 ($4,125.00) for a head of household; or
23282328 (3) Two Thousand Seven Hundred Fifty Dollars
23292329 ($2,750.00), if the filing status is single or
23302330 married filing separate.
23312331 d. For the taxable year beginning on January 1, 2008, and
23322332 ending December 31, 2008, in the case of individuals
23332333
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23842384 who use the standard deduction in determining taxable
23852385 income, there shall be added or deducted, as the case
23862386 may be, the difference necessary to allow a standard
23872387 deduction in lieu of the standard ded uction allowed by
23882388 the Internal Revenue Code, in an amount equal to:
23892389 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
23902390 the filing status is married filing joint or
23912391 qualifying widow, or
23922392 (2) Four Thousand Eight Hundred Seventy -five Dollars
23932393 ($4,875.00) for a head of household, or
23942394 (3) Three Thousand Two Hundred Fifty Dollars
23952395 ($3,250.00), if the filing status is single or
23962396 married filing separate.
23972397 e. For the taxable year beginning on January 1, 2009, and
23982398 ending December 31, 2009, in the case of individuals
23992399 who use the standard deduction in determining taxable
24002400 income, there shall be added or deduc ted, as the case
24012401 may be, the difference necessary to allow a standard
24022402 deduction in lieu of the standard deduction allowed by
24032403 the Internal Revenue Code, in an amount equ al to:
24042404 (1) Eight Thousand Five Hundre d Dollars ($8,500.00),
24052405 if the filing status is marr ied filing joint or
24062406 qualifying widow, or
24072407
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24582458 (2) Six Thousand Three Hundred Seventy -five Dollars
24592459 ($6,375.00) for a head of household, or
24602460 (3) Four Thousand Two Hundred Fifty Dollars
24612461 ($4,250.00), if the filing s tatus is single or
24622462 married filing separate.
24632463 Oklahoma adjusted gross income shall be increased by
24642464 any amounts paid for motor vehicle excise taxes which
24652465 were deducted as allowed by the Internal Revenue Code.
24662466 f. For taxable years beginning on or after January 1,
24672467 2010, and ending on December 31, 2016, in the c ase of
24682468 individuals who use the standard deduction in
24692469 determining taxable income, there shall be added or
24702470 deducted, as the case may be, the difference necessary
24712471 to allow a standard deduction equal to the st andard
24722472 deduction allowed by the Internal Revenue Co de, based
24732473 upon the amount and filing status prescribed by such
24742474 Code for purposes of filing federal individual income
24752475 tax returns.
24762476 g. For taxable years beginning on or a fter January 1,
24772477 2017, in the case of individuals who use the standard
24782478 deduction in determining taxable income, there shall
24792479 be added or deducted, as the case may be, the
24802480 difference necessary to allow a standard deduction in
24812481
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25322532 lieu of the standard deduction al lowed by the Internal
25332533 Revenue Code, as follows:
25342534 (1) Six Thousand Three Hundred Fifty Dol lars
25352535 ($6,350.00) for single or married filing
25362536 separately,
25372537 (2) Twelve Thousand Seven Hundred Dollars
25382538 ($12,700.00) for married filing jointly or
25392539 qualifying widower with d ependent child, and
25402540 (3) Nine Thousand Three Hundred Fifty Dollars
25412541 ($9,350.00) for head o f household.
25422542 3. a. In the case of resident and part -year resident
25432543 individuals having adjusted gross income from sources
25442544 both within and without the state, the itemized or
25452545 standard deductions and personal e xemptions shall be
25462546 reduced to an amount which is th e same portion of the
25472547 total thereof as Oklahoma adjusted gross income is of
25482548 adjusted gross income . To the extent itemized
25492549 deductions include allowable moving expense, proration
25502550 of moving expense shall not be required or permitted
25512551 but allowable moving expe nse shall be fully deductible
25522552 for those taxpayers moving within or into Oklahoma and
25532553 no part of moving expense shall be deductible for
25542554 those taxpayers moving without or out of Oklahoma.
25552555 All other itemized or standard deductions and personal
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26072607 exemptions shall be subject to proration as provided
26082608 by law.
26092609 b. For taxable years beginning on or after January 1,
26102610 2018, the net amount of itemized deductions allowable
26112611 on an Oklahoma income tax return, subject to the
26122612 provisions of paragraph 24 of this subsection, shall
26132613 not exceed Seventeen Thousand Dollars ($17,000.00) .
26142614 For purposes of this subparagraph, charitable
26152615 contributions and medical expenses deductible for
26162616 federal income tax purposes shall be excluded from the
26172617 amount of Seventeen Thousand Dollars ($17,000.00) a s
26182618 specified by this subparagraph.
26192619 4. A resident individual with a physical disability
26202620 constituting a substantial handicap to employment may deduct from
26212621 Oklahoma adjusted gross income such expenditures to modify a motor
26222622 vehicle, home or workplace as are ne cessary to compensate for his or
26232623 her handicap. A veteran certified by the Department of Veterans
26242624 Affairs of the federal government as having a service -connected
26252625 disability shall be conclusively presumed t o be an individual with a
26262626 physical disability const ituting a substantial handicap to
26272627 employment. The Tax Commission shall promulgate rules containing a
26282628 list of combinations of common disabilities and modifications whic h
26292629 may be presumed to qualify for this deduction. The Tax Commission
26302630 shall prescribe necessary requirements for verification.
