OK
Oklahoma Senate Bill SB1843

Oklahoma 2022 Regular Session

Oklahoma Senate Bill SB1843 Compare Versions

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28-ENGROSSED SENATE
29-BILL NO. 1843 By: Leewright of the Senate
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33+SENATE BILL NO. 1843 By: Leewright
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3839 An Act relating to income tax; amending 68 O.S. 2021,
3940 Section 2358, which relates t o adjustments to arrive
4041 at Oklahoma taxable income and Oklahoma adjusted
4142 gross income; modifying the payroll apportionment
4243 factor to include expenditures for employees working
4344 from home that reside in this state but employed by
4445 business outside this state ; updating statutory
4546 language; and providing an effective date .
4647
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5051 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
5152 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2358, is
5253 amended to read as follows:
5354 Section 2358. For all tax years beginning after December 31,
5455 1981, taxable income and adjusted gross i ncome shall be adjusted to
5556 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
5657 as required by this section.
5758 A. The taxable income of any taxpayer sh all be adjusted to
5859 arrive at Oklahoma taxable income f or corporations and Oklahoma
5960 adjusted gross income for individuals, as follows:
6061 1. There shall be added interest income on obligations of any
6162 state or political subdivisi on thereto which is not otherwi se
6263 exempted pursuant to other laws of this state, to t he extent that
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8991 such interest is not included in taxable income and adjusted gross
9092 income.
9193 2. There shall be deducted amounts included in such income that
9294 the state is prohibited from taxing because of the provisions of the
9395 Federal Constitution, the State Constitution, federal laws , or laws
9496 of Oklahoma.
9597 3. The amount of any federal net operating loss deduction shall
9698 be adjusted as follows:
9799 a. For carryovers and carrybacks to taxable years
98100 beginning before January 1, 1981, the amount of any
99101 net operating loss deduction allowed to a taxpayer f or
100102 federal income tax purposes shall be reduced to an
101103 amount which is the same portion thereof as the loss
102104 from sources within this sta te, as determined pursuant
103105 to this section and Section 2362 of this title, for
104106 the taxable year in which such loss is sus tained is of
105107 the total loss for such year;
106108 b. For carryovers and carryba cks to taxable years
107109 beginning after December 31, 1980, the amo unt of any
108110 net operating loss de duction allowed for the taxable
109111 year shall be an amou nt equal to the aggregate of the
110112 Oklahoma net operating loss carryovers and carrybacks
111113 to such year. Oklahoma net operating losses shall be
112114 separately determined by refer ence to Section 172 of
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139142 the Internal Revenue Code, 26 U.S.C., Section 172, as
140143 modified by the Oklahoma Income Tax Act, Sec tion 2351
141144 et seq. of this title, and shall be allowed without
142145 regard to the existence of a federal net operating
143146 loss. For tax years beginning after December 31,
144147 2000, and ending before January 1, 2008, the years to
145148 which such losses may be carried shall be determined
146149 solely by reference to Section 172 of the Internal
147150 Revenue Code, 26 U.S.C., Section 172, with the
148151 exception that the term s “net operating loss” and
149152 “taxable income” shall be replaced with “Oklahoma net
150153 operating loss” and “Oklahoma taxable income”. For
151154 tax years beginning after December 31, 2007, and
152155 ending before January 1, 2009, years to which such
153156 losses may be carried b ack shall be limited to two (2)
154157 years. For tax years beginning after December 31,
155158 2008, the years to which such losses m ay be carried
156159 back shall be determined solely by reference to
157160 Section 172 of the Internal Revenue Code, 26 U.S.C.,
158161 Section 172, with th e exception that the terms “net
159162 operating loss” and “taxable income” shall be replaced
160163 with “Oklahoma net operating loss ” and “Oklahoma
161164 taxable income”.
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188192 4. Items of the following nature shall be allocated as
189193 indicated. Allowable deductions attributable t o items separately
190194 allocable in subparagraphs a, b, and c of this paragraph, whether or
191195 not such items of income were act ually received, shall be allocated
192196 on the same basis as those items:
193197 a. Income from real and tangible personal property, such
194198 as rents, oil and mining production or roy alties, and
195199 gains or losses from sales of such prope rty, shall be
196200 allocated in accordanc e with the situs of such
197201 property;
198202 b. Income from intangible personal pro perty, such as
199203 interest, dividends, patent or copyright royalt ies,
200204 and gains or losses from sal es of such property, shall
201205 be allocated in accordanc e with the domiciliary situs
202206 of the taxpayer, except that:
203207 (1) where such property has acquired a nonunitary
204208 business or commercial situs apart from the
205209 domicile of the taxpayer such income shall be
206210 allocated in accordance with such business or
207211 commercial situs; interest income from
208212 investments held to generate working capital for
209213 a unitary business enterprise sh all be included
210214 in apportionable income; a resident trust or
211215 resident estate shall be treated a s having a
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238243 separate commercial or business situs ins ofar as
239244 undistributed income is conc erned, but shall not
240245 be treated as having a separate commercial or
241246 business situs insofar as distributed income is
242247 concerned,
243248 (2) for taxable years beginning after Dece mber 31,
244249 2003, capital or ordinary gains or losses f rom
245250 the sale of an ownership interes t in a publicly
246251 traded partnership, as defined by Section 7704(b)
247252 of the Internal Revenue Code, shall be allocated
248253 to this state in the ratio of the original cost
249254 of such partnership’s tangible property in this
250255 state to the original cost of such partnershi p’s
251256 tangible property everywhere, as determined at
252257 the time of the sale; if more than fifty percent
253258 (50%) of the value of the partnersh ip’s assets
254259 consists of intangibl e assets, capital or
255260 ordinary gains or losses from t he sale of an
256261 ownership interest in the partnership shall be
257262 allocated to this state in accordance with the
258263 sales factor of the partnership for its first
259264 full tax period immediately preceding its tax
260265 period during which the ownership interest in the
261266 partnership was sold; the provisions of th is
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288294 division shall only apply if the capital or
289295 ordinary gains or losses f rom the sale of an
290296 ownership interest in a partnership do not
291297 constitute qualifying gain receiv ing capital
292298 treatment as defined in subparagraph a o f
293299 paragraph 2 of subsection F of thi s section,
294300 (3) income from such property which is required to be
295301 allocated pursuant to the provisions of paragraph
296302 5 of this subsection shall be allocated as herein
297303 provided;
298304 c. Net income or loss from a business activit y which is
299305 not a part of business ca rried on within or without
300306 the state of a unitary character shall be sepa rately
301307 allocated to the state in which such activity is
302308 conducted;
303309 d. In the case of a manufact uring or processing
304310 enterprise the business of which in Oklahoma consists
305311 solely of marketing its products by:
306312 (1) sales having a situs without this state, shipp ed
307313 directly to a point from without the state to a
308314 purchaser within the state, commonly known as
309315 interstate sales,
310316 (2) sales of the product stored in public warehouses
311317 within the state pursuant to “in transit”
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338345 tariffs, as prescribed and allowed by the
339346 Interstate Commerce Commission, to a purchaser
340347 within the state,
341348 (3) sales of the product stored in public warehouses
342349 within the state where the shipme nt to such
343350 warehouses is not covered by “in transit”
344351 tariffs, as prescribed and allowed by the
345352 Interstate Commerce Commission, to a purchaser
346353 within or without the state,
347354 the Oklahoma net income shall , at the option of the
348355 taxpayer, be that portion of the total net income of
349356 the taxpayer for federal income tax purposes derived
350357 from the manufacture and/or processi ng and sales
351358 everywhere as determined by the ratio of the sale s
352359 defined in this section mad e to the purchaser within
353360 the state to the total sales e verywhere. The term
354361 “public warehouse” as used in this subparagraph means
355362 a licensed public warehouse, the p rincipal business of
356363 which is warehousing merchandise for the public;
357364 e. In the case of insurance companies, Oklahoma taxable
358365 income shall be taxab le income of the taxpayer for
359366 federal tax purposes, as adjusted for the adjustments
360367 provided pursuant to the provisions of paragraphs 1
361368 and 2 of this subsection, apportion ed as follows:
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388396 (1) except as otherwise provided by division (2) of
389397 this subparagraph, taxable income of an insurance
390398 company for a taxable year shall be apportioned
391399 to this state by multiplying such income by a
392400 fraction, the numerator of which is the direc t
393401 premiums written for insu rance on property or
394402 risks in this state, and the denomina tor of which
395403 is the direct premiums written for insurance on
396404 property or risks everywhere. For purposes of
397405 this subsection, the term “direct premiums
398406 written” means the total amount of direct
399407 premiums written, assessments and annuity
400408 considerations as rep orted for the taxable year
401409 on the annual statement filed by the company with
402410 the Insurance Commissioner in th e form approved
403411 by the National Association of Insurance
404412 Commissioners, or such other for m as may be
405413 prescribed in lieu thereof,
406414 (2) if the principal source of premiums written by an
407415 insurance company consists of premiums for
408416 reinsurance accepted by it, th e taxable income of
409417 such company shall be apportioned to this state
410418 by multiplying such income by a fraction, the
411419 numerator of which is the sum of (a) direct
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438447 premiums written for insu rance on property or
439448 risks in this state, plus (b) premiums written
440449 for reinsurance accepted in respect of property
441450 or risks in this state, and the denominator o f
442451 which is the sum of (c) direct premiums written
443452 for insurance on property or risks everywhere ,
444453 plus (d) premiums written for reinsurance
445454 accepted in respect of proper ty or risks
446455 everywhere. For purposes of this paragraph,
447456 premiums written for reinsuranc e accepted in
448457 respect of property or risks in this state,
449458 whether or not otherwise determinable , may at the
450459 election of the company be determined on the
451460 basis of the proportion which premiums written
452461 for insurance accepted from co mpanies
453462 commercially domiciled in Oklahoma bears to
454463 premiums written for reinsurance accepted from
455464 all sources, or altern atively in the proportion
456465 which the sum of the direct premiums written fo r
457466 insurance on property or risks in this state by
458467 each ceding company from which reinsur ance is
459468 accepted bears to the sum of the total direct
460469 premiums written by each such ceding comp any for
461470 the taxable year.
