OK
Oklahoma Senate Bill SB357

Oklahoma 2022 Regular Session

Oklahoma Senate Bill SB357 Compare Versions

Only one version of the bill is available at this time.
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5353 STATE OF OKLAHOMA
5454
5555 1st Session of the 58th Legislature (2021)
5656
5757 SENATE BILL 357 By: Paxton
5858
5959
6060
6161
6262
6363 AS INTRODUCED
6464
6565 An Act relating to income tax adjustment; ame nding 68
6666 O.S. 2011, Section 2358, as last amended by Section
6767 5, Chapter 201, O.S.L. 2019 (68 O.S. Supp. 2020,
6868 Section 2358), which relates to taxable income and
6969 adjusted gross income adjustments; excluding gambling
7070 loss deduction from limit for itemized deductions;
7171 updating statutory reference; a nd declaring an
7272 emergency.
7373
7474
7575
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7777 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
7878 SECTION 1. AMENDATORY 68 O.S. 2011, Section 2358, as
7979 last amended by Section 5, Chapter 201, O.S.L. 2019 (68 O.S. Supp.
8080 2020, Section 2358), is amended to read as follows:
8181 Section 2358. For all tax years beginning after December 31,
8282 1981, taxable income and adjusted gross income shall be adjusted to
8383 arrive at Oklahoma taxable income and Oklaho ma adjusted gross income
8484 as required by this se ction.
8585 A. The taxable income of any taxpayer shall be adjusted to
8686 arrive at Oklahoma taxable income for corporations and Oklahoma
8787 adjusted gross income for individuals, as follows:
8888
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139139 1. There shall be added in terest income on obligations of any
140140 state or political subdivision thereto which is not otherwise
141141 exempted pursuant to other laws of this state, to the extent that
142142 such interest is not included in taxable income and adjusted gross
143143 income.
144144 2. There shall be deducted amounts included in such income that
145145 the state is prohibited from taxing because of the provisions of the
146146 Federal Constitution, the State Constitution, federal laws or laws
147147 of Oklahoma.
148148 3. The amount of any federal net operating loss deduction shall
149149 be adjusted as follows:
150150 a. For carryovers and carrybacks to taxable years
151151 beginning before January 1, 1981, the amount of any
152152 net operating loss deduction allowed to a taxpayer for
153153 federal income tax purposes shall be reduced to an
154154 amount which is the same portion thereof as the loss
155155 from sources within this state, as determined pursuant
156156 to this section and Section 2362 of this title, for
157157 the taxable year in which such loss is sustained is of
158158 the total loss for such year;
159159 b. For carryovers and carryba cks to taxable years
160160 beginning after December 3 1, 1980, the amount of any
161161 net operating loss deduc tion allowed for the taxable
162162 year shall be an amount equal to the aggregate of the
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214214 Oklahoma net operating loss carryovers and carrybacks
215215 to such year. Oklaho ma net operating losses shall be
216216 separately determined by reference to Section 172 of
217217 the Internal Revenue Code, 26 U.S.C., Section 172, as
218218 modified by the Oklahoma Income Tax Act, Section 2351
219219 et seq. of this title, and shall be allowed without
220220 regard to the existence of a federal net operating
221221 loss. For tax years beginning after December 31,
222222 2000, and ending before January 1, 2008, the years to
223223 which such losses may be carried shall be determined
224224 solely by reference to Section 172 of the Internal
225225 Revenue Code, 26 U.S.C., Section 172, with the
226226 exception that the terms “net operating loss” and
227227 “taxable income” shall be replaced with “Oklahoma net
228228 operating loss” and “Oklahoma taxable income ”. For
229229 tax years beginning after December 31, 2007, and
230230 ending before January 1, 2009, years to which such
231231 losses may be carried back shall be limited to two (2)
232232 years. For tax years beginning after December 31,
233233 2008, the years to which such losses may be carried
234234 back shall be determined solely by reference to
235235 Section 172 of the Internal Revenue Code, 26 U.S.C.,
236236 Section 172, with the exception that the terms “net
237237 operating loss” and “taxable income” shall be replaced
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289289 with “Oklahoma net operating loss ” and “Oklahoma
290290 taxable income”.