26312631
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26822682 5. a. Before July 1, 2010, the first One Thousand Five
26832683 Hundred Dollars ($1,500.00) received by any person
26842684 from the United States a s salary or compensation in
26852685 any form, other than retirement benefits, as a member
26862686 of any component of the Armed Forces of the United
26872687 States shall be deducted from taxable income.
26882688 b. On or after July 1, 2010, one hundred percent (100%)
26892689 of the income receive d by any person from the United
26902690 States as salary or compensation in any form, other
26912691 than retirement benefits, as a member of any component
26922692 of the Armed Forces of the United States shall be
26932693 deducted from taxable income.
26942694 c. Whenever the filing of a timely in come tax return by a
26952695 member of the Armed Forces of the United States is
26962696 made impracticable or impossible of accomplishment by
26972697 reason of:
26982698 (1) absence from the United States, which term
26992699 includes only the states and the District of
27002700 Columbia;
27012701 (2) absence from the State of Oklahoma this state
27022702 while on active duty; or
27032703 (3) confinement in a hospital within the United
27042704 States for treatment of wounds, injuries or
27052705 disease,
27062706
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27572757 the time for filing a return and paying an income tax
27582758 shall be and is hereby extended without incu rring
27592759 liability for interest or pena lties, to the fifteenth
27602760 day of the third month foll owing the month in whic h:
27612761 (a) Such individual shall return to the United
27622762 States if the extension is granted pursuant
27632763 to subparagraph a of this paragraph, return
27642764 to the State of Oklahoma this state if the
27652765 extension is granted pu rsuant to
27662766 subparagraph b of this paragraph or be
27672767 discharged from such hospital if the
27682768 extension is granted pursuant to
27692769 subparagraph c of this paragraph; or
27702770 (b) An executor, administrator, or conserv ator
27712771 of the estate of the taxpayer is appointed,
27722772 whichever event occurs the earliest.
27732773 Provided, that the Tax Commission m ay, in its discretion, grant
27742774 any member of the Armed Forces of the United States an extension of
27752775 time for filing of income tax returns and payment of income tax
27762776 without incurring liabilities fo r interest or penalties . Such
27772777 extension may be granted only wh en in the judgment of the Tax
27782778 Commission a good cause exists therefor and may be for a period in
27792779 excess of six (6) months . A record of every such extension granted,
27802780 and the reason therefor, sh all be kept.
27812781
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28322832 6. Before July 1, 2010, the salary or any other f orm of
28332833 compensation, received from the United States by a member of any
28342834 component of the Armed Forces of the United States, shall be
28352835 deducted from taxable income during the time in which the pe rson is
28362836 detained by the enemy in a conflict, is a prisoner of w ar or is
28372837 missing in action and not deceased; provided, after July 1, 2010,
28382838 all such salary or compensation shall be subject to the dedu ction as
28392839 provided pursuant to paragraph 5 of this subsecti on.
28402840 7. a. An individual taxpayer, whether resident or
28412841 nonresident, may deduct an amount equal to the federal
28422842 income taxes paid by the taxpayer during the taxable
28432843 year.
28442844 b. Federal taxes as described in subparagraph a of this
28452845 paragraph shall be deductible by any individual
28462846 taxpayer, whether resident or nonresident, only to the
28472847 extent they relate to income subject to taxation
28482848 pursuant to the provisions of the Oklahoma Income Tax
28492849 Act. The maximum amount allowable in the preceding
28502850 paragraph shall be prorated on the ratio of the
28512851 Oklahoma adjusted gross income to federal adj usted
28522852 gross income.
28532853 c. For the purpose of this paragraph, “federal income
28542854 taxes paid” shall mean federal income taxes, surtaxes
28552855 imposed on incomes or excess profits taxes, as though
28562856
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29072907 the taxpayer was on the accrual basis . In determining
29082908 the amount of deduction for federal income taxes for
29092909 tax year 2001, the amount of the deduction shall not
29102910 be adjusted by the amount of any accelerated ten
29112911 percent (10%) tax rate bracket credit or advanced
29122912 refund of the credit received during the tax year
29132913 provided pursuant to the federal Economic Growth and
29142914 Tax Relief Reconciliation Act of 2001, P.L. No. 107 -
29152915 16, and the advanced refund of such credit shall n ot
29162916 be subject to taxation.
29172917 d. The provisions of this parag raph shall apply to all
29182918 taxable years ending after December 31, 1978, and
29192919 beginning before January 1, 2006.