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488498 5. The net income or loss remaining after the separate
489499 allocation in paragraph 4 of this subsection, being t hat which is
490500 derived from a unitary business enterprise, shall be apportioned to
491501 this state on the basis of the arithmeti cal average of three factors
492502 consisting of property, payroll, and sales or gross revenue
493503 enumerated as subparagraphs a, b , and c of this paragraph. Net
494504 income or loss as used in this paragraph includes that derived from
495505 patent or copyright royalties, purc hase discounts, and interest on
496506 accounts receivable relating to or arising from a business activity,
497507 the income from which is apportion ed pursuant to this subsect ion,
498508 including the sale or other disposition of such prope rty and any
499509 other property used in t he unitary enterprise. Deductions used in
500510 computing such net income or los s shall not include taxes based on
501511 or measured by income . Provided, for corporations w hose property
502512 for purposes of the tax imposed by Section 2 355 of this title has an
503513 initial investment cost equaling or exceeding Two Hund red Million
504514 Dollars ($200,000,00 0.00) and such investment is made on or after
505515 July 1, 1997, or for corporations which e xpand their property or
506516 facilities in this state and such expansion has an investment cost
507517 equaling or exceeding Two Hundred Million Doll ars ($200,000,000.00)
508518 over a period not to exceed three (3) years, and such expansion is
509519 commenced on or after January 1, 2000, the three factors shall be
510520 apportioned with prope rty and payroll, each comprising twe nty-five
511521 percent (25%) of the apportionment factor and sales comprising fif ty
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538549 percent (50%) of the apportionment factor . The apportionment
539550 factors shall be compu ted as follows:
540551 a. The property factor is a fraction, the numerator of
541552 which is the average va lue of the taxpayer’s real and
542553 tangible personal property owned or rented a nd used in
543554 this state during the tax period and the denomina tor
544555 of which is the averag e value of all the taxpayer’s
545556 real and tangible personal pr operty everywhere owned
546557 or rented and used during the tax period.
547558 (1) Property, the income from which is separa tely
548559 allocated in paragraph 4 of this subsection,
549560 shall not be included in determinin g this
550561 fraction. The numerator of the fraction shall
551562 include a portion of the investment in
552563 transportation and other equipment having no
553564 fixed situs, such as rolling stoc k, buses,
554565 trucks, and trailers, including machinery and
555566 equipment carried thereon, air planes,
556567 salespersons’ automobiles, and other similar
557568 equipment, in the proportion that miles tr aveled
558569 in Oklahoma by such equipment bears to total
559570 miles traveled,
560571 (2) Property owned by the taxpayer is valued at its
561572 original cost. Property rented by the ta xpayer
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588600 is valued at eight times the net annual rental
589601 rate. Net annual rental rate is the annu al
590602 rental rate paid by the taxpayer, less any annual
591603 rental rate received by the taxpayer from
592604 subrentals,
593605 (3) The average value of pro perty shall be determined
594606 by averaging the values at the beginning and
595607 ending of the tax period, but the Oklahoma Tax
596608 Commission may require the averaging of monthly
597609 values during the tax period if r easonably
598610 required to reflect properly the average value of
599611 the taxpayer’s property;
600612 b. The payroll factor is a fraction, the numerator of
601613 which is the total compensation for ser vices rendered
602614 in the state during the tax per iod, and the
603615 denominator of which is the total compensation for
604616 services rendered everywh ere during the tax period .
605617 “Compensation”, as used in this subsection means those
606618 paid-for services to the extent relate d to the unitary
607619 business but does not include officers’ salaries,
608620 wages, and other compensation.
609621 (1) In the case of a transportation e nterprise, the
610622 numerator of the fraction shall include a portion
611623 of such expenditure in connection with employees
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638651 operating equipment over a fixed route, such as
639652 railroad employees, airline pilots, or bus
640653 drivers, in this state only a part of the time,
641654 in the proportion that milea ge traveled in
642655 Oklahoma bears to total mileage traveled by s uch
643656 employees,
644657 (2) In any case the numerator of the fraction shall
645658 include a portion of such expenditures in
646659 connection with itinerant employees, such as
647660 traveling salespersons, in this state onl y a part
648661 of the time, in the proportion that time spent in
649662 Oklahoma bears to total time spent in furtherance
650663 of the enterprise by such employees ,
651664 (3) In any case the numerator of the fraction shall
652665 include expenditures of emplo yees who reside in
653666 this state and work for a business located
654667 outside this state, in the proportion that time
655668 spent working from home bears to the total time
656669 spent working from home and other location
657670 outside of this state;
658671 c. The sales factor is a fract ion, the numerator of which
659672 is the total sales or gross revenue of the taxpayer in
660673 this state during the tax period, and the den ominator
661674 of which is the total sales or gross revenue of the
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688702 taxpayer everywhere during the tax period. “Sales”,
689703 as used in this subsection does not include sales or
690704 gross revenue which are separately alloc ated in
691705 paragraph 4 of this subsection.
692706 (1) Sales of tangible personal property have a situs
693707 in this state if the property is delivered or
694708 shipped to a purchaser other than the United
695709 States government, within this state r egardless
696710 of the FOB point or oth er conditions of the sale;
697711 or the property is ship ped from an office, store,
698712 warehouse, factory, or other place of storage in
699713 this state and (a) the purchaser is the United
700714 States government or (b) the taxpayer is not
701715 doing business in the state of the dest ination of
702716 the shipment.
703717 (2) In the case of a rai lroad or interurban railway
704718 enterprise, the numerator of the fr action shall
705719 not be less than the allocation of revenues to
706720 this state as shown in its annual report to the
707721 Corporation Commission.
708722 (3) In the case of an airline, truck, or bus
709723 enterprise or freight car, tank car, refrigerator
710724 car, or other railroad equipm ent enterprise, the
711725 numerator of the fraction shall include a portio n
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738753 of revenue from interstate transportatio n in the
739754 proportion that interstat e mileage traveled in
740755 Oklahoma bears to total int erstate mileage
741756 traveled.
742757 (4) In the case of an oil, gasoline o r gas pipeline
743758 enterprise, the numer ator of the fraction shall
744759 be either the total of traffic units of the
745760 enterprise within Oklahoma or the re venue
746761 allocated to Oklahoma based upon miles moved , at
747762 the option of the taxpayer, and the denominator
748763 of which shall be the total of traffic units o f
749764 the enterprise or the revenue of the enterprise
750765 everywhere as appropriat e to the numerator. A
751766 “traffic unit” is hereby defined as the
752767 transportation for a distance of one (1) mile of
753768 one (1) barrel of oil, one (1) gal lon of
754769 gasoline, or one thousand (1,0 00) cubic feet of
755770 natural or casinghead gas, as the case may be.
756771 (5) In the case of a telephone or telegra ph or other
757772 communication enterprise, the numerato r of the
758773 fraction shall include that portion of the
759774 interstate revenue as is allocated pursuant to
760775 the accounting procedures prescri bed by the
761776 Federal Communications Commiss ion; provided that
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788804 in respect to each corporation or b usiness entity
789805 required by the Federal Communications Commission
790806 to keep its books and recor ds in accordance with
791807 a uniform system of accounts prescribed by such
792808 Commission, the intrastate net income sh all be
793809 determined separately in t he manner provided by
794810 such uniform system of accou nts and only the
795811 interstate income shall be subject to allocati on
796812 pursuant to the provisions of this subsection.
797813 Provided further, that the gross revenue factors
798814 shall be those as are determined pursuant t o the
799815 accounting procedures prescribed by the Fede ral
800816 Communications Commission.
801817 In any case where the apportionm ent of the three factors
802818 prescribed in this paragraph attributes to O klahoma a portion of net
803819 income of the enterprise out of all appropriate proportion to the
804820 property owned and/or business tr ansacted within this state, because
805821 of the fact that one or mor e of the factors so prescribed are no t
806822 employed to any appreciable ex tent in furtherance of the enterprise;
807823 or because one or more factors not so prescribed are emp loyed to a
808824 considerable extent in furtherance of the enterprise; or because of
809825 other reasons, the Tax Commission is empowered to permit, after a
810826 showing by taxpayer that an excessive portion of net inco me has been
811827 attributed to Oklaho ma, or require, when i n its judgment an
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838855 insufficient portion of net income has been attributed to Oklahoma,
839856 the elimination, substitution, or use of ad ditional factors, or
840857 reduction or increase in the weight of such prescrib ed factors.
841858 Provided, however, that any such variance from such prescribed
842859 factors which has the effect of increasing the portion of net income
843860 attributable to Oklahoma must not be i nherently arbitrary, and
844861 application of the recomputed final apportionmen t to the net income
845862 of the enterprise must attribute t o Oklahoma only a reasonable
846863 portion thereof.