291291 4. Items of the following nature shall be allocated as
292292 indicated. Allowable deduction s attributable to items separately
293293 allocable in subparagraphs a, b and c of this paragraph, whether or
294294 not such items of income were actually received, shall be allocated
295295 on the same basis as those items:
296296 a. Income from real and tangible personal property, such
297297 as rents, oil and mining production or royalt ies, and
298298 gains or losses from sales of such property, shall be
299299 allocated in accordance with the situs of such
300300 property;
301301 b. Income from intangible personal pro perty, such as
302302 interest, dividends, patent or c opyright royalties,
303303 and gains or losses from sales of such property, shall
304304 be allocated in accordance with the domiciliary situs
305305 of the taxpayer, except that:
306306 (1) where such property has acquired a nonunitary
307307 business or commercial situs apart from the
308308 domicile of the taxpayer such income shall be
309309 allocated in accordance with such business or
310310 commercial situs; interest income from
311311 investments held to generate working capital for
312312 a unitary business enterprise sh all be included
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364364 in apportionable income; a resi dent trust or
365365 resident estate shall be treated as h aving a
366366 separate commercial or business situs insofar as
367367 undistributed income is concerned, but shall not
368368 be treated as having a separate commercial or
369369 business situs insofar as distributed income is
370370 concerned,
371371 (2) for taxable years beginning after Decembe r 31,
372372 2003, capital or ordinary gains or losses from
373373 the sale of an ownership interest in a publicly
374374 traded partnership, as defined by Section 7704(b)
375375 of the Internal Revenue Code, shall be allocated
376376 to this state in the ratio of the original cost
377377 of such partnership’s tangible property in this
378378 state to the original cost of such partnership ’s
379379 tangible property everywhere, as determined at
380380 the time of the sale; if more than fifty percent
381381 (50%) of the value o f the partnership’s assets
382382 consists of intangible a ssets, capital or
383383 ordinary gains or losses from the sale of an
384384 ownership interest in the partnership shall be
385385 allocated to this state in accordance with the
386386 sales factor of the partnership for its first
387387 full tax period immediately preceding its tax
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439439 period during which the ownership interest in the
440440 partnership was sold; the provisions of this
441441 division shall only apply if the capital or
442442 ordinary gains or losses f rom the sale of an
443443 ownership interest in a part nership do not
444444 constitute qualifying gain receiving capital
445445 treatment as defined in subparagraph a of
446446 paragraph 2 of subsection F of this section,
447447 (3) income from such property which is required to be
448448 allocated pursuant to the provisions of paragraph
449449 5 of this subsection shall be allocated as herein
450450 provided;
451451 c. Net income or loss from a business activity which is
452452 not a part of business carried on within or without
453453 the state of a unitary character shall be sepa rately
454454 allocated to the state in which such act ivity is
455455 conducted;
456456 d. In the case of a manufacturi ng or processing
457457 enterprise the business of which in Oklahoma consists
458458 solely of marketing its products by:
459459 (1) sales having a situs without this state, shipp ed
460460 directly to a point from without the state t o a
461461 purchaser within the state, commonly known as
462462 interstate sales,
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514514 (2) sales of the product stored in public warehouses
515515 within the state pursuant to “in transit”
516516 tariffs, as prescribed and allowed by the
517517 Interstate Commerce Commission, to a purchaser
518518 within the state,
519519 (3) sales of the product stored in pu blic warehouses
520520 within the state where the shipment to such
521521 warehouses is not covered by “in transit”
522522 tariffs, as prescribed and allowed by the
523523 Interstate Commerce Commission, to a purchaser
524524 within or without the state,
525525 the Oklahoma net income shall, at th e option of the
526526 taxpayer, be that portion of the total net income of
527527 the taxpayer for federal income tax purposes derived
528528 from the manufacture and/or processi ng and sales
529529 everywhere as determined by the ra tio of the sales
530530 defined in this section made to th e purchaser within
531531 the state to the total sales everywhere. The term
532532 “public warehouse” as used in this subparagraph means
533533 a licensed public warehouse, the p rincipal business of
534534 which is warehousing merch andise for the public;
535535 e. In the case of insurance companies, Oklahoma taxable
536536 income shall be taxable income of the taxpayer for
537537 federal tax purposes, as adjusted for the adjustments
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589589 provided pursuant to the provisions of paragraphs 1
590590 and 2 of this subsec tion, apportioned as follows:
591591 (1) except as otherwise provided by division (2) of
592592 this subparagraph, taxable income of an insurance
593593 company for a taxable year shall be apportioned
594594 to this state by multiplying such income by a
595595 fraction, the numerator of whi ch is the direct
596596 premiums written for insurance on property or
597597 risks in this state, and the denominator of which
598598 is the direct premiums written for insurance on
599599 property or risks everywhere. For purposes of
600600 this subsection, the term “direct premiums
601601 written” means the total amount of direct
602602 premiums written, assessments and annuity
603603 considerations as reported for the taxable year
604604 on the annual statement filed by the company with
605605 the Insurance Commissioner in th e form approved
606606 by the National Association of Insurance
607607 Commissioners, or such other form as may be
608608 prescribed in lieu thereof,
609609 (2) if the principal source of premiums written by an
610610 insurance company consists of premiums for
611611 reinsurance accepted by it, th e taxable income of
612612 such company shall be appor tioned to this state
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664664 by multiplying such income by a fraction, the
665665 numerator of which is the sum of (a) direct
666666 premiums written for insurance on property or
667667 risks in this state, plus (b) premiums written
668668 for reinsurance accepted in respect of property
669669 or risks in this state, and the denominator of
670670 which is the sum of (c) direct premiums written
671671 for insurance on property or risks everywhere,
672672 plus (d) premiums written for reinsurance
673673 accepted in respect of proper ty or risks
674674 everywhere. For purposes of this p aragraph,
675675 premiums written for reinsurance accepted in
676676 respect of property or risks in this state,
677677 whether or not otherwise determinable, may at the
678678 election of the company be determined on the
679679 basis of the proportion which premiums written
680680 for insurance accepted from companies
681681 commercially domiciled in Ok lahoma bears to
682682 premiums written for reinsurance accepted from
683683 all sources, or alternatively in the proportion
684684 which the sum of the direct premiums written fo r
685685 insurance on property or risks in this state by
686686 each ceding company from which reinsurance is
687687 accepted bears to the sum of the total direct
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739739 premiums written by each such ceding company for
740740 the taxable year.