29202920 8. Retirement benefits not to exceed Five Thousand Five Hundred
29212921 Dollars ($5,500.00) for t he 2004 tax year, Seven Thousand Five
29222922 Hundred Dollars ($7, 500.00) for the 2005 tax year and Ten Thousand
29232923 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
29242924 years, which are received by an individual from the civil service of
29252925 the United States, the Oklahoma Public Employees Retirement System,
29262926 the Teachers’ Retirement System of Oklahoma, the Oklahoma Law
29272927 Enforcement Retirement System, the Oklahoma Firefighters Pension and
29282928 Retirement System, the Oklahoma Police Pension and Retirement
29292929 System, the employee retirement systems created by counties pursuant
29302930 to Section 951 et seq. of Tit le 19 of the Oklahoma Statutes, th e
29312931
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29812981
29822982 Uniform Retirement System for Justices and Judges, the Oklahoma
29832983 Wildlife Conservation Department Retirement Fund, the Oklahoma
29842984 Employment Security Commission Retirement Plan, or the employee
29852985 retirement systems created by municipalities pursuant to Sectio n 48-
29862986 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
29872987 from taxable income.
29882988 9. In taxable years beginning after Decembe r 3l, 1984, Social
29892989 Security benefits received by an indivi dual shall be exempt from
29902990 taxable income, to the extent such be nefits are included in the
29912991 federal adjusted gross income pursuant to the provisions of Section
29922992 86 of the Internal Revenue Code, 26 U.S. C., Section 86.
29932993 10. For taxable years beginning after Dec ember 31, 1994, lump -
29942994 sum distributions from employer plans of d eferred compensation,
29952995 which are not qualified plans within the meaning of Section 401(a)
29962996 of the Internal Revenue Code, 26 U.S.C., Secti on 401(a), and which
29972997 are deposited in and accounted for wi thin a separate bank account or
29982998 brokerage account in a financia l institution within this state,
29992999 shall be excluded from taxable income in the same manner as a
30003000 qualifying rollover contribution to an i ndividual retirement account
30013001 within the meaning of Section 408 of the Internal Revenue Code, 26
30023002 U.S.C., Section 408. Amounts withdrawn from such bank or brokerage
30033003 account, including any earnings thereon, shall be included in
30043004 taxable income when withdrawn in the same manner as withdrawals from
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30563056 individual retirement accounts within the meanin g of Section 408 of
30573057 the Internal Revenue Code.
30583058 11. In taxable years beginning after December 31, 1995,
30593059 contributions made to and interest received from a medical saving s
30603060 account established pursuant to Sections 2621 through 26 23 of Title
30613061 63 of the Oklahoma Statutes shall be exempt from ta xable income.
30623062 12. For taxable years beginning after December 31, 1996, the
30633063 Oklahoma adjusted gross income of any individual taxpayer w ho is a
30643064 swine or poultry producer may be further adjusted for the deduction
30653065 for depreciation allowed for new construction or expansion costs
30663066 which may be computed using the same depreciation method elected for
30673067 federal income tax purposes except that the us eful life shall be
30683068 seven (7) years for purposes of this pa ragraph. If depreciation is
30693069 allowed as a deduction in determin ing the adjusted gross income of
30703070 an individual, any depreciation calculated and claimed pursuant to
30713071 this section shall in no event be a duplication of any depreciation
30723072 allowed or permitted on t he federal income tax return of the
30733073 individual.
30743074 13. a. In taxable years beginning after December 31, 2002,
30753075 nonrecurring adoption expenses paid by a resident
30763076 individual taxpayer in connection with:
30773077 (1) the adoption of a minor, or
30783078 (2) a proposed adoption of a minor which did not
30793079 result in a decreed adoption,
30803080
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31313131 may be deducted from the Oklahoma adjusted gross
31323132 income.
31333133 b. The deductions for adoptions and proposed adoptions
31343134 authorized by this paragraph shall not exceed Twenty
31353135 Thousand Dollars ($20,000.00) per calen dar year.
31363136 c. The Tax Commission shall promulgate rules to imple ment
31373137 the provisions of this paragraph which shall contain a
31383138 specific list of nonrecurring adoption expenses which
31393139 may be presumed to qu alify for the deducti on. The Tax
31403140 Commission shall prescri be necessary requirements for
31413141 verification.
31423142 d. “Nonrecurring adoption expenses” means adoption fees,
31433143 court costs, medical expenses, attorney fees and
31443144 expenses which are directly related to the lega l
31453145 process of adoption of a child including, but not
31463146 limited to, costs relating to the ad option study,
31473147 health and psycholog ical examinations, transportation
31483148 and reasonable costs of lodging and food for the child
31493149 or adoptive parents which are incurred to com plete the
31503150 adoption process and are not reimbursed by other
31513151 sources. The term “nonrecurring adoption expenses ”
31523152 shall not include attorney fees incurred for the
31533153 purpose of litigating a contested adoption, from and
31543154 after the point of the initiation of the co ntest,
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32063206 costs associated with physical remodeling, renovatio n
32073207 and alteration of the adopt ive parents’ home or
32083208 property, except for a special needs child as
32093209 authorized by the court.
32103210 14. a. In taxable years beginning before January 1, 2005,
32113211 retirement benefits not to exceed the am ounts
32123212 specified in this paragraph, wh ich are received by an
32133213 individual sixty-five (65) years of age or older and
32143214 whose Oklahoma adjusted gross income is Twenty -five
32153215 Thousand Dollars ($25,000.00) or less if the filing
32163216 status is single, head of household, or married filing
32173217 separate, or Fifty Th ousand Dollars ($50,000.00) o r
32183218 less if the filing status is mar ried filing joint or
32193219 qualifying widow, shall be exempt from taxable income .