847864 6. For calendar years 1997 and 1998, the owne r of a new or
848865 expanded agricultural c ommodity processing facility in this state
849866 may exclude from Oklahoma taxa ble income, or in the case of a n
850867 individual, the Oklah oma adjusted gross income, fi fteen percent
851868 (15%) of the investment by the owner in the new o r expanded
852869 agricultural commodity pro cessing facility. For calendar year 1999,
853870 and all subsequent years, the percentage, not to exceed fifte en
854871 percent (15%), avail able to the owner of a new or expanded
855872 agricultural commodity processing facility in this st ate claiming
856873 the exemption shall be a djusted annually so that the tot al estimated
857874 reduction in tax liability d oes not exceed One Million Doll ars
858875 ($1,000,000.00) annually. The Tax Commission sh all promulgate rules
859876 for determining the percentage of the inve stment which each eligible
860877 taxpayer may exclude. The exclusion provided by this paragraph
861878 shall be taken in the taxable year when the invest ment is made. In
862879
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888906 the event the total reduction in t ax liability authorized by this
889907 paragraph exceeds One Million D ollars ($1,000,000.00) in any
890908 calendar year, the Tax Commission shall permit any excess over One
891909 Million Dollars ($1,000,000.00) and shall fa ctor such excess into
892910 the percentage for subsequent years. Any amount of the exemption
893911 permitted to be excluded pu rsuant to the provisions of this
894912 paragraph but not used in any year m ay be carried forward as an
895913 exemption from income pursuant to the provis ions of this paragraph
896914 for a period not exceeding si x (6) years following the year in which
897915 the investment was orig inally made.
898916 For purposes of this par agraph:
899917 a. “Agricultural commodi ty processing facility” means
900918 building, structures, fixtures and impro vements used
901919 or operated primarily for the processing or production
902920 of marketable products from agricultural commodit ies.
903921 The term shall also mean a dair y operation that
904922 requires a depreciable investment of at least Two
905923 Hundred Fifty Thousand Dollars ($25 0,000.00) and which
906924 produces milk from dairy cows. The term does not
907925 include a facility that provides only, and noth ing
908926 more than, storage, cleaning, dry ing or transportation
909927 of agricultural commodities, and
910928 b. “Facility” means each part of the facility which is
911929 used in a process primarily for:
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938957 (1) the processing of agricultural commodities,
939958 including receiving or stori ng agricultural
940959 commodities, or the p roduction of milk at a dairy
941960 operation,
942961 (2) transporting the agricultural commodities or
943962 product before, during or after the pr ocessing,
944963 or
945964 (3) packaging or otherwise preparing the product for
946965 sale or shipment.
947966 7. Despite any provision to the contrary in paragraph 3 of this
948967 subsection, for taxable years beginning after Decembe r 31, 1999, in
949968 the case of a taxpayer which has a farm ing loss, such farming loss
950969 shall be considered a net operating loss carryback in accordance
951970 with and to the extent of the Intern al Revenue Code, 26 U.S.C.,
952971 Section 172(b)(G). However, the amount of th e net operating loss
953972 carryback shall not exceed the le sser of:
954973 a. Sixty Thousand Dollars ($60,000.00), or
955974 b. the loss properly shown on Schedule F of the Internal
956975 Revenue Service Form 1040 reduced by one-half (1/2) of
957976 the income from all other sources othe r than reflected
958977 on Schedule F.
959978 8. In taxable years beginning after December 31, 1 995, all
960979 qualified wages equal to the federal income tax credit set forth in
961980 26 U.S.C.A., Section 45 A, shall be deducted from taxabl e income.
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9881008 The deduction allowed pursuant to this paragraph sh all only be
9891009 permitted for the tax years in which the federal t ax credit pursuant
9901010 to 26 U.S.C.A., Section 45A, is allowed . For purposes of this
9911011 paragraph, “qualified wages” means those wages use d to calculate the
9921012 federal credit pursuan t to 26 U.S.C.A., Sec tion 45A.
9931013 9. In taxable years beginning after December 31, 20 05, an
9941014 employer that is eligible for and utilizes the Safety Pa ys OSHA
9951015 Consultation Service provided by the Oklahoma Department of Labor
9961016 shall receive an exemption from taxa ble income in the am ount of One
9971017 Thousand Dollars ($1,0 00.00) for the tax year that the service is
9981018 utilized.
9991019 10. For taxable years beginning on or after January 1, 2010,
10001020 there shall be added to Oklahoma taxable inco me an amount equal to
10011021 the amount of deferred income not included in such taxable income
10021022 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
10031023 as amended by Section 1231 of th e American Recovery and Reinvestment
10041024 Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
10051025 Oklahoma taxable income an amount equal to the amount of deferred
10061026 income included in such taxa ble income pursuant to Section 108(i)(1)
10071027 of the Internal Revenu e Code by Section 1231 of the America n
10081028 Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
10091029 11. For taxable years beginning on or after January 1, 2019,
10101030 there shall be subtracted from Oklah oma taxable income or adjusted
10111031 gross income any item of income or gain, and there shall be added to
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10381059 Oklahoma taxable income or adjus ted gross income any item of loss or
10391060 deduction that in the absence of an election pursuant to t he
10401061 provisions of the Pass -Through Entity Tax Equity Act of 2019 would
10411062 be allocated to a memb er or to an indirect member of an ele cting
10421063 pass-through entity pursua nt to Section 2351 et seq. of this title,
10431064 if (i) the electing pass-through entity has accounted for such item
10441065 in computing its Oklahoma net entity income or loss pursuant to the
10451066 provisions of the Pass-Through Entity Tax Equi ty Act of 2019, and
10461067 (ii) the total amount of tax attributable to any resu lting Oklahoma
10471068 net entity income has been paid . The Oklahoma Tax Commission shall
10481069 promulgate rules for the reporting of such exclusion to direct and
10491070 indirect members of the electing pass-through entity. As used in
10501071 this paragraph, “electing pass-through entity”, “indirect member”,
10511072 and “member” shall be defined in the same manner as pres cribed by
10521073 Section 2355.1P-2 of this title. Notwithstanding the application of
10531074 this paragraph, the a djusted tax basis of any ownersh ip interest in
10541075 a pass-through entity for purposes of Section 2351 et seq. of this
10551076 title shall be equal to its adjusted tax b asis for federal income
10561077 tax purposes.
10571078 B. 1. The taxable income of any corporation shall be further
10581079 adjusted to arrive at Oklahoma taxable income, except those
10591080 corporations electing treatment as provided in subchapter S of the
10601081 Internal Revenue Code, 26 U. S.C., Section 1361 et seq., and Section
10611082 2365 of this title, ded uctions pursuant to the provisions of the
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10881110 Accelerated Cost Recovery S ystem as defined and allowed in the
10891111 Economic Recovery Tax Act of 1981, Public Law 97 -34, 26 U.S.C.,
10901112 Section 168, for depreci ation of assets placed into service after
10911113 December 31, 1981, sh all not be allowed in calculating Okl ahoma
10921114 taxable income. Such corporations shall be allowed a deduction for
10931115 depreciation of assets placed into service after Dece mber 31, 1981,
10941116 in accordance with provisions of the Internal Revenue Code, 26
10951117 U.S.C., Section 1 et seq., in effect immediately pr ior to the
10961118 enactment of the Acce lerated Cost Recovery System . The Oklahoma tax
10971119 basis for all such assets placed into service a fter December 31,
10981120 1981, calculated in this section shall be retained and utilized for
10991121 all Oklahoma income tax purposes through th e final disposition of
11001122 such assets.
11011123 Notwithstanding any other provisions of the Oklahoma Income Tax
11021124 Act, Section 2351 et seq. o f this title, or of the Inter nal Revenue
11031125 Code to the contrary, this subsection shall control calculation of
11041126 depreciation of asset s placed into service after Dece mber 31, 1981,
11051127 and before January 1, 1983 .
11061128 For assets placed in service and held by a corporati on in which
11071129 accelerated cost recovery system was previously disallowed, an
11081130 adjustment to taxable income is required in the first taxable year
11091131 beginning after December 31, 1982, to reconcile the basis of such
11101132 assets to the basis allowed in the Internal Reve nue Code. The
11111133 purpose of this adjustment is to equalize the basis and allowance
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11381161 for depreciation accounts between that reported to the Internal
11391162 Revenue Service and that reported to Oklahoma.
11401163 2. For tax years beginning on or after January 1, 2009, and
11411164 ending on or before December 31, 2009, there shall be added to
11421165 Oklahoma taxable income any amou nt in excess of One Hundred Seventy -
11431166 five Thousand Dollars ($175,000.0 0) which has been deducted as a
11441167 small business expense under Internal Revenue Code, Section 179 as
11451168 provided in the American Recovery and Reinvestment Act of 2009.
11461169 C. 1. For taxable years beginning after December 31, 1987, the
11471170 taxable income of any corpor ation shall be further adjusted to
11481171 arrive at Oklahoma taxable income for transfers of technolog y to
11491172 qualified small business es located in Oklahoma. Such transferor
11501173 corporation shall be a llowed an exemption from taxable inco me of an
11511174 amount equal to the amo unt of royalty payment received as a resu lt
11521175 of such transfer; provided, however, such amount sh all not exceed
11531176 ten percent (10%) of the amount of gross proceeds received by such
11541177 transferor corporation as a result of the techn ology transfer. Such
11551178 exemption shall be allowed for a period not to exce ed ten (10) years
11561179 from the date of receipt of the firs t royalty payment accruing fr om
11571180 such transfer. No exemption may be claimed for transfers of
11581181 technology to qualified small busine sses made prior to January 1,
11591182 1988.
11601183 2. For purposes of this subsection:
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11871211 a. “Qualified small business” means an entity, whether
11881212 organized as a corporation, partnership, or
11891213 proprietorship, organized for profit with its
11901214 principal place of business located wi thin this state
11911215 and which meets the following criteria:
11921216 (1) Capitalization of not more than Two Hundred Fifty
11931217 Thousand Dollars ($250,000.00),
11941218 (2) Having at least fifty percent (50%) of its
11951219 employees and assets located i n Oklahoma at the
11961220 time of the transfer, and
11971221 (3) Not a subsidiary or a ffiliate of the transferor
11981222 corporation;
11991223 b. “Technology” means a proprietary process, formula,
12001224 pattern, device, or compilation of scientific or
12011225 technical information which is not in the pu blic
12021226 domain;
12031227 c. “Transferor corporatio n” means a corporation which is
12041228 the exclusive and undisputed owner of th e technology
12051229 at the time the transfer is made; and
12061230 d. “Gross proceeds” means the total amount of
12071231 consideration for the transfer of technology, whe ther
12081232 the consideration is in money or otherwise.