741741 5. The net income or loss remaining after the separate
742742 allocation in paragraph 4 of this subs ection, being that which is
743743 derived from a unitary business enterprise, shall be apportioned to
744744 this state on the basis of the arithmetical average of three factors
745745 consisting of property, payroll and sales or gross revenue
746746 enumerated as subparagraphs a, b and c of this paragraph. Net
747747 income or loss as us ed in this paragraph includes that derived from
748748 patent or copyright royalties, purchase discounts, and interest on
749749 accounts receivable relating to or arising from a business activity,
750750 the income from which is apportioned pursuant to this subsection ,
751751 including the sale or other disposition of such property and any
752752 other property used in the unitary enterprise. Deductions used in
753753 computing such net income or los s shall not include taxes based on
754754 or measured by income. Provided, for corporations whose proper ty
755755 for purposes of the tax imposed by Section 2355 of this title has an
756756 initial investment cost equaling or exceeding Two Hundred Million
757757 Dollars ($200,000,00 0.00) and such investment is made on or after
758758 July 1, 1997, or for corporations which expand their property or
759759 facilities in this state and such expansion has an investment cost
760760 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
761761 over a period not to exceed three (3) years, and such exp ansion is
762762 commenced on or after January 1, 2000, th e three factors shall be
763763
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814814 apportioned with property and payroll, each comprising twenty -five
815815 percent (25%) of the apportionment factor and sales comprising fif ty
816816 percent (50%) of the apportionment factor. The apportionment
817817 factors shall be computed as foll ows:
818818 a. The property factor is a fraction, the numerator of
819819 which is the average value of the taxpayer ’s real and
820820 tangible personal property owned or rented a nd used in
821821 this state during the tax period and the denominator
822822 of which is the average value of a ll the taxpayer’s
823823 real and tangible personal property everywhere owned
824824 or rented and used during the tax period.
825825 (1) Property, the income from which is separa tely
826826 allocated in paragraph 4 of this subsectio n,
827827 shall not be included in determining this
828828 fraction. The numerator of the fraction shall
829829 include a portion of the investment in
830830 transportation and other equipment having no
831831 fixed situs, such as rolling stoc k, buses, trucks
832832 and trailers, including machinery and equipment
833833 carried thereon, airplanes, sales persons’
834834 automobiles and other similar equipment, in the
835835 proportion that miles traveled in Oklahoma by
836836 such equipment bears to total miles traveled,
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888888 (2) Property owned by the taxpayer is valued at its
889889 original cost. Property rented by the taxpayer
890890 is valued at eight times the net annual rental
891891 rate. Net annual rental rate is the annual
892892 rental rate paid by the taxpayer, less any annual
893893 rental rate received by the taxpayer from
894894 subrentals,
895895 (3) The average value of property shall be determined
896896 by averaging the values at the beginning and
897897 ending of the tax period but the Oklahoma Tax
898898 Commission may require the averaging of monthly
899899 values during the tax period if r easonably
900900 required to reflect properly the aver age value of
901901 the taxpayer’s property;
902902 b. The payroll factor is a fraction, the numerator of
903903 which is the total compensation for services rendered
904904 in the state during the tax period, and the
905905 denominator of which is the total compensation for
906906 services rendered everywhere during the tax period.
907907 “Compensation”, as used in this subsection means those
908908 paid-for services to the extent related to the unitary
909909 business but does not include officers ’ salaries,
910910 wages and other compensation.
911911
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962962 (1) In the case of a transpo rtation enterprise, the
963963 numerator of the fraction s hall include a portion
964964 of such expenditure in connection with employees
965965 operating equipment over a fixed route, such as
966966 railroad employees, airline pilots, or bus
967967 drivers, in this state only a part of the time,
968968 in the proportion that mileage traveled in
969969 Oklahoma bears to total mileage traveled by such
970970 employees,
971971 (2) In any case the numerator of the fraction shall
972972 include a portion of such expenditures in
973973 connection with itinerant employees, such as
974974 traveling salespersons, in this state only a part
975975 of the time, in the proportion that time spent in
976976 Oklahoma bears to total time spent in furtherance
977977 of the enterprise by such employees;
978978 c. The sales factor is a fract ion, the numerator of which
979979 is the total sales or gross revenue of the taxpayer in
980980 this state during the tax period, and the denominator
981981 of which is the total sales or gross revenue of the
982982 taxpayer everywhere during the tax period. “Sales”,
983983 as used in this subsection does not include sales or
984984 gross revenue which are separately allocated in
985985 paragraph 4 of this subsection.
986986
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10371037 (1) Sales of tangible personal property have a situs
10381038 in this state if the property is delivered or
10391039 shipped to a purchaser other than the United
10401040 States government, within this state reg ardless
10411041 of the FOB point or other conditions of the sale;
10421042 or the property is shipped from an office, store,
10431043 warehouse, factory or other place of storage in
10441044 this state and (a) the purchaser is the United
10451045 States government or (b) the taxpayer is not
10461046 doing business in the state of the destination of
10471047 the shipment.
10481048 (2) In the case of a railroad or interurban railway
10491049 enterprise, the numerator of the fraction shall
10501050 not be less than the allocation of revenues to
10511051 this state as shown in its annual report to the
10521052 Corporation Commission.
10531053 (3) In the case of an airline, t ruck or bus
10541054 enterprise or freight car, tank car, refrigerator
10551055 car or other railroad equipment enterprise, the
10561056 numerator of the fraction shall include a portio n
10571057 of revenue from interstate transportation in the
10581058 proportion that interstate mileage traveled in
10591059 Oklahoma bears to total interstate mileage
10601060 traveled.