32203220 In taxable years beginning after December 31, 2004,
32213221 retirement benefits not to exceed the amounts
32223222 specified in this paragraph, which are received by an
32233223 individual whose Oklahoma a djusted gross income is
32243224 less than the qualifying amount specified in this
32253225 paragraph, shall be exempt from taxable income.
32263226 b. For purposes of this paragraph, the qualifying amount
32273227 shall be as follows:
32283228 (1) in taxable years beginning after December 31,
32293229 2004, and prior to January 1, 2007, the
32303230
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32813281 qualifying amount shall be Thirty -seven Thousand
32823282 Five Hundred Dollars ($37,500.00) or less if the
32833283 filing status is single, head of household, or
32843284 married filing separate, or Seventy -five Thousand
32853285 Dollars ($75,000.00) or les s if the filing status
32863286 is married filing jointly or qualifying widow,
32873287 (2) in the taxable year beginning January 1, 2007,
32883288 the qualifying amount shall be Fift y Thousand
32893289 Dollars ($50,000.00) or le ss if the filing status
32903290 is single, head of household, or marrie d filing
32913291 separate, or One Hundred Thousand Dollars
32923292 ($100,000.00) or less if the filing status is
32933293 married filing jointly or qualify ing widow,
32943294 (3) in the taxable year beginning January 1, 2008,
32953295 the qualifying amount shall be Sixty-two Thousand
32963296 Five Hundred Dollars ($62,500.00) or less if the
32973297 filing status is single, head of household, or
32983298 married filing separate, or One Hundred Twenty -
32993299 five Thousand Dollars ($125 ,000.00) or less if
33003300 the filing status is married filing jointly or
33013301 qualifying widow,
33023302 (4) in the taxable year beginning January 1, 2009,
33033303 the qualifying amount shall be One Hundred
33043304 Thousand Dollars ($100,000.00) or less if the
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33563356 filing status is single, head o f household, or
33573357 married filing separa te, or Two Hundred Thousand
33583358 Dollars ($200,000.00) or less if th e filing
33593359 status is married filing jointly or qualifying
33603360 widow, and
33613361 (5) in the taxable year beginning January 1, 2010,
33623362 and subsequent taxable years, there sh all be no
33633363 limitation upon the qualify ing amount.
33643364 c. For purposes of this paragraph, “retirement benefits”
33653365 means the total distributions or withdrawals from the
33663366 following:
33673367 (1) an employee pension benefit plan which satisfies
33683368 the requirements of Section 401 of the Internal
33693369 Revenue Code, 26 U.S. C., Section 401,
33703370 (2) an eligible deferred compensation plan tha t
33713371 satisfies the requirements of Section 457 of the
33723372 Internal Revenue Code, 26 U.S.C., Section 457,
33733373 (3) an individual retirem ent account, annuity or
33743374 trust or simplified employee pension that
33753375 satisfies the requirements of Sec tion 408 of the
33763376 Internal Revenue Code, 26 U.S.C., Section 408,
33773377 (4) an employee annuity subject to the provisions of
33783378 Section 403(a) or (b) of the Internal Re venue
33793379 Code, 26 U.S.C., Section 403 (a) or (b),
33803380
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34313431 (5) United States Retirem ent Bonds which satisfy the
34323432 requirements of Section 86 of the I nternal
34333433 Revenue Code, 26 U.S.C., Section 86, or
34343434 (6) lump-sum distributions from a retirement plan
34353435 which satisfies the re quirements of Section
34363436 402(e) of the Internal Revenue Code, 26 U.S.C.,
34373437 Section 402(e).
34383438 d. The amount of the exemption provided by this pa ragraph
34393439 shall be limited to Five Thousand Five Hundred Dollars
34403440 ($5,500.00) for the 2004 tax year, Seven Thousand Five
34413441 Hundred Dollars ($7,500.00) for the 20 05 tax year and
34423442 Ten Thousand Dollars ($10,000.00) for the tax year
34433443 2006 and for all subsequent tax y ears. Any individual
34443444 who claims the exemption provided for in paragraph 8
34453445 of this subsection shall not be permitted to claim a
34463446 combined total exemption pur suant to this paragraph
34473447 and paragraph 8 of this subsection in an a mount
34483448 exceeding Five Thousand Five Hundred Dollars
34493449 ($5,500.00) for the 2004 tax year, Seven Thousand Five
34503450 Hundred Dollars ($7,500.00) for the 2005 tax ye ar and
34513451 Ten Thousand Dollars ($10,000. 00) for the 2006 tax
34523452 year and all subsequent tax years.
34533453 15. In taxable years beginning after Decemb er 31, 1999, for an
34543454 individual engaged in production agriculture who has filed a
34553455
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35063506 Schedule F form with the taxpayer ’s federal income tax return for
35073507 such taxable year, there shall be excluded fro m taxable income any
35083508 amount which was included as federal taxab le income or federal
35093509 adjusted gross income and which consists of the discharge of an
35103510 obligation by a creditor of the t axpayer incurred to finance the
35113511 production of agricultural products.