12091233 D. 1. For taxable years beginning after December 31, 2005, the
12101234 taxable income of any corporation, estate , or trust, shall be
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12371262 further adjusted for qualifying gains receiving capital treatment .
12381263 Such corporations, estates, or trusts shall be all owed a deduction
12391264 from Oklahoma taxable income for the amount of qualifyi ng gains
12401265 receiving capital treatment earned by the corpor ation, estate, or
12411266 trust during the taxable year and included in the federal taxable
12421267 income of such corporation, estate, or trust.
12431268 2. As used in this subsection:
12441269 a. “qualifying gains receiving capita l treatment” means
12451270 the amount of net capital gains, as defi ned in Section
12461271 1222(11) of the Internal Revenue Code, included in the
12471272 federal income tax return of the corporation, estate ,
12481273 or trust that result from:
12491274 (1) the sale of real property or tangible pers onal
12501275 property located within Oklahoma that has been
12511276 directly or indirectly owned by the corporation,
12521277 estate, or trust for a holding period of at l east
12531278 five (5) years prior to the date of the
12541279 transaction from which such net capital gains
12551280 arise,
12561281 (2) the sale of stock or on the sale of an ownership
12571282 interest in an Oklahoma company, limited
12581283 liability company, or partnership where such
12591284 stock or ownership interest has been directly or
12601285 indirectly owned by the corporation, estat e, or
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12871313 trust for a holding period of at least three (3)
12881314 years prior to the date of the transaction from
12891315 which the net capital gains arise, or
12901316 (3) the sale of real property, tangible per sonal
12911317 property, or intangible personal property located
12921318 within Oklahoma as part of the sale of all or
12931319 substantially all of the assets of an Oklahoma
12941320 company, limited lia bility company, or
12951321 partnership where such property has been directly
12961322 or indirectly owned by such entity owned by the
12971323 owners of such entity, and used in or deri ved
12981324 from such entity for a period of a t least three
12991325 (3) years prior to the date of the transactio n
13001326 from which the net cap ital gains arise,
13011327 b. “holding period” means an uninterrupted period of
13021328 time. The holding period shall includ e any additional
13031329 period when the property was held by another
13041330 individual or entity, if such additional period is
13051331 included in the taxpayer’s holding period for the
13061332 asset pursuant to the Internal Revenue Code,
13071333 c. “Oklahoma company”, “limited liability compan y”, or
13081334 “partnership” means an entity whose primary
13091335 headquarters have been located in Oklahoma for at
13101336 least three (3) uninterrupted years prior to the date
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13371364 of the transaction from which the net capital gains
13381365 arise,
13391366 d. “direct” means the taxpayer directly ow ns the asset,
13401367 and
13411368 e. “indirect” means the taxpayer owns an inter est in a
13421369 pass-through entity (or chain of pass -through
13431370 entities) that sells the asset that gives rise to the
13441371 qualifying gains receiving capital treatment.
13451372 (1) With respect to sales of real pro perty or
13461373 tangible personal property located within
13471374 Oklahoma, the deduction described in this
13481375 subsection shall not apply unless the pass-
13491376 through entity that makes the sale has held the
13501377 property for not less than five (5) uninterrupted
13511378 years prior to the dat e of the transaction that
13521379 created the capital gain, and each pas s-through
13531380 entity included in the chain of ownership has
13541381 been a member, partner, or shareholder of the
13551382 pass-through entity in the tier immediately below
13561383 it for an uninterrupted period of not le ss than
13571384 five (5) years.
13581385 (2) With respect to sales of stock or ow nership
13591386 interest in or sales of all or substantially al l
13601387 of the assets of an Oklahoma company, limited
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13871415 liability company, or partnership, the deduction
13881416 described in this subsection shall not a pply
13891417 unless the pass-through entity that makes the
13901418 sale has held the stock or ownership interest or
13911419 the assets for not less than three (3)
13921420 uninterrupted years prior to the date of the
13931421 transaction that created the capital gain, and
13941422 each pass-through entity included in the chain of
13951423 ownership has been a member, partner or
13961424 shareholder of the pass -through entity in the
13971425 tier immediately below it for an uninterrupted
13981426 period of not less than three (3) years.
13991427 E. The Oklahoma adjusted gross income of any individual
14001428 taxpayer shall be further adjusted as follows to arrive at Oklah oma
14011429 taxable income:
14021430 1. a. In the case of individuals, t here shall be added or
14031431 deducted, as the case may be, the difference necessary
14041432 to allow personal exemptions of One Thousand Dollars
14051433 ($1,000.00) in lieu of the perso nal exemptions allowed
14061434 by the Internal Revenue Code.
14071435 b. There shall be allowed an additional exemption of One
14081436 Thousand Dollars ($1,000.00) for each taxpayer or
14091437 spouse who is blind at the close of the tax year . For
14101438 purposes of this subparagraph, an individ ual is blind
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14371466 only if the central visu al acuity of the individual
14381467 does not exceed 20/200 in th e better eye with
14391468 correcting lenses, or if the visual acuity of the
14401469 individual is greater than 20/200, but is accompanied
14411470 by a limitation in the fields of vision s uch that the
14421471 widest diameter of the v isual field subtends an angle
14431472 no greater than twenty (20 ) degrees.
14441473 c. There shall be allowed an additional exemption of One
14451474 Thousand Dollars ($1,000.00) for each taxpayer or
14461475 spouse who is sixty-five (65) years of age or older at
14471476 the close of the tax year based upon the filing status
14481477 and federal adjusted gross i ncome of the taxpayer.
14491478 Taxpayers with the following filing status may claim
14501479 this exemption if the federal adjusted gross income
14511480 does not exceed:
14521481 (1) Twenty-five Thousand Dollars ($25,000.00) if
14531482 married and filing jointly;
14541483 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
14551484 if married and filing separately;
14561485 (3) Fifteen Thousand Dollars ($15,000.00) if single;
14571486 and
14581487 (4) Nineteen Thousand Dol lars ($19,000.00) if a
14591488 qualifying head of household.
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14861516 Provided, for taxable years beginning after December
14871517 31, 1999, amounts included in the calculation of
14881518 federal adjusted gross income pursuant to the
14891519 conversion of a traditional individual retirement
14901520 account to a Roth individual re tirement account shall
14911521 be excluded from federal adjusted gross income for
14921522 purposes of the income thresholds provided in this
14931523 subparagraph.
14941524 2. a. For taxable years beginning on or before December 31,
14951525 2005, in the case of individual s who use the standard
14961526 deduction in determining taxable income, there shall
14971527 be added or deducted, as the case may be, t he
14981528 difference necessary to allow a standard deduction in
14991529 lieu of the standard deduction allowed by the Internal
15001530 Revenue Code, in an amoun t equal to the larger of
15011531 fifteen percent (15%) of the Ok lahoma adjusted gross
15021532 income or One Thousand Dollars ($1,000.00 ), but not to
15031533 exceed Two Thousand Dollars ($2,000.00), except that
15041534 in the case of a married individual filing a separate
15051535 return such deduction shall be the larger of fifteen
15061536 percent (15%) of such Oklahoma adjusted gross income
15071537 or Five Hundred Dollars ($500 .00), but not to exceed
15081538 the maximum amount of One Thousand Dollars
15091539 ($1,000.00).
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15361567 b. For taxable years beginning on or after January 1,
15371568 2006, and before January 1, 2 007, in the case of
15381569 individuals who use the standard deduction in
15391570 determining taxable income, there shall be added or
15401571 deducted, as the case may be, the difference necessary
15411572 to allow a standard deduction in lieu of the standard
15421573 deduction allowed by the Inte rnal Revenue Code, in an
15431574 amount equal to:
15441575 (1) Three Thousand Dollars ($3,000.00), if the fili ng
15451576 status is married filing joint, head of
15461577 household, or qualifying widow; or
15471578 (2) Two Thousand Dollars ($2,000.00), if the filing
15481579 status is single or married filin g separate.
15491580 c. For the taxable year beginning on January 1, 2007, and
15501581 ending December 31, 200 7, in the case of individuals
15511582 who use the standard deduction in determining taxable
15521583 income, there shall be added or deducted, as the case
15531584 may be, the difference ne cessary to allow a standard
15541585 deduction in lieu of the standard deduction allowed by
15551586 the Internal Revenue Code, in an amount equal to:
15561587 (1) Five Thousand Five Hundred Dollars ($5,500.00),
15571588 if the filing status is married filing joint o r
15581589 qualifying widow; or
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15851617 (2) Four Thousand One Hundred Twenty-five Dollars
15861618 ($4,125.00) for a head of household; or
15871619 (3) Two Thousand Seven Hundred Fifty Dollars
15881620 ($2,750.00), if the filing status is single or
15891621 married filing separate.
15901622 d. For the taxable year be ginning on January 1, 200 8, and
15911623 ending December 31, 2008, in the case of individuals
15921624 who use the standard deduction in determining taxable
15931625 income, there shall be added or deducted, as the case
15941626 may be, the difference necessary to allow a standard
15951627 deduction in lieu of the standard d eduction allowed by
15961628 the Internal Revenue Code, in an amount equal to:
15971629 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
15981630 the filing status is married filing joint or
15991631 qualifying widow, or
16001632 (2) Four Thousand Eight Hundred Seventy -five Dollars
16011633 ($4,875.00) for a head of household, or
16021634 (3) Three Thousand Two Hundred Fifty Dollars
16031635 ($3,250.00), if the f iling status is single or
16041636 married filing separate.