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11121112 (4) In the case of an oil, gasoline or gas pipeline
11131113 enterprise, the numerator of the fraction shall
11141114 be either the total of traffic units of the
11151115 enterprise within Oklahoma or the revenue
11161116 allocated to Oklahoma based upon miles moved, at
11171117 the option of the taxpayer, and the denominator
11181118 of which shall be the total of traffic units of
11191119 the enterprise or the revenue of the enterprise
11201120 everywhere as appropriate to the numerator. A
11211121 “traffic unit” is hereby defined as the
11221122 transportation for a distance of one (1) mile of
11231123 one (1) barrel of oil, one (1) gallon of gasoline
11241124 or one thousand (1,000) cubic feet of natural or
11251125 casinghead gas, as the case may be.
11261126 (5) In the case of a telephone or telegraph or other
11271127 communication enterprise, the numerator of the
11281128 fraction shall include that portion of the
11291129 interstate revenue as is allocated pursuant to
11301130 the accounting procedures prescri bed by the
11311131 Federal Communications Commission; p rovided that
11321132 in respect to each corporation or busi ness entity
11331133 required by the Federal Communications Commission
11341134 to keep its books and records in accordance with
11351135 a uniform system of accounts prescribed by such
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11871187 Commission, the intrastate net income shall be
11881188 determined separately in the manner provided by
11891189 such uniform system of accounts and only the
11901190 interstate income shall be subject to allocation
11911191 pursuant to the provisions of this subsection.
11921192 Provided further, that the gross revenue factors
11931193 shall be those as are determined pursuant to the
11941194 accounting procedures prescribed by the Federal
11951195 Communications Commission.
11961196 In any case where the apportionment of the three factors
11971197 prescribed in this paragraph attributes to O klahoma a portion of net
11981198 income of the enterpri se out of all appropriate proportion to the
11991199 property owned and/or business transacted within this state, because
12001200 of the fact that one or more of the factors so prescribed are not
12011201 employed to any appreciable ex tent in furtherance of the enterprise;
12021202 or because one or more factors not so prescribed are employ ed to a
12031203 considerable extent in furtherance of the enterprise; or because of
12041204 other reasons, the Tax Commission is empowered to permit, after a
12051205 showing by taxpayer that an excessive portion of net income has been
12061206 attributed to Oklahoma, or require, when in i ts judgment an
12071207 insufficient portion of net income has been attributed to Oklahoma,
12081208 the elimination, substitution, or use of additional factors, or
12091209 reduction or increase in the weight of such prescribed fac tors.
12101210 Provided, however, that any such variance fr om such prescribed
12111211
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12621262 factors which has the effect of increasing the portion of net income
12631263 attributable to Oklahoma must not be inherently arbitrary, and
12641264 application of the recomputed final apportionment to t he net income
12651265 of the enterprise must attribute to O klahoma only a reasonable
12661266 portion thereof.
12671267 6. For calendar years 1997 and 1998, the owner of a new or
12681268 expanded agricultural commodity processing facility in this state
12691269 may exclude from Oklahoma taxable in come, or in the case of an
12701270 individual, the Oklahoma adjusted gross income, fifteen percent
12711271 (15%) of the investment by the owner in the new or expanded
12721272 agricultural commodity processing facility. For calendar year 1999,
12731273 and all subsequent years, the percen tage, not to exceed fifteen
12741274 percent (15%), availabl e to the owner of a new or expanded
12751275 agricultural commodity processing facility in this state claiming
12761276 the exemption shall be adjusted annually so that the tot al estimated
12771277 reduction in tax liability does no t exceed One Million Dollars
12781278 ($1,000,000.00) annual ly. The Tax Commission shall promulgate rules
12791279 for determining the percentage of the investment which each eligible
12801280 taxpayer may exclude. The exclusion provi ded by this paragraph
12811281 shall be taken in the tax able year when the investment is made. In
12821282 the event the total reduction in tax liability authorized by this
12831283 paragraph exceeds One Million Dollars ($1,000,000.00) in any
12841284 calendar year, the Tax Commission shall permit any excess over One
12851285 Million Dollars ($1,000,000.00) and shall factor such excess into
12861286
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13371337 the percentage for subsequent years. Any amount of the exemption
13381338 permitted to be excluded pursuant to the provisions of this
13391339 paragraph but not used in any year m ay be carried forward as an
13401340 exemption from income pursuant to the provisions of this paragraph
13411341 for a period not exceeding six (6) years following the year in which
13421342 the investment was originally made.
13431343 For purposes of this paragraph:
13441344 a. “Agricultural commodi ty processing facility” means
13451345 building, structures, fixtures and improvements used
13461346 or operated primarily for the processing or production
13471347 of marketable products from agricultural commodities.
13481348 The term shall also mean a dairy operation that
13491349 requires a depreciable investment of at least Two
13501350 Hundred Fifty Thousand Dollars ($250,000.00) and which
13511351 produces milk from dairy cows. The term does not
13521352 include a facility that provides only, and nothing
13531353 more than, storage, cleaning, drying or transportation
13541354 of agricultural commodities, and
13551355 b. “Facility” means each part of the facility which is
13561356 used in a process pr imarily for:
13571357 (1) the processing of agricultural commodities ,
13581358 including receiving or storing agricultural
13591359 commodities, or the production of milk at a dairy
13601360 operation,
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14121412 (2) transporting the agricultural commo dities or
14131413 product before, during or after the proce ssing,
14141414 or
14151415 (3) packaging or otherwise preparing the product for
14161416 sale or shipment.