35123512 16. In taxable years beginning Dec ember 31, 2000, an amount
35133513 equal to one hundred percent (100%) of the amount of any scholarship
35143514 or stipend received from participation in the Oklahoma P olice Corps
35153515 Program, as established in Section 2-140.3 of Title 47 of the
35163516 Oklahoma Statutes shall be exem pt from taxable income.
35173517 17. a. In taxable years beginning after December 31, 2001,
35183518 and before January 1, 2005, there shall be allowed a
35193519 deduction in the amount of contributions to accounts
35203520 established pursuant to the Oklahoma C ollege Savings
35213521 Plan Act. The deduction shall equal the amount of
35223522 contributions to accounts, but in no event shall the
35233523 deduction for each contributor exceed Two Thousand
35243524 Five Hundred Dollars ($2,500.00) each taxable yea r for
35253525 each account.
35263526 b. In taxable years beginning after December 3 1, 2004,
35273527 each taxpayer shall be al lowed a deduction for
35283528 contributions to accounts established pursuant to the
35293529 Oklahoma College Savings Plan Act . The maximum annual
35303530
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35813581 deduction shall equal the amount of contributions to
35823582 all such accounts plus any contributio ns to such
35833583 accounts by the taxpaye r for prior taxable years after
35843584 December 31, 2004, which were not deducted, but in no
35853585 event shall the deduction for each tax year exceed Ten
35863586 Thousand Dollars ($10,000.00) for each individual
35873587 taxpayer or Twenty Thousand Dol lars ($20,000.00) for
35883588 taxpayers filing a joint return. Any amount of a
35893589 contribution that is not deducted by the taxpayer in
35903590 the year for which the c ontribution is made may be
35913591 carried forward as a deduction from income for the
35923592 succeeding five (5) years . For taxable years
35933593 beginning after December 31, 2005, deductions may be
35943594 taken for contributions and rollovers made during a
35953595 taxable year and up to Apri l 15 of the succeedi ng
35963596 year, or the due date of a taxpayer’s state income tax
35973597 return, excluding extensions, whichever is later.
35983598 Provided, a deduction for the same contribution may
35993599 not be taken for two (2) different taxable years.
36003600 c. In taxable years begi nning after December 31, 2006,
36013601 deductions for contributions made pursuant to
36023602 subparagraph b of this paragrap h shall be limited as
36033603 follows:
36043604
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36553655 (1) for a taxpayer who qualified for the five -year
36563656 carryforward election and who takes a rollover or
36573657 nonqualified withdrawal during that p eriod, the
36583658 tax deduction otherwise available pursuant to
36593659 subparagraph b of this paragra ph shall be reduced
36603660 by the amount which is equal to the rollover or
36613661 nonqualified withdrawal, and
36623662 (2) for a taxpayer who elects to take a rollover or
36633663 nonqualified withdra wal within the same t ax year
36643664 in which a contribution was m ade to the
36653665 taxpayer’s account, the tax deduction otherwise
36663666 available pursuant to subparagraph b of this
36673667 paragraph shall be reduced by the amount of the
36683668 contribution which is e qual to the rollover or
36693669 nonqualified withdra wal.
36703670 d. If a taxpayer elects to take a rollover on a
36713671 contribution for which a deduction has been tak en
36723672 pursuant to subparagraph b of this paragraph within
36733673 one (1) year of the date of contribution, the amount
36743674 of such rollover shall be i ncluded in the adjust ed
36753675 gross income of the taxpayer in th e taxable year of
36763676 the rollover.
36773677 e. If a taxpayer makes a nonqua lified withdrawal of
36783678 contributions for which a deduction was taken pursuant
36793679
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37303730 to subparagraph b of this paragrap h, such nonqualified
37313731 withdrawal and any earnin gs thereon shall be included
37323732 in the adjusted gross income of the t axpayer in the
37333733 taxable year of the nonqualified withdrawal.
37343734 f. As used in this paragraph:
37353735 (1) “non-qualified withdrawal ” means a withdrawal
37363736 from an Oklahoma College Savi ngs Plan account
37373737 other than one of the following:
37383738 (a) a qualified withdrawal,
37393739 (b) a withdrawal made as a result of the de ath
37403740 or disability of the designated beneficiary
37413741 of an account,
37423742 (c) a withdrawal that is made on the accou nt of
37433743 a scholarship or the all owance or payment
37443744 described in Section 135(d)(1)(B) or (C) or
37453745 by the Internal Revenue C ode, received by
37463746 the designated beneficiary to the extent the
37473747 amount of the refund does not exceed the
37483748 amount of the scholarship, allowance , or
37493749 payment, or
37503750 (d) a rollover or change of design ated
37513751 beneficiary as permitted by subs ection F of
37523752 Section 3970.7 of Title 70 of Oklahoma
37533753 Statutes, and
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38053805 (2) “rollover” means the transfer of funds from the
38063806 Oklahoma College Savings Plan to any other plan
38073807 under Section 529 of the Internal Revenue Code.
38083808 18. For taxable years beginning after Dece mber 31, 2005 tax
38093809 years 2006 through 2022, retirement benefits received by an
38103810 individual from any component of the Armed Forces of the United
38113811 States in an amount not to exceed the greater of se venty-five
38123812 percent (75%) of such benefits or Ten Thousand Dollars ($10,000.00)
38133813 shall be exempt from taxable income but in no case less than the
38143814 amount of the exemption provided by paragraph 14 of this subsection.