16051637 e. For the taxable year beginning on January 1, 2009, and
16061638 ending December 31, 2009, in the case of individuals
16071639 who use the standard deduction in determining taxable
16081640 income, there shall be added or deducted , as the case
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16351668 may be, the difference necessary to allow a standard
16361669 deduction in lieu of the standard deduction allowed by
16371670 the Internal Revenue Code, in an amount e qual to:
16381671 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
16391672 if the filing status is married filing joint or
16401673 qualifying widow, or
16411674 (2) Six Thousand Three Hundred Seventy -five Dollars
16421675 ($6,375.00) for a head of household, or
16431676 (3) Four Thousand Two Hundred Fif ty Dollars
16441677 ($4,250.00), if the filing status is single or
16451678 married filing separate.
16461679 Oklahoma adjusted gross income shall be increased by
16471680 any amounts paid for motor vehicle excise taxes which
16481681 were deducted as allowed by the Internal Revenue Code.
16491682 f. For taxable years beginning on or after Januar y 1,
16501683 2010, and ending on December 31, 2016, in the case of
16511684 individuals who use the standard deduction in
16521685 determining taxable income, there shall be added or
16531686 deducted, as the case may be, the di fference necessary
16541687 to allow a standard deduction equal to the s tandard
16551688 deduction allowed by the Internal Revenue Code, based
16561689 upon the amount and filing status prescribed by such
16571690 Code for purposes of filing federal individual income
16581691 tax returns.
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16851719 g. For taxable years beginning on or after January 1,
16861720 2017, in the case of individuals who use the standard
16871721 deduction in determin ing taxable income, there shall
16881722 be added or deducted, as the case may be, the
16891723 difference necessary to allow a standard deduction in
16901724 lieu of the standard deduction allowed by the Internal
16911725 Revenue Code, as follows:
16921726 (1) Six Thousand Three Hundred Fifty Dollar s
16931727 ($6,350.00) for single or married filing
16941728 separately,
16951729 (2) Twelve Thousand Seven Hundred Dollars
16961730 ($12,700.00) for married filing jointly o r
16971731 qualifying widower with dependent child, and
16981732 (3) Nine Thousand Three Hundred Fifty Dollars
16991733 ($9,350.00) for head of h ousehold.
17001734 3. a. In the case of resident and part-year resident
17011735 individuals having adjusted gross income from sources
17021736 both within and witho ut the state, the itemize d or
17031737 standard deductions and personal exemptions shall be
17041738 reduced to an amount which is the s ame portion of the
17051739 total thereof as Oklahoma adjusted gross income is of
17061740 adjusted gross income . To the extent itemized
17071741 deductions include allowable moving expense , proration
17081742 of moving expense shall no t be required or permitted
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17351770 but allowable moving expense shall be fully deductible
17361771 for those taxpayers moving within or into Oklahoma and
17371772 no part of moving expense shall be deductible for
17381773 those taxpayers moving without or out of Oklahoma.
17391774 All other itemized or standard deductions and personal
17401775 exemptions shall be subject to proration as provided
17411776 by law.
17421777 b. For taxable years beginning on or after January 1,
17431778 2018, the net amount of itemized deducti ons allowable
17441779 on an Oklahoma income tax return, subject to the
17451780 provisions of paragraph 24 of this subsection, shall
17461781 not exceed Seventeen Thousand Dollars ($17,000.00).
17471782 For purposes of this subparagraph, charitable
17481783 contributions and medical expenses deduct ible for
17491784 federal income tax purposes shall be excluded from the
17501785 amount of Seventeen Thousand Dollars ($17,000.00) as
17511786 specified by this subparagraph.
17521787 4. A resident individual with a physical disability
17531788 constituting a substantial handicap to employment may deduct from
17541789 Oklahoma adjusted gross income such expenditures to modify a motor
17551790 vehicle, home, or workplace as are nece ssary to compensate for his
17561791 or her handicap. A veteran certified by the Department of Veterans
17571792 Affairs of the federal government as having a service-connected
17581793 disability shall be conclusively presumed to be an individual with a
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17851821 physical disability constit uting a substantial handicap to
17861822 employment. The Tax Commission shall promulgate rules containing a
17871823 list of combinations of common disabili ties and modifications w hich
17881824 may be presumed to qualify for th is deduction. The Tax Commission
17891825 shall prescribe neces sary requirements for verification.
17901826 5. a. Before July 1, 2010, the first One Thousand Five
17911827 Hundred Dollars ($1,500.00) received by any pers on
17921828 from the United State s as salary or compensation in
17931829 any form, other than retirement benefits, as a member
17941830 of any component of the Armed Forces of the United
17951831 States shall be deducted from taxable income.
17961832 b. On or after July 1, 2010, one hundred percent ( 100%)
17971833 of the income received by any person from the United
17981834 States as salary or compensation in any form, other
17991835 than retirement benefits, as a member of any component
18001836 of the Armed Forces of the United States shall be
18011837 deducted from taxable income.
18021838 c. Whenever the filing of a timely income tax return by a
18031839 member of the Armed Forces of the United States is
18041840 made impracticable or impossible of accomplishment by
18051841 reason of:
18061842 (1) absence from the United States, which term
18071843 includes only the states and the District of
18081844 Columbia;
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18351872 (2) absence from the State of Oklahoma this state
18361873 while on active duty; or
18371874 (3) confinement in a hospital within the United
18381875 States for treatment of wounds, injuries, or
18391876 disease,
18401877 the time for filing a return and paying an income tax
18411878 shall be and is hereby exte nded without incurring
18421879 liability for interest or penalties, to the fifteenth
18431880 day of the third month following the month in which:
18441881 (a) Such individual shall return to the United
18451882 States if the extension is granted pursuant
18461883 to subparagraph a of this paragraph , return
18471884 to the State of Oklahoma this state if the
18481885 extension is granted pursuant to
18491886 subparagraph b of this p aragraph or be
18501887 discharged from such hospital if the
18511888 extension is granted pursuant to
18521889 subparagraph c of this paragraph; or
18531890 (b) An executor, administrator, or c onservator
18541891 of the estate of the taxpayer is appointed,
18551892 whichever event occurs the earliest.
18561893 Provided, that the Tax Commission may, in its discretion, grant
18571894 any member of the Armed Forces of the United States an extension of
18581895 time for filing of income tax re turns and payment of i ncome tax
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18851923 without incurring liabilities for interest or penalties . Such
18861924 extension may be granted only when in the judgment of the Tax
18871925 Commission a good cause exists therefor and may be for a period in
18881926 excess of six (6) months . A record of every such exte nsion granted,
18891927 and the reason therefor, shall be kept.
18901928 6. Before July 1, 2010, the salary or any other form of
18911929 compensation, received from the United States by a member of any
18921930 component of the Armed Forces of the United States, shall be
18931931 deducted from taxable income during the time in which the person is
18941932 detained by the enemy in a conflict, is a prisoner of war or is
18951933 missing in action and not deceased; provided, after July 1, 2010,
18961934 all such salary or compensation shall be subject to th e deduction as
18971935 provided pursuant to paragraph 5 of this subsection.
18981936 7. a. An individual taxpayer, whether resident or
18991937 nonresident, may deduct an amount equal to the federal
19001938 income taxes paid by the taxpayer during the taxable
19011939 year.
19021940 b. Federal taxes as desc ribed in subparagraph a of this
19031941 paragraph shall be deductible by any individual
19041942 taxpayer, whether resident or nonresident, only to the
19051943 extent they relate to income subject to taxation
19061944 pursuant to the provisions of the Oklahoma Income Tax
19071945 Act. The maximum amount allowable in the preceding
19081946 paragraph shall be prorated on the ratio of the
19091947
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19351974 Oklahoma adjusted gross income to federal adjusted
19361975 gross income.
19371976 c. For the purpose of this paragraph, “federal income
19381977 taxes paid” shall mean federal income taxes, surtaxes
19391978 imposed on incomes or excess profits taxes, as though
19401979 the taxpayer was on the accrual basis . In determining
19411980 the amount of deduction for federal income taxes for
19421981 tax year 2001, the amount of the deduction shall not
19431982 be adjusted by the amount of any accelerat ed ten
19441983 percent (10%) tax rate bracket credit or advanced
19451984 refund of the credit received during the tax year
19461985 provided pursuant to the federal Economic Growth and
19471986 Tax Relief Reconciliation Act of 2001, P.L. No. 107 -
19481987 16, and the advanced refund of such credit s hall not
19491988 be subject to taxation.
19501989 d. The provisions of this paragraph shall apply to all
19511990 taxable years ending after December 31, 1978, and
19521991 beginning before January 1, 2006.
19531992 8. Retirement benefits not to exceed Five Thousand Five Hundred
19541993 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
19551994 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
19561995 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
19571996 years, which are received by an individual from the civil service of
19581997 the United States, the Oklahoma Public Employees Retirement System,
19591998
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19852025 the Teachers’ Retirement System of Oklah oma, the Oklahoma Law
19862026 Enforcement Retirement System, the Oklahoma Firefighters Pension and
19872027 Retirement System, the Oklahoma Police Pension and Retirement
19882028 System, the employee retirement systems created by counties pursuant
19892029 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the
19902030 Uniform Retirement System for Justices and Judges, the Oklahoma
19912031 Wildlife Conservation Department Retirement Fund, the Oklahoma
19922032 Employment Security Commission Retirement Plan, or the employee
19932033 retirement systems created by muni cipalities pursuant to Section 48-
19942034 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
19952035 from taxable income.
19962036 9. In taxable years beginning after D ecember 3l, 1984, Social
19972037 Security benefits received by an individual shall be exempt from
19982038 taxable income, to the extent such benefits are included in the
19992039 federal adjusted gross income pursuant to the provisions of Section
20002040 86 of the Internal Revenue Code, 2 6 U.S.C., Section 86.