14171417 7. Despite any provision to the contrary in paragraph 3 of this
14181418 subsection, for taxable years beginning after December 31, 1999, in
14191419 the case of a taxpayer which has a farming loss, such farming loss
14201420 shall be considered a net operating loss carryback in accordance
14211421 with and to the extent of the Internal Revenue Code, 26 U.S.C.,
14221422 Section 172(b)(G). However, the amount of the net operating loss
14231423 carryback shall not exceed the lesse r of:
14241424 a. Sixty Thousand Dollars ($60,000.00), or
14251425 b. the loss properly shown on Schedule F of the Internal
14261426 Revenue Service Form 1040 reduced by one -half (1/2) of
14271427 the income from all other sources other than reflected
14281428 on Schedule F.
14291429 8. In taxable years begi nning after December 31, 1995, all
14301430 qualified wages equal to the federal income tax credit set forth in
14311431 26 U.S.C.A., Section 45A, shall be deducted from taxabl e income.
14321432 The deduction allowed pursuant to th is paragraph shall only be
14331433 permitted for the tax ye ars in which the federal tax credit pursuant
14341434 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
14351435
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14861486 paragraph, “qualified wages” means those wages use d to calculate the
14871487 federal credit pursuant to 2 6 U.S.C.A., Section 45A.
14881488 9. In taxable years begin ning after December 31, 2005, an
14891489 employer that is eligible for and utilizes the Safety Pays OSHA
14901490 Consultation Service provided by the Oklahoma Department of L abor
14911491 shall receive an exemption from taxable in come in the amount of One
14921492 Thousand Dollars ($1,000. 00) for the tax year that the service is
14931493 utilized.
14941494 10. For taxable years beginning on or after January 1, 2010,
14951495 there shall be added to Oklahoma taxable inco me an amount equal to
14961496 the amount of deferred in come not included in such taxable income
14971497 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
14981498 as amended by Section 1231 of the American Recovery and Reinvestment
14991499 Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
15001500 Oklahoma taxable income an amount equal to the amount of deferred
15011501 income included in such taxable income pursuant to Section 108(i)(1)
15021502 of the Internal Revenue Code by Section 1231 of the American
15031503 Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
15041504 11. For taxable year s beginning on or after January 1, 2019,
15051505 there shall be subtracted from Oklahoma taxable income or adjusted
15061506 gross income any item of income or gain, and there shall be added to
15071507 Oklahoma taxable income or adjus ted gross income any item of loss or
15081508 deduction that in the absence of an election pursuant to the
15091509 provisions of the Pass -Through Entity Tax Equity Act of 2019 would
15101510
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15611561 be allocated to a member or to an indirect member of an electing
15621562 pass-through entity pursua nt to Section 2351 et seq. of this title,
15631563 if (i) the electing pass-through entity has accounted fo r such item
15641564 in computing its Oklahoma net entity income or loss pursuant to the
15651565 provisions of the Pass -Through Entity Tax Equity Act of 2019, and
15661566 (ii) the total amount of tax attributable to any resulting Oklahoma
15671567 net entity income has been paid. The Okla homa Tax Commission shall
15681568 promulgate rules for the reporting of such exclusion to direct and
15691569 indirect members of the electing pass -through entity. As used in
15701570 this paragraph, “electing pass-through entity”, “indirect member”,
15711571 and “member” shall be defined in the same manner as prescribed by
15721572 Section 2 of this act Section 2355.1P-2 of this title.
15731573 Notwithstanding the application of this paragraph, the adjusted tax
15741574 basis of any ownership interes t in a pass-through entity for
15751575 purposes of Section 2351 et seq. of this title shall be equal to its
15761576 adjusted tax basis for federal income tax purposes.
15771577 B. 1. The taxable income of any corporation shall be further
15781578 adjusted to arrive at Oklahoma taxable i ncome, except those
15791579 corporations electing treatment as provided in subchapter S of the
15801580 Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
15811581 2365 of this title, deductions pursuant to the provisions of the
15821582 Accelerated Cost Recovery System as defined and allowed in the
15831583 Economic Recovery Tax Act of 1981, Publi c Law 97-34, 26 U.S.C.,
15841584 Section 168, for depreciation of assets placed into service after
15851585
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16361636 December 31, 1981, shall not be allowed in calculating Oklahoma
16371637 taxable income. Such corporations shall be allowed a deduction for
16381638 depreciation of assets placed into service after December 31, 1981,
16391639 in accordance with provisions of the Internal Revenue Code, 26
16401640 U.S.C., Section 1 et seq., in effect immediately prior to the
16411641 enactment of the Accelerated C ost Recovery System. The Oklahoma tax
16421642 basis for all such assets pl aced into service after December 31,
16431643 1981, calculated in this section shall be retained and utilized for
16441644 all Oklahoma income tax purposes through the final dispositio n of
16451645 such assets.
16461646 Notwithstanding any other provisions of the Oklahoma Income Tax
16471647 Act, Section 2351 et seq. of this title, or of the Internal Revenue
16481648 Code to the contrary, this subsection shall control calculation of
16491649 depreciation of assets placed into serv ice after December 31, 1981,
16501650 and before January 1, 1983.