38153815 For tax year 2022 and subsequent tax years, ret irement benefits
38163816 received by an individual from any compon ent of the Armed Forces of
38173817 the United States shall be exempt from taxable income.
38183818 19. For taxable years beginning after Dec ember 31, 2006,
38193819 retirement benefits received by federal civi l service retirees,
38203820 including survivor annuities, paid in lieu of Social Security
38213821 benefits shall be exempt from taxable income to the extent such
38223822 benefits are included in the federal adjusted gros s income pursuant
38233823 to the provisions of Section 86 of the Int ernal Revenue Code, 26
38243824 U.S.C., Section 86, according to the following sc hedule:
38253825 a. in the taxable year beginning January 1, 2007, twenty
38263826 percent (20%) of such benefits shall be exempt,
38273827 b. in the taxable year beginning January 1, 2008, forty
38283828 percent (40%) of such benefits shall be exempt,
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38803880 c. in the taxable year beginning Januar y 1, 2009, sixty
38813881 percent (60%) of such benefits shall be exempt,
38823882 d. in the taxable year beginning January 1, 2010, eight y
38833883 percent (80%) of such benefits shall be exempt, and
38843884 e. in the taxable year beginning January 1, 2 011, and
38853885 subsequent taxable years, on e hundred percent (100% )
38863886 of such benefits shall be exempt.
38873887 20. a. For taxable years beginning after December 31, 2007, a
38883888 resident individual may deduct up to Ten Thousand
38893889 Dollars ($10,000.00) from Oklahoma adjusted gros s
38903890 income if the individual, or the de pendent of the
38913891 individual, while living, donates one or more human
38923892 organs of the individual to another human being for
38933893 human organ transplantation . As used in this
38943894 paragraph, “human organ” means all or part of a liver,
38953895 pancreas, kidney, intestine, lung, o r bone marrow. A
38963896 deduction that is claimed under this paragraph may be
38973897 claimed in the taxable year in which the human organ
38983898 transplantation occurs.
38993899 b. An individual may claim this ded uction only once, and
39003900 the deduction may be claimed only for unreimbursed
39013901 expenses that are incu rred by the individual and
39023902 related to the organ donation of the individual.
39033903
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39543954 c. The Oklahoma Tax Commission shall promulgate rules to
39553955 implement the provisions of this paragraph which shall
39563956 contain a specific list of expenses which may be
39573957 presumed to qualify for the deduction. The Tax
39583958 Commission shall prescribe necessary requirements for
39593959 verification.
39603960 21. For taxable years beginning after December 31, 2009, there
39613961 shall be exempt from taxable income any amount received by the
39623962 beneficiary of the death benefit for an emergency medical technician
39633963 or a registered emergency medical responder provided by Section 1-
39643964 2505.1 of Title 63 of the Oklahoma Statutes.
39653965 22. For taxable years beginning after December 31, 2008,
39663966 taxable income shall be inc reased by any unemploym ent compensation
39673967 exempted under Section 85(c) of the Internal Revenue Code, 26
39683968 U.S.C., Section 85(c)(2009).
39693969 23. For taxable years beginning after December 31, 2 008, there
39703970 shall be exempt from tax able income any payment in an amount less
39713971 than Six Hundred Dollars ($600.00) received by a person as an award
39723972 for participation in a competitive lives tock show event. For
39733973 purposes of this paragraph, the payment shall be treated as a
39743974 scholarship amount pai d by the entity sponsoring the event and the
39753975 sponsoring entity shall cause the payment to be categorized as a
39763976 scholarship in its books and records.
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40284028 24. For taxable years beginning on or after January 1, 2016,
40294029 taxable income shall be increased by any amoun t of state and local
40304030 sales or income taxes deducted under 26 U.S.C., Section 164 of the
40314031 Internal Revenue Code . If the amount of state and local taxe s
40324032 deducted on the federal return is limited, taxable income on the
40334033 state return shall be increased only by the amount actually deducted
40344034 after any such limitations are applied.
40354035 25. For taxable years beginning after December 31, 2020, each
40364036 taxpayer shall be allowed a deduction for contributions to accounts
40374037 established pursuant to the Achieving a Better Life Expe rience
40384038 (ABLE) Program as established in Section 4001.1 et se q. of Title 56
40394039 of the Oklahoma Statutes . For any tax year, the deduction provided
40404040 for in this paragraph shall not exceed Ten Thousand Dollars
40414041 ($10,000.00) for an individual taxpayer or Twenty Tho usand Dollars
40424042 ($20,000.00) for taxpay ers filing a joint retu rn. Any amount of
40434043 contribution not deducted by the taxpayer in the tax year for which
40444044 the contribution is made may be carried forward as a deduction from
40454045 income for up to five (5) tax years. Deductions may be taken for
40464046 contributions made during the tax y ear and through April 15 of the
40474047 succeeding tax year, or through the due date of a taxpay er’s state
40484048 income tax return excluding extensions, whichever is later.
40494049 Provided, a deduction for the same co ntribution may not be taken in
40504050 more than one (1) tax year.