20012041 10. For taxable years beginning after December 31, 1994, lump -
20022042 sum distributions from employer plans of deferred compensation,
20032043 which are not qualified plans within the meaning of Section 401(a)
20042044 of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which
20052045 are deposited in and accounted for within a separate bank account or
20062046 brokerage account in a financial institution within this state,
20072047 shall be excluded from taxable income in the same manner as a
20082048 qualifying rollover contribution t o an individual retirement account
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20352076 within the meaning of Section 408 of the Internal Revenue Code, 26
20362077 U.S.C., Section 408. Amounts withdrawn from such bank or brokerage
20372078 account, including any earnings thereon, shall be included in
20382079 taxable income when with drawn in the same manner as withdrawals from
20392080 individual retirement accounts within the meaning of Section 408 of
20402081 the Internal Revenue Code.
20412082 11. In taxable years beginning after December 31, 1995,
20422083 contributions made to and interest received from a medical savings
20432084 account established pursuant to Sections 2621 through 2623 of Title
20442085 63 of the Oklahoma Sta tutes shall be exempt from taxable income.
20452086 12. For taxable years beginning after December 31, 1996, the
20462087 Oklahoma adjusted gross income of any individual taxp ayer who is a
20472088 swine or poultry producer may be further adjusted for the deduction
20482089 for depreciation allowed for new construction or expansion costs
20492090 which may be computed using the same depreciation method elected for
20502091 federal income tax purposes except that the useful life shall be
20512092 seven (7) years for purposes of this paragraph . If depreciation is
20522093 allowed as a deduction in determining the adjusted gross income of
20532094 an individual, any depreciation calculated and claimed pursuant to
20542095 this section shall in no even t be a duplication of any deprec iation
20552096 allowed or permitted on the federal income tax return of th e
20562097 individual.
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20832125 13. a. In taxable years beginning after December 31, 2002,
20842126 nonrecurring adoption expenses paid by a resident
20852127 individual taxpayer in connection w ith:
20862128 (1) the adoption of a minor , or
20872129 (2) a proposed adoption of a minor which did not
20882130 result in a decreed adoption,
20892131 may be deducted from the Oklahoma adjusted gross
20902132 income.
20912133 b. The deductions for adoptions and proposed adoptions
20922134 authorized by this paragraph shall not exceed Twenty
20932135 Thousand Dollars ($20,000.00) per calendar year.
20942136 c. The Tax Commission sh all promulgate rules to implement
20952137 the provisions of this paragraph which shall contain a
20962138 specific list of nonrecurring adoption expenses which
20972139 may be presumed to qualify for the deduction . The Tax
20982140 Commission shall prescribe necessary requirements for
20992141 verification.
21002142 d. “Nonrecurring adoption expenses” means adoption fees,
21012143 court costs, medical expenses, attorney fees , and
21022144 expenses which are directly related to the legal
21032145 process of adoption of a child including, but not
21042146 limited to, costs relating to the adopti on study,
21052147 health and psychological examinations, transportation,
21062148 and reasonable costs of lodging and food for the child
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21332176 or adoptive parents which are incurred to complete the
21342177 adoption process and are not reimbursed by other
21352178 sources. The term “nonrecurring adoption expenses”
21362179 shall not include attorney fees incurred for the
21372180 purpose of litigating a contested adoption, from and
21382181 after the point of the initiation of the contest,
21392182 costs associated wit h physical remodeling, renovation ,
21402183 and alteration of the adoptiv e parents’ home or
21412184 property, except for a special needs child as
21422185 authorized by the court.
21432186 14. a. In taxable years beginning before January 1, 2005,
21442187 retirement benefits not to exceed the amounts
21452188 specified in this paragraph, which are received by an
21462189 individual sixty-five (65) years of age or older and
21472190 whose Oklahoma adjusted gross income is Twenty -five
21482191 Thousand Dollars ($25,000.00) or less if the filing
21492192 status is single, head of household, or marr ied filing
21502193 separate, or Fifty Thousand Dollars ($50,000.00) or
21512194 less if the filing status is married filing joint or
21522195 qualifying widow, shall be exempt from taxable income .
21532196 In taxable years beginning after December 31, 2004 ,
21542197 retirement benefits not to excee d the amounts
21552198 specified in this paragraph, which are received b y an
21562199 individual whose Oklahoma adjusted gross income is
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21832227 less than the qualifying amount specified in this
21842228 paragraph, shall be exempt from taxable income.
21852229 b. For purposes of this paragraph, the qualifying amount
21862230 shall be as follows:
21872231 (1) in taxable years beg inning after December 31,
21882232 2004, and prior to January 1, 2007, the
21892233 qualifying amount shall be Thirty -seven Thousand
21902234 Five Hundred Dollars ($37,500.00) or less if the
21912235 filing status is single, head of household, or
21922236 married filing separate, or Seventy -five Thousand
21932237 Dollars ($75,000.00) or less if the filing status
21942238 is married filing jointly or qualifying widow,
21952239 (2) in the taxable year beginning January 1, 2007,
21962240 the qualifying amount shall be Fifty Tho usand
21972241 Dollars ($50,000.00) or less if the filing status
21982242 is single, head of household, or married filing
21992243 separate, or One Hundred Thousand Dollars
22002244 ($100,000.00) or less if the filing status is
22012245 married filing jointly or qual ifying widow,
22022246 (3) in the taxable year beginning January 1, 2008,
22032247 the qualifying amount shall be S ixty-two Thousand
22042248 Five Hundred Dollars ($62,500.00) or less if the
22052249 filing status is single, head of household, or
22062250 married filing separate, or One Hundred Twent y-
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22332278 five Thousand Dollars ($125,000. 00) or less if
22342279 the filing status is married filing jointly or
22352280 qualifying widow,
22362281 (4) in the taxable year beginning January 1, 2009,
22372282 the qualifying amount shall be One Hundred
22382283 Thousand Dollars ($100,000.00) or less if the
22392284 filing status is single, head of hou sehold, or
22402285 married filing separate, or Two Hundred Thousand
22412286 Dollars ($200,000.00) or less if the filing
22422287 status is married filing jointly or qualifying
22432288 widow, and
22442289 (5) in the taxable year beginning January 1, 2010,
22452290 and subsequent taxable years, there shall b e no
22462291 limitation upon the qualifying amount.
22472292 c. For purposes of this paragraph, “retirement benefits”
22482293 means the total distributions or withdrawals from the
22492294 following:
22502295 (1) an employee pension benefit plan which satisfies
22512296 the requirements of Section 401 of th e Internal
22522297 Revenue Code, 26 U.S.C., Section 401,
22532298 (2) an eligible deferred compensation plan that
22542299 satisfies the requirements of Section 457 of the
22552300 Internal Revenue Code, 26 U.S.C., Section 457,
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22822328 (3) an individual retirem ent account, annuity, or
22832329 trust or simplified employee pension that
22842330 satisfies the requirements of Sect ion 408 of the
22852331 Internal Revenue Code, 26 U.S.C., Section 408,
22862332 (4) an employee annuity subject to the provisions of
22872333 Section 403(a) or (b) of the Internal Re venue
22882334 Code, 26 U.S.C., Section 403(a) o r (b),
22892335 (5) United States Retirement Bonds which satisfy the
22902336 requirements of Section 86 of the Internal
22912337 Revenue Code, 26 U.S.C., Section 86, or
22922338 (6) lump-sum distributions from a retirement plan
22932339 which satisfies the re quirements of Section
22942340 402(e) of the Internal Revenue Code, 26 U.S.C.,
22952341 Section 402(e).
22962342 d. The amount of the exemption provided by this paragraph
22972343 shall be limited to Five Thousand Five Hundred Dollars
22982344 ($5,500.00) for the 2004 tax year, Seven Thousand Five
22992345 Hundred Dollars ($7,500.00) for the 2005 ta x year and
23002346 Ten Thousand Dollars ($10,000.00) for the tax year
23012347 2006 and for all subsequent tax years. Any individual
23022348 who claims the exemption provided for in paragraph 8
23032349 of this subsection shall not be permitted to claim a
23042350 combined total exemption pursuant to this paragraph
23052351 and paragraph 8 of this subsection in an am ount
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23322379 exceeding Five Thousand Five Hundred Dollars
23332380 ($5,500.00) for the 2004 tax year, Seven Thousand Five
23342381 Hundred Dollars ($7,500.00) for the 2005 tax ye ar and
23352382 Ten Thousand Dollars ($10,000.00) f or the 2006 tax
23362383 year and all subsequent tax years.
23372384 15. In taxable years beginning after December 31, 1999, for an
23382385 individual engaged in production agriculture who has filed a
23392386 Schedule F form with the taxpayer ’s federal income tax return for
23402387 such taxable year, there shall be excluded from taxable income any
23412388 amount which was included as federal taxable income or federal
23422389 adjusted gross income and which consists of the discharge of an
23432390 obligation by a creditor of the t axpayer incurred to finance the
23442391 production of agricultural products.
23452392 16. In taxable years beginning Dece mber 31, 2000, an amount
23462393 equal to one hundred percent (100%) of the amount of any scholarship
23472394 or stipend received from participation in the Oklahoma P olice Corps
23482395 Program, as established in Secti on 2-140.3 of Title 47 of the
23492396 Oklahoma Statutes shall be exemp t from taxable income.
23502397 17. a. In taxable years beginning after December 31, 2001,
23512398 and before January 1, 2005, there shall be allowed a
23522399 deduction in the amount of contributions to accounts
23532400 established pursuant to the Oklahoma College Savings
23542401 Plan Act. The deduction shall equal the amount of
23552402 contributions to accounts, but in no event shall the
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23822430 deduction for each contributor exceed Two Thousand
23832431 Five Hundred Dollars ($2,500.00) each taxable year for
23842432 each account.