16511651 For assets placed in service and held by a corporation in which
16521652 accelerated cost recovery system was previously disallowed, an
16531653 adjustment to taxable income is required in the first taxable year
16541654 beginning after December 31, 1982, to reconcile the basis of such
16551655 assets to the basis allowed i n the Internal Revenue Code. The
16561656 purpose of this adjustment is to equalize the basis and allowance
16571657 for depreciation accounts between that reported to the Internal
16581658 Revenue Service and that reported to Oklahoma.
16591659
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17101710 2. For tax years beginning on or after Janua ry 1, 2009, and
17111711 ending on or before December 31, 2009, there shall be added to
17121712 Oklahoma taxable income any amount in excess of One Hundred Seventy -
17131713 five Thousand Dollars ($175,000.00) which has been deducted as a
17141714 small business expense under Internal Revenu e Code, Section 179 as
17151715 provided in the American Recovery and Reinvestment Act of 2009.
17161716 C. 1. For taxable years beginning after December 31, 1987, the
17171717 taxable income of any corporation sha ll be further adjusted to
17181718 arrive at Oklahoma taxable income for tra nsfers of technology to
17191719 qualified small businesses located in Oklahoma. Such transferor
17201720 corporation shall be allowed an exemption from taxable income of an
17211721 amount equal to the amount of ro yalty payment received as a result
17221722 of such transfer; provided, howe ver, such amount shall not exceed
17231723 ten percent (10%) of the amount of gross proceeds received by such
17241724 transferor corporation as a result of the technology transfer. S uch
17251725 exemption shall be allowed for a period not to exceed ten (10) years
17261726 from the date of receipt of the first royalty payment accruing from
17271727 such transfer. No exemption may be claimed for transfers of
17281728 technology to qualified small businesses made prior to January 1,
17291729 1988.
17301730 2. For purposes of this subsection:
17311731 a. “Qualified small business ” means an entity, whether
17321732 organized as a corporation, partnership, or
17331733 proprietorship, organized for profit with its
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17851785 principal place of business located within this state
17861786 and which meets the follo wing criteria:
17871787 (1) Capitalization of not more than Two Hundred Fift y
17881788 Thousand Dollars ($250,000.00),
17891789 (2) Having at least fifty percent (50%) of its
17901790 employees and assets located in Oklahoma at the
17911791 time of the transfer, and
17921792 (3) Not a subsidiary or affiliate of the transferor
17931793 corporation;
17941794 b. “Technology” means a proprietary process, formula,
17951795 pattern, device or compilation of scientific or
17961796 technical information which is not in the public
17971797 domain;
17981798 c. “Transferor corporation ” means a corporation which is
17991799 the exclusive and undisputed owner of the technology
18001800 at the time the transfe r is made; and
18011801 d. “Gross proceeds” means the total amount of
18021802 consideration for the transfer of technology, whether
18031803 the consideration is in money or otherwise.
18041804 D. 1. For taxable years begi nning after December 31, 2005, the
18051805 taxable income of any corporatio n, estate or trust, shall be further
18061806 adjusted for qualifying gains receiving capital treatment. Such
18071807 corporations, estates or trusts shall be allowed a deduction fro m
18081808 Oklahoma taxable inco me for the amount of qualifying gains receiving
18091809
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18601860 capital treatment earned by the corporation, estate or trust during
18611861 the taxable year and included in the federal taxable income of such
18621862 corporation, estate or trust.
18631863 2. As used in this subsection:
18641864 a. “qualifying gains receiving capital treatment ” means
18651865 the amount of net cap ital gains, as defined in Section
18661866 1222(11) of the Internal Revenue Code, included in the
18671867 federal income tax return of the corporation, estate
18681868 or trust that result fro m:
18691869 (1) the sale of real property or tangible personal
18701870 property located within Oklahoma tha t has been
18711871 directly or indirectly owned by the corporation,
18721872 estate or trust for a holding period of at least
18731873 five (5) years prior to the date of the
18741874 transaction from which such net capital gains
18751875 arise,
18761876 (2) the sale of stock or on the sale of an ownership
18771877 interest in an Oklahoma company, limited
18781878 liability company, or partnership where such
18791879 stock or ownership interest has been directly or
18801880 indirectly owned by the corporat ion, estate or
18811881 trust for a holding period of at least three (3)
18821882 years prior to the date of the transaction from
18831883 which the net capital gains arise, or
18841884
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19351935 (3) the sale of real property, tangible personal
19361936 property or intangible personal property located
19371937 within Oklahoma as part of the sale of all or
19381938 substantially all of the assets of an Oklahoma
19391939 company, limited liability company, or
19401940 partnership where such property has been directly
19411941 or indirectly owned by such entity owned by the
19421942 owners of such entity, and used in or derived
19431943 from such entity for a period of at least three
19441944 (3) years prior to the date of the transaction
19451945 from which the net capital gains arise,
19461946 b. “holding period” means an uninterrupted period of
19471947 time. The holding period shall include any additional
19481948 period when the property was held by another
19491949 individual or entity, if such additional perio d is
19501950 included in the taxpayer ’s holding period for the
19511951 asset pursuant to the Internal Revenue Code,
19521952 c. “Oklahoma company”, “limited liability company ”, or
19531953 “partnership” means an entity whos e primary
19541954 headquarters have been located in Oklahoma for at
19551955 least three (3) uninterrupted years prior to the date
19561956 of the transaction from which the net capital gains
19571957 arise,
19581958
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20092009 d. “direct” means the taxpayer directly owns the asset,
20102010 and
20112011 e. “indirect” means the taxpayer owns an interest in a
20122012 pass-through entity (or chain of pa ss-through
20132013 entities) that sells the asset that gives rise to the
20142014 qualifying gains receiving capital treatment.