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41024102 F. 1. For taxable years beginning after December 31, 2004, a
41034103 deduction from the Oklaho ma adjusted gross income of any individual
41044104 taxpayer shall be allowed for q ualifying gains receiving capital
41054105 treatment that are included in the fe deral adjusted gross inc ome of
41064106 such individual taxpayer during the taxable year.
41074107 2. As used in this subsectio n:
41084108 a. “qualifying gains receiving capital treatment ” means
41094109 the amount of net capital gains, as defined in Sect ion
41104110 1222(11) of the Internal Revenue Code, included in an
41114111 individual taxpayer’s federal income tax return that
41124112 result from:
41134113 (1) the sale of real property or tangible personal
41144114 property located within Oklahoma that has been
41154115 directly or indirectly owned by th e individual
41164116 taxpayer for a holding period of at least five
41174117 (5) years prior to the date of the transaction
41184118 from which such net capital gains ari se,
41194119 (2) the sale of stock or the sale of a direct or
41204120 indirect ownership inter est in an Oklahoma
41214121 company, limited liability company, or
41224122 partnership where such stock or owner ship
41234123 interest has been directly or indirectly owned by
41244124 the individual taxpayer for a holding period of
41254125 at least two (2) years prior to the date of the
41264126
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41774177 transaction from which the net capital gains
41784178 arise, or
41794179 (3) the sale of real prope rty, tangible personal
41804180 property or intangible personal property located
41814181 within Oklahoma as part of the sal e of all or
41824182 substantially all of the assets of an Oklahoma
41834183 company, limited lia bility company, or
41844184 partnership or an Oklahoma proprietorship
41854185 business enterprise where such pro perty has been
41864186 directly or indirectly owned by such entity or
41874187 business enterprise or owned by the owners of
41884188 such entity or business enterprise for a period
41894189 of at least two (2) years prior to the d ate of
41904190 the transaction from which th e net capital gains
41914191 arise,
41924192 b. “holding period” means an uninterrupted period of
41934193 time. The holding period shall include any additional
41944194 period when the property was held by another
41954195 individual or entity, if such additional period is
41964196 included in the taxpayer ’s holding period for the
41974197 asset pursuant to the Internal Revenue Code,
41984198 c. “Oklahoma company,” “limited liability company,” or
41994199 “partnership” means an entity whose primary
42004200 headquarters have been located in Oklahoma for at
42014201
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42524252 least three (3) uninterrupted years p rior to the date
42534253 of the transaction from which the net capital gains
42544254 arise,
42554255 d. “direct” means the individual taxpayer directly owns
42564256 the asset,
42574257 e. “indirect” means the individual taxpaye r owns an
42584258 interest in a pass-through entity (or chain of pass-
42594259 through entities) that sells the asset that gives rise
42604260 to the qualifying gains receiving capital treatment.
42614261 (1) With respect to sales of real property or
42624262 tangible personal property located withi n
42634263 Oklahoma, the deduction described in this
42644264 subsection shall not apply unless the pass-
42654265 through entity that makes the sale has held the
42664266 property for not less than five (5) u ninterrupted
42674267 years prior to the date of the transaction that
42684268 created the capital gai n, and each pass-through
42694269 entity included in the chain of ownership has
42704270 been a member, partner, or shareholder of the
42714271 pass-through entity in the tier immediately below
42724272 it for an uninterrupted period of not less than
42734273 five (5) years.
42744274 (2) With respect to sales of stock or ownership
42754275 interest in or sales of all or substantially all
42764276
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43274327 of the assets of an Okl ahoma company, limited
43284328 liability company, partnership or Oklahoma
43294329 proprietorship business enterprise, the deduction
43304330 described in this subsection shall not apply
43314331 unless the pass-through entity that makes the
43324332 sale has held the stock o r ownership interest for
43334333 not less than two (2) uninterrupted years prior
43344334 to the date of the transact ion that created the
43354335 capital gain, and each pass -through entity
43364336 included in the chain of ownership has been a
43374337 member, partner or shareholder of the pass-
43384338 through entity in the tier immediately below it
43394339 for an uninterrupted period of not less than two
43404340 (2) years. For purposes of this division,
43414341 uninterrupted ownership prior to July 1, 2007,
43424342 shall be included in the determinati on of the
43434343 required holding period pr escribed by this
43444344 division, and
43454345 f. “Oklahoma proprietorship business enterprise ” means a
43464346 business enterprise whose income and expenses have
43474347 been reported on Schedule C or F of an individ ual
43484348 taxpayer’s federal income tax r eturn, or any similar
43494349 successor schedule published by the In ternal Revenue
43504350 Service and whose primary headquarters have been
43514351
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44024402 located in Oklahoma for at least three (3)
44034403 uninterrupted years prior to the date of the
44044404 transaction from which the net capital gains arise.
44054405 G. 1. For purposes of comp uting its Oklahoma taxab le income
44064406 under this section, the dividends -paid deduction otherwise allow ed
44074407 by federal law in computing net income of a real estate investment
44084408 trust that is subject to federal income tax shall be added back in
44094409 computing the tax imp osed by this state under this title if the real
44104410 estate investment trust is a captive real estate i nvestment trust.