23852433 b. In taxable years beginning after December 31 , 2004,
23862434 each taxpayer shall be allowed a deduction for
23872435 contributions to accounts established pursuant to the
23882436 Oklahoma College Savings Plan Act . The maximum annual
23892437 deduction shall equal the amou nt of contributions to
23902438 all such accounts plus any contribution s to such
23912439 accounts by the taxpayer for prior taxable years after
23922440 December 31, 2004, which were not deducted, but in no
23932441 event shall the deduction for each tax year exceed Ten
23942442 Thousand Dollars ($1 0,000.00) for each individual
23952443 taxpayer or Twenty Thousand Doll ars ($20,000.00) for
23962444 taxpayers filing a joint return. Any amount of a
23972445 contribution that is not deducted by the taxpayer in
23982446 the year for which the c ontribution is made may be
23992447 carried forward as a deduction from income for the
24002448 succeeding five (5) years . For taxable years
24012449 beginning after December 31, 2005, deductions may be
24022450 taken for contributions and rollovers made during a
24032451 taxable year and up to Apri l 15 of the succeeding
24042452 year, or the due date o f a taxpayer’s state income tax
24052453 return, excluding extensions, whichever is later.
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24322481 Provided, a deduction for the same contribution may
24332482 not be taken for two (2) different taxable years.
24342483 c. In taxable years begi nning after December 31, 2006,
24352484 deductions for contributions made pursuant to
24362485 subparagraph b of this paragraph shall be limited as
24372486 follows:
24382487 (1) for a taxpayer who qualified for the five-year
24392488 carryforward election and who takes a rollover or
24402489 nonqualified withdrawal during that period, the
24412490 tax deduction otherwise available pursuant to
24422491 subparagraph b of this paragrap h shall be reduced
24432492 by the amount which is equal to the rollover or
24442493 nonqualified withdrawal, and
24452494 (2) for a taxpayer who elects to take a rollover or
24462495 nonqualified withdrawal within the same tax ye ar
24472496 in which a contribution was made to the
24482497 taxpayer’s account, the tax deduction otherwise
24492498 available pursuant to subparagraph b of this
24502499 paragraph shall be reduced by the amount of the
24512500 contribution which is e qual to the rollover or
24522501 nonqualified withdrawal.
24532502 d. If a taxpayer elects to take a rollover on a
24542503 contribution for which a deduction has been taken
24552504 pursuant to subparagraph b of this paragraph within
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24822532 one (1) year of the date of contribution, the amount
24832533 of such rollover shall be included in the adjusted
24842534 gross income of the taxpayer in the taxable year of
24852535 the rollover.
24862536 e. If a taxpayer makes a nonqualified withdrawal of
24872537 contributions for which a deduction was taken pursuant
24882538 to subparagraph b of this paragrap h, such nonqualified
24892539 withdrawal and any earnings th ereon shall be included
24902540 in the adjusted gross income of the ta xpayer in the
24912541 taxable year of the nonqualified withdrawal.
24922542 f. As used in this paragraph:
24932543 (1) “non-qualified withdrawal ” means a withdrawal
24942544 from an Oklahoma College Savings Plan account
24952545 other than one of the following:
24962546 (a) a qualified withdrawal,
24972547 (b) a withdrawal made as a result of the death
24982548 or disability of the designated beneficiary
24992549 of an account,
25002550 (c) a withdrawal that is made on the accou nt of
25012551 a scholarship or the allowance or payment
25022552 described in Section 135(d)(1)(B) or (C) or
25032553 by the Internal Revenue Co de, received by
25042554 the designated beneficiary to the extent the
25052555 amount of the refund does not exceed the
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25322583 amount of the scholarship, allowance , or
25332584 payment, or
25342585 (d) a rollover or change of designated
25352586 beneficiary as permitted by subsection F of
25362587 Section 3970.7 of Title 70 of Oklahoma
25372588 Statutes, and
25382589 (2) “rollover” means the transfer of funds from the
25392590 Oklahoma College Savings Plan to any other plan
25402591 under Section 529 of the Internal Revenue Code.
25412592 18. For taxable years beginning after December 31, 2005,
25422593 retirement benefits received by an individual from any component of
25432594 the Armed Forces of the United States in an amount not to exceed the
25442595 greater of seventy-five percent (75%) of such benefits or Ten
25452596 Thousand Dollars ($10,000.00) shall be exempt from taxable income
25462597 but in no case less than the amount of the exemption provided by
25472598 paragraph 14 of this subsection.
25482599 19. For taxable years beginning after Dec ember 31, 2006,
25492600 retirement benefits received by federal civi l service retirees,
25502601 including survivor annuities, paid in lieu of Social Security
25512602 benefits shall be exempt from taxable income to the extent such
25522603 benefits are included in the federal adjusted gros s income pursuant
25532604 to the provisions of Section 86 of the Int ernal Revenue Code, 26
25542605 U.S.C., Section 86, according to the fo llowing schedule:
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25812633 a. in the taxable year beginning January 1, 2007, twenty
25822634 percent (20%) of such benefits shall be exempt,
25832635 b. in the taxable year beginning Jan uary 1, 2008, forty
25842636 percent (40%) of such benefits shall be exempt,
25852637 c. in the taxable year beginn ing January 1, 2009, sixty
25862638 percent (60%) of such benefits shall be exempt,
25872639 d. in the taxable year beginning January 1, 2010, eight y
25882640 percent (80%) of such benef its shall be exempt, and
25892641 e. in the taxable year beginning January 1, 2011, and
25902642 subsequent taxable years, one hundred percent (100%)
25912643 of such benefits shall be exempt.
25922644 20. a. For taxable years beginning after December 31, 2007, a
25932645 resident individual may dedu ct up to Ten Thousand
25942646 Dollars ($10,000.00) from Oklahoma adjusted gross
25952647 income if the individual, or the dependent of the
25962648 individual, while living, donates one or more human
25972649 organs of the individual to another human being for
25982650 human organ transplantation . As used in this
25992651 paragraph, “human organ” means all or part of a liver,
26002652 pancreas, kidney, intestin e, lung, or bone marrow. A
26012653 deduction that is claimed under this paragraph may be
26022654 claimed in the taxable year in which the human organ
26032655 transplantation occurs.
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26302683 b. An individual may claim this ded uction only once, and
26312684 the deduction may be claimed only for un reimbursed
26322685 expenses that are incurred by the individual and
26332686 related to the organ donation of the individual.
26342687 c. The Oklahoma Tax Commission shall promulgate ru les to
26352688 implement the provisions of this paragraph which shall
26362689 contain a specific list of expenses which may be
26372690 presumed to qualify for the deduction. The Tax
26382691 Commission shall prescribe necessary requirements for
26392692 verification.
26402693 21. For taxable years beginn ing after December 31, 2009, there
26412694 shall be exempt from taxable income any amount received by the
26422695 beneficiary of the death benefit for an emergency medical technician
26432696 or a registered emergency medical responder provided by Section 1-
26442697 2505.1 of Title 63 of t he Oklahoma Statutes.
26452698 22. For taxable years beginning after December 31, 2008,
26462699 taxable income shall be increased by any unemployment compensation
26472700 exempted under Section 85(c) of the Internal Revenue Code, 26
26482701 U.S.C., Section 85(c)(2009).
26492702 23. For taxable years beginning after December 31, 2 008, there
26502703 shall be exempt from taxable income any payment in an amount less
26512704 than Six Hundred Dollars ($600.00) received by a person as an award
26522705 for participation in a competitive lives tock show event. For
26532706 purposes of this paragraph, the payment shall be treated as a
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26802734 scholarship amount paid by the entity sponsoring the event and the
26812735 sponsoring entity shall cause the payment to be categorized as a
26822736 scholarship in its books and records.
26832737 24. For taxable years beginning on or after January 1, 2016,
26842738 taxable income shall be increased by any amount of state and local
26852739 sales or income taxes deducted under 26 U.S.C., Section 164 of the
26862740 Internal Revenue Code . If the amount of state and local taxe s
26872741 deducted on the federal return is l imited, taxable income on the
26882742 state return shall be increased only by the amount actually deducte d
26892743 after any such limitations are applied.
26902744 25. For taxable years beginning after December 31, 2020, each
26912745 taxpayer shall be allowed a deduction for contribution s to accounts
26922746 established pursuant to the Achieving a Better Life Experience
26932747 (ABLE) Program as es tablished in Section 4001.1 et seq. of Title 56
26942748 of the Oklahoma Statutes. For any tax year, the deduction provided
26952749 for in this paragraph shall not exceed Ten Thousand Dollars
26962750 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
26972751 ($20,000.00) for taxpayers filing a joint return. Any amount of
26982752 contribution not deducted by the taxpayer in the tax year for which
26992753 the contribution is made may be carried forward as a deduction from
27002754 income for up to five (5) tax years . Deductions may be taken for
27012755 contributions made during the tax year and through April 15 of the
27022756 succeeding tax year, or through the due date of a taxpay er’s state
27032757 income tax return excluding extensions, whichever is later.
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27302785 Provided, a deduction for the same contribution may not be take n in
27312786 more than one (1) tax year.
27322787 F. 1. For taxable years beginning after December 31, 2004, a
27332788 deduction from the Oklaho ma adjusted gross income of any indivi dual
27342789 taxpayer shall be allowed for q ualifying gains receiving capital
27352790 treatment that are included in the federal adjusted gross income of
27362791 such individual taxpayer during the taxable year.