20152015 (1) With respect to sales of real property or
20162016 tangible personal property locat ed within
20172017 Oklahoma, the deduction described in this
20182018 subsection shall not apply unless the pass -
20192019 through entity that makes the sale has held the
20202020 property for not less than five (5) uninterrupted
20212021 years prior to the date of the transacti on that
20222022 created the capital gain, and each pass-through
20232023 entity included in the chain of ow nership has
20242024 been a member, partner, or shareholder of the
20252025 pass-through entity in the tier immediately below
20262026 it for an uninterrupted period of not less than
20272027 five (5) years.
20282028 (2) With respect to sales of stock or ownership
20292029 interest in or sales of all or subst antially all
20302030 of the assets of an Oklahoma company, limited
20312031 liability company, or partnership, the deduction
20322032 described in this subsection shall not apply
20332033
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20842084 unless the pass-through entity that makes the
20852085 sale has held the stock or ownership interest or
20862086 the assets for not less than three (3)
20872087 uninterrupted years prior to the date of the
20882088 transaction that created the capital gain, and
20892089 each pass-through entity included in the ch ain of
20902090 ownership has been a member, partner or
20912091 shareholder of the pass -through entity in the
20922092 tier immediately below it for an uninterrupted
20932093 period of not less than three (3) years.
20942094 E. The Oklahoma adjusted gross income of any individual
20952095 taxpayer shall be further adjusted as fol lows to arrive at Oklahoma
20962096 taxable income:
20972097 1. a. In the case of individuals, there shall be added or
20982098 deducted, as the case may be, the difference necessary
20992099 to allow personal exemptions of One Thousand Dollars
21002100 ($1,000.00) in lieu of t he personal exemptions allowed
21012101 by the Internal Revenue Code.
21022102 b. There shall be allowed an additional exemption of One
21032103 Thousand Dollars ($1,000.00) for each taxpayer or
21042104 spouse who is blind at the close of the tax year. For
21052105 purposes of this subparagraph, an individual is blind
21062106 only if the central visual acuity of the individual
21072107 does not exceed 20/200 in the better eye with
21082108
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21592159 correcting lenses, or if the visual acuity of the
21602160 individual is greater than 20/200, but is accompanied
21612161 by a limitation in the fields of vision such that the
21622162 widest diameter of the visual field subtends an angle
21632163 no greater than twenty (20) degrees.
21642164 c. There shall be allowed an additional exemption of One
21652165 Thousand Dollars ($1,000.00) for each taxpayer or
21662166 spouse who is sixty-five (65) years of age or older at
21672167 the close of the tax year based upon the filing status
21682168 and federal adjusted gross income of the taxpayer.
21692169 Taxpayers with the following filing status may claim
21702170 this exemption if the federal adjusted gross income
21712171 does not exceed:
21722172 (1) Twenty-five Thousand Dollars ($25,000.00) if
21732173 married and filing jointly;
21742174 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
21752175 if married and filing separately;
21762176 (3) Fifteen Thousand Dollars ($15,000.00) if single;
21772177 and
21782178 (4) Nineteen Thousand Dollars ($19,000.00) if a
21792179 qualifying head of household.
21802180 Provided, for taxable years beginning after December
21812181 31, 1999, amounts included in the calculation of
21822182 federal adjusted gross income pursuant to the
21832183
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22342234 conversion of a traditional individual retirement
22352235 account to a Roth indiv idual retirement accoun t shall
22362236 be excluded from federal adjusted gross income for
22372237 purposes of the income thresholds provided in this
22382238 subparagraph.
22392239 2. a. For taxable years beginning on or before December 31,
22402240 2005, in the case of individuals who use the stan dard
22412241 deduction in determining taxable income, there shall
22422242 be added or deducted, as the cas e may be, the
22432243 difference necessary to allow a standard deduction in
22442244 lieu of the standard deduction allowed by the Internal
22452245 Revenue Code, in an amount equal to the lar ger of
22462246 fifteen percent (15%) of the Oklahoma adjusted gross
22472247 income or One Thousand Dollars ($1,000.00), but not to
22482248 exceed Two Thousand Dollars ($2,000.00), except that
22492249 in the case of a married individual filing a separate
22502250 return such deduction shall be the larger of fifteen
22512251 percent (15%) of such Oklahoma adjusted gross income
22522252 or Five Hundred Dollars ($500.00), but not to exceed
22532253 the maximum amount of One Thousand Dollars
22542254 ($1,000.00).
22552255 b. For taxable years beginning on or after January 1,
22562256 2006, and before Janu ary 1, 2007, in the cas e of
22572257 individuals who use the standard deduction in
22582258
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23092309 determining taxable income, there shall be added or
23102310 deducted, as the case may be, the difference necessary
23112311 to allow a standard deduction in lieu of the standard
23122312 deduction allowed by the Internal Revenue Co de, in an
23132313 amount equal to:
23142314 (1) Three Thousand Dollars ($3,000.00), if the filing
23152315 status is married filing joint, head of household
23162316 or qualifying widow; or
23172317 (2) Two Thousand Dollars ($2,000.00), if the filing
23182318 status is single or marrie d filing separate.