44114411 2. For purposes of computing its Oklahoma taxable income under
44124412 this section, a taxpayer shall add back o therwise deductible rents
44134413 and interest expenses paid to a ca ptive real estate investment trust
44144414 that is not subject to the provisions of paragraph 1 of this
44154415 subsection. As used in this subsection:
44164416 a. the term “real estate investment trust” or “REIT”
44174417 means the meaning ascribed to such term in Section 856
44184418 of the Internal Revenue Code,
44194419 b. the term “captive real estate investment trust ” means
44204420 a real estate investment trust, the shares or
44214421 beneficial interests of which are not r egularly traded
44224422 on an established securities market and more than
44234423 fifty percent (50%) of the vo ting power or value of
44244424 the beneficial interests or shares of which are owned
44254425
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44764476 or controlled, directly or indirectly, or
44774477 constructively, by a single entity that is :
44784478 (1) treated as an association tax able as a
44794479 corporation under the Inte rnal Revenue Code, and
44804480 (2) not exempt from federal income tax pursuant to
44814481 the provisions of Section 501(a) of the Internal
44824482 Revenue Code.
44834483 The term shall not include a real estate investm ent
44844484 trust that is intended to be re gularly traded on an
44854485 established securities market, and that satisfies the
44864486 requirements of Section 856(a)(5) and (6) of the U.S.
44874487 Internal Revenue Code by reason of Section 856(h)(2)
44884488 of the Internal Revenue Code,
44894489 c. the term “association taxable as a corpor ation” shall
44904490 not include the followi ng entities:
44914491 (1) any real estate investment trust as defined in
44924492 paragraph a of this subsec tion other than a
44934493 “captive real estate investment trust ”, or
44944494 (2) any qualified real estate inve stment trust
44954495 subsidiary under Secti on 856(i) of the Internal
44964496 Revenue Code, other than a qualifi ed REIT
44974497 subsidiary of a “captive real estate investment
44984498 trust”, or
44994499
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45504550 (3) any Listed Australian Property Trust (meaning an
45514551 Australian unit trust registered as a “Managed
45524552 Investment Scheme” under the Australian
45534553 Corporations Act in which the principal class of
45544554 units is listed on a recognized stock exchange in
45554555 Australia and is regularly traded on an
45564556 established securities market), or an entity
45574557 organized as a trust, prov ided that a Listed
45584558 Australian Property Trust owns or controls,
45594559 directly or indirectly, seventy -five percent
45604560 (75%) or more of the voting power or value of the
45614561 beneficial interests or shares of such trust, or
45624562 (4) any Qualified Foreign Entity, meaning a
45634563 corporation, trust, association or partn ership
45644564 organized outside the laws of the United States
45654565 and which satisfies the following criteria:
45664566 (a) at least seventy-five percent (75%) of the
45674567 entity’s total asset value at the close of
45684568 its taxable year is represented by real
45694569 estate assets, as defined i n Section
45704570 856(c)(5)(B) of the Intern al Revenue Code,
45714571 thereby including shares or certificates of
45724572 beneficial interest in an y real estate
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46244624 investment trust, cash and cash equivalents,
46254625 and U.S. Government securities,
46264626 (b) the entity receives a dividend-paid
46274627 deduction comparable to Section 561 of the
46284628 Internal Revenue Cod e, or is exempt from
46294629 entity level tax,
46304630 (c) the entity is required to distribute at
46314631 least eighty-five percent (85%) of its
46324632 taxable income, as computed in the
46334633 jurisdiction in which it is organized, to
46344634 the holders of its shares or cert ificates of
46354635 beneficial interest on an annual basis,
46364636 (d) not more than ten percent ( 10%) of the
46374637 voting power or value in such entity is held
46384638 directly or indirectly or constructively by
46394639 a single entity or individual, or th e shares
46404640 or beneficial interests of such entity are
46414641 regularly traded on an established
46424642 securities market, and
46434643 (e) the entity is organized in a country which
46444644 has a tax treaty with the United States.
46454645 3. For purposes of this subsection, the constructive owne rship
46464646 rules of Section 318(a) of the Internal Revenue Code, as modified by
46474647 Section 856(d)(5) of the Internal Revenue Code, shall apply in
46484648
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46994699 determining the ownership of stock, assets, or net profits of any
47004700 person.
47014701 4. A real estate investment trust that does not become
47024702 regularly traded on an e stablished securities ma rket within one (1)
47034703 year of the date on which it first b ecomes a real estate investment
47044704 trust shall be deemed not to have been regularly traded on an
47054705 established securities market, retroactive to the date it first
47064706 became a real estate investment trust, and shall file an amended
47074707 return reflecting such retroactiv e designation for any tax year or
47084708 part year occurring during its initial year of status as a real
47094709 estate investment trust. For purposes of this subsection, a real
47104710 estate investment trust becomes a re al estate investment trust on
47114711 the first day it has both met the requirements of Section 856 of the
47124712 Internal Revenue Code and has elected to be treated as a real estate
47134713 investment trust pursuant to Section 856(c)(1) of the Internal
47144714 Revenue Code.
47154715 SECTION 2. This act shall become effective November 1, 2022.
47164716
47174717 58-2-2346 QD 1/20/2022 7:17:08 PM