27372792 2. As used in this subsectio n:
27382793 a. “qualifying gains receiving capit al treatment” means
27392794 the amount of net capital gains, as defined in Section
27402795 1222(11) of the Intern al Revenue Code, included in an
27412796 individual taxpayer’s federal income tax return that
27422797 result from:
27432798 (1) the sale of real property or tangible personal
27442799 property located within Oklahoma that has been
27452800 directly or indirectly owned by the individual
27462801 taxpayer for a holding period of at least five
27472802 (5) years prior to the date of the transaction
27482803 from which such net capital gains ari se,
27492804 (2) the sale of stock or the sale of a direct or
27502805 indirect ownership inter est in an Oklahoma
27512806 company, limited liability company, or
27522807 partnership where such stock or ownership
27532808 interest has been directly or indirectly owned by
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27802836 the individual taxpayer for a holding period of
27812837 at least two (2) years prior to the date of the
27822838 transaction from which the net capital gains
27832839 arise, or
27842840 (3) the sale of real property, tangible personal
27852841 property or intangible personal property located
27862842 within Oklahoma as part of the sal e of all or
27872843 substantially all of the assets of an Oklahoma
27882844 company, limited lia bility company, or
27892845 partnership or an Oklahoma proprietorship
27902846 business enterprise where such property has been
27912847 directly or indirectly owned by such entity or
27922848 business enterprise or owned by the owners of
27932849 such entity or business enterprise for a period
27942850 of at least two (2) years prior to the date of
27952851 the transaction from which the net capital gains
27962852 arise,
27972853 b. “holding period” means an uninterrupted peri od of
27982854 time. The holding period shall include any additional
27992855 period when the property was held by another
28002856 individual or entity, if such a dditional period is
28012857 included in the taxpayer’s holding period for the
28022858 asset pursuant to the Internal Revenue Code,
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28292886 c. “Oklahoma company,” “limited liability company,” or
28302887 “partnership” means an entity whose primary
28312888 headquarters have been located in Oklahoma for at
28322889 least three (3) uninterrupt ed years prior to the da te
28332890 of the transaction from which the net capital gains
28342891 arise,
28352892 d. “direct” means the individual taxpayer directly owns
28362893 the asset,
28372894 e. “indirect” means the individual taxpayer owns an
28382895 interest in a pass-through entity (or chain of pass -
28392896 through entities) that sells the asset that gives rise
28402897 to the qualifying gains rece iving capital treatment.
28412898 (1) With respect to sales of real property or
28422899 tangible personal property located within
28432900 Oklahoma, the deduction described in this
28442901 subsection shall not apply unless the pas s-
28452902 through entity that makes the sale has held the
28462903 property for not less than five (5) u ninterrupted
28472904 years prior to the date of the tran saction that
28482905 created the capital gain, and each pass-through
28492906 entity included in the chain of owne rship has
28502907 been a member, partner, or shareholder of the
28512908 pass-through entity in the t ier immediately below
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28782936 it for an uninterrupted period of not less than
28792937 five (5) years.
28802938 (2) With respect to sales of stock or ownership
28812939 interest in or sales of all or substan tially all
28822940 of the assets of an Oklahoma company, limited
28832941 liability company, partners hip, or Oklahoma
28842942 proprietorship business enterprise, the deduction
28852943 described in this subsection shall not apply
28862944 unless the pass-through entity that makes the
28872945 sale has held the stock or ownership i nterest for
28882946 not less than two (2) uninterrupted years prior
28892947 to the date of the transact ion that created the
28902948 capital gain, and each pass -through entity
28912949 included in the chain of ownership has been a
28922950 member, partner or shareholder of t he pass-
28932951 through entity in the tier immediately below it
28942952 for an uninterrupted period o f not less than two
28952953 (2) years. For purposes of this division,
28962954 uninterrupted ownership prior to July 1, 2007,
28972955 shall be included in the d etermination of the
28982956 required holding period prescribed by t his
28992957 division, and
29002958 f. “Oklahoma proprietorship business enterp rise” means a
29012959 business enterprise whose income and expenses have
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29282987 been reported on Schedule C or F of an individual
29292988 taxpayer’s federal income tax return, or any similar
29302989 successor schedule publishe d by the Internal Revenue
29312990 Service and whose primary headquart ers have been
29322991 located in Oklahoma for at least three (3)
29332992 uninterrupted years prior to the date of the
29342993 transaction from which the net cap ital gains arise.
29352994 G. 1. For purposes of computing its Okl ahoma taxable income
29362995 under this section, the dividends -paid deduction otherwise allow ed
29372996 by federal law in computing net income of a rea l estate investment
29382997 trust that is subject to federal income ta x shall be added back in
29392998 computing the tax imposed by this state under this title if the real
29402999 estate investment trust is a captive real estate i nvestment trust.
29413000 2. For purposes of computing its Oklahoma taxable income under
29423001 this section, a taxpayer shall add back otherwise deductible rents
29433002 and interest expenses p aid to a captive real estate investment trust
29443003 that is not subject to the provisions of paragraph 1 of this
29453004 subsection. As used in this subsection:
29463005 a. the term “real estate investment trust” or “REIT”
29473006 means the meaning ascribed to s uch term in Section 856
29483007 of the Internal Revenue Code,
29493008 b. the term “captive real estate investment trust” means
29503009 a real estate investment trust, the shares or
29513010 beneficial interests of which are not regularly traded
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29783038 on an established securities market and more than
29793039 fifty percent (50%) of the voting power or value of
29803040 the beneficial interests or shares of which are owned
29813041 or controlled, directly or indirectly, or
29823042 constructively, by a single entity that is:
29833043 (1) treated as an association taxable as a
29843044 corporation under the Internal Revenue Code, and
29853045 (2) not exempt from federal income tax pursuant to
29863046 the provisions of Section 501(a) of the Internal
29873047 Revenue Code.
29883048 The term shall not include a real estate investment
29893049 trust that is intende d to be regularly traded on an
29903050 established securities marke t, and that satisfies the
29913051 requirements of Section 856(a)(5) a nd (6) of the U.S.
29923052 Internal Revenue Code by reason of Section 856(h)(2)
29933053 of the Internal Revenue Code,
29943054 c. the term “association taxable a s a corporation” shall
29953055 not include the following entities:
29963056 (1) any real estate investment trust as defined in
29973057 paragraph a of this subsection other than a
29983058 “captive real estate investment trust ”, or
29993059 (2) any qualified real estate investment trust
30003060 subsidiary under Section 856(i) of the Internal
30013061 Revenue Code, other tha n a qualified REIT
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30283089 subsidiary of a “captive real estate inves tment
30293090 trust”, or
30303091 (3) any Listed Australian Property Trust (meaning an
30313092 Australian unit trust registered as a “Managed
30323093 Investment Scheme” under the Australian
30333094 Corporations Act in which the principa l class of
30343095 units is listed on a recognized stock exchange in
30353096 Australia and is regularly traded on an
30363097 established securities market), or an entity
30373098 organized as a trust, provided that a Listed
30383099 Australian Property Trust owns or control s,
30393100 directly or indirectl y, seventy-five percent
30403101 (75%) or more of the voting power or value of the
30413102 beneficial interests or shares of such trust, or
30423103 (4) any Qualified Foreign Entity, meaning a
30433104 corporation, trust, associatio n, or partnership
30443105 organized outside the laws of the United States
30453106 and which satisfies the following criteria:
30463107 (a) at least seventy-five percent (75%) of the
30473108 entity’s total asset value at the clo se of
30483109 its taxable year is represented by real
30493110 estate assets, as defined in Section
30503111 856(c)(5)(B) of the Internal Revenue C ode,
30513112 thereby including shares or certificates of
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30783140 beneficial interest in any real estate
30793141 investment trust, cash and cash equivalents,
30803142 and U.S. Government securities,
30813143 (b) the entity receives a divide nd-paid
30823144 deduction comparable to Sec tion 561 of the
30833145 Internal Revenue Code, or is exempt from
30843146 entity level tax,
30853147 (c) the entity is required to distribute at
30863148 least eighty-five percent (85%) of its
30873149 taxable income, as computed in the
30883150 jurisdiction in which it is organized, to
30893151 the holders of its sh ares or certificates of
30903152 beneficial interest on an annual basis,
30913153 (d) not more than ten percent (10%) of the
30923154 voting power or value in such entity is held
30933155 directly or indirectly or constructively by
30943156 a single entity or indivi dual, or the shares
30953157 or beneficial interests of such entity are
30963158 regularly traded on an established
30973159 securities market, and
30983160 (e) the entity is organized in a country which
30993161 has a tax treaty with the United States.
31003162 3. For purposes of this subsection, the constr uctive ownership
31013163 rules of Section 318(a) of the Internal Re venue Code, as modified by
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31283191 Section 856(d)(5) of the Internal R evenue Code, shall apply in
31293192 determining the ownership of stock, assets, o r net profits of any
31303193 person.
31313194 4. A real estate investment trus t that does not become
31323195 regularly traded on an established s ecurities market within one (1)
31333196 year of the date on which it f irst becomes a real estate investment
31343197 trust shall be deemed not to have b een regularly traded on an
31353198 established securities market, retr oactive to the date it first
31363199 became a real estate investmen t trust, and shall file an amended
31373200 return reflecting such retr oactive designation for any tax year or
31383201 part year occurring during its in itial year of status as a real
31393202 estate investment trust. For purposes of this subsection, a real
31403203 estate investment trust becomes a real estate investment trust on
31413204 the first day it has both met the requirements of Section 856 of the
31423205 Internal Revenue Code an d has elected to be treated as a real estate
31433206 investment trust pursuant to Section 856(c)(1) of th e Internal
31443207 Revenue Code.
31453208 SECTION 2. This act shall become effective November 1, 2022.
3146-
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3172-Passed the Senate the 8th day of March, 2022.
3173-
3174-
3175-
3176- Presiding Officer of the Senate
3177-
3178-
3179-Passed the House of Representatives the ____ day of __________,
3180-2022.
3181-
3182-
3183-
3184- Presiding Officer of the House
3185- of Representatives
3186-
3209+COMMITTEE REPORT BY: COMMITTEE ON FINANCE
3210+February 22, 2022 - DO PASS