23192319 c. For the taxable year beginning on January 1, 2007, and
23202320 ending December 31, 2007, in the case of individuals
23212321 who use the standard deduction in determining taxable
23222322 income, there shall be added or deducted, as the case
23232323 may be, the difference necessary to allow a standard
23242324 deduction in lieu of the standard deduction allowed by
23252325 the Internal Revenue Code, in an amount equal to:
23262326 (1) Five Thousand Five Hundred Dollars ($5,500.00),
23272327 if the filing status is married filing joint or
23282328 qualifying widow; or
23292329 (2) Four Thousand One Hundred Twenty-five Dollars
23302330 ($4,125.00) for a head of household ; or
23312331
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23822382 (3) Two Thousand Seven Hundred Fifty Dollars
23832383 ($2,750.00), if the filing status is single or
23842384 married filing separate.
23852385 d. For the taxable year beginning on January 1, 2008, and
23862386 ending December 31, 2008, in the case of individuals
23872387 who use the standard de duction in determining taxable
23882388 income, there shall be added or deducted, as the case
23892389 may be, the difference necessary to allow a standard
23902390 deduction in lieu of the sta ndard deduction allowed by
23912391 the Internal Revenue Code, in an amount equal to:
23922392 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
23932393 the filing status is married filing joint or
23942394 qualifying widow, or
23952395 (2) Four Thousand Eight Hundred Seventy -five Dollars
23962396 ($4,875.00) for a head of hou sehold, or
23972397 (3) Three Thousand Two Hundred Fifty Dollars
23982398 ($3,250.00), if the filing status is single or
23992399 married filing separate.
24002400 e. For the taxable year beginning on January 1, 2009, and
24012401 ending December 31, 2009, in the case of indivi duals
24022402 who use the standard deduction in determining taxable
24032403 income, there shall be added o r deducted, as the case
24042404 may be, the difference necessary to allow a standard
24052405
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24562456 deduction in lieu of the standard deduction allowed by
24572457 the Internal Revenue Code, in an a mount equal to:
24582458 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
24592459 if the filing status is married filing joint or
24602460 qualifying widow, or
24612461 (2) Six Thousand Three Hundred Seventy -five Dollars
24622462 ($6,375.00) for a head of household, or
24632463 (3) Four Thousand Two Hund red Fifty Dollars
24642464 ($4,250.00), if the filing status is single or
24652465 married filing separate.
24662466 Oklahoma adjusted gross income shall be increased by
24672467 any amounts paid for motor vehicle excise taxes which
24682468 were deducted as allowed by the Internal Revenue Code.
24692469 f. For taxable years beginn ing on or after January 1,
24702470 2010, and ending on December 31, 2016, i n the case of
24712471 individuals who use the standard deduction in
24722472 determining taxable income, there shall be added or
24732473 deducted, as the case may be, the difference necessary
24742474 to allow a standard de duction equal to the standard
24752475 deduction allowed by the Internal Rev enue Code, based
24762476 upon the amount and filing status prescribed by such
24772477 Code for purposes of filing federal individual income
24782478 tax returns.
24792479
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25302530 g. For taxable years beginnin g on or after January 1 ,
25312531 2017, in the case of individuals who use the standard
25322532 deduction in determining taxable income, there shall
25332533 be added or deducted, as the case may be, the
25342534 difference necessary to allow a standard deduction in
25352535 lieu of the standard ded uction allowed by the I nternal
25362536 Revenue Code, as follows:
25372537 (1) Six Thousand Three Hundred Fi fty Dollars
25382538 ($6,350.00) for single or married filing
25392539 separately,
25402540 (2) Twelve Thousand Seven Hundred Dollars
25412541 ($12,700.00) for married filing jointly or
25422542 qualifying widower with dependent child , and
25432543 (3) Nine Thousand Three Hundred Fifty Dollars
25442544 ($9,350.00) for head of household.
25452545 3. a. In the case of resident and part -year resident
25462546 individuals having adjusted gross income from sources
25472547 both within and without the state, the itemized or
25482548 standard deductions and personal exemptions shall be
25492549 reduced to an amount whic h is the same portion of the
25502550 total thereof as Oklahoma adjusted gross income is of
25512551 adjusted gross income. To the extent itemized
25522552 deductions include allowable moving expense, proration
25532553 of moving expense shall not be required or permitted
25542554
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26052605 but allowable moving expense shall be fully deductible
26062606 for those taxpayers moving within or into Oklahoma and
26072607 no part of moving expense shall be deductible for
26082608 those taxpayers moving w ithout or out of Oklaho ma.
26092609 All other itemized or standard deductions and personal
26102610 exemptions shall be subject to proration as provided
26112611 by law.
26122612 b. For taxable years beginning on or after January 1,
26132613 2018, the net amount of itemized deductions allowable
26142614 on an Oklahoma income tax r eturn, subject to the
26152615 provisions of paragraph 24 of this subsection , shall
26162616 not exceed Seventeen Thousand Dollars ($17,000.00).
26172617 For purposes of this subparagraph, charitable
26182618 contributions and medical expenses deductible for
26192619 federal income tax purposes the following shall be
26202620 excluded from the amount of Seventeen Thousand D ollars
26212621 ($17,000.00) as specified by this subparagraph :
26222622 (1) charitable contributions deductible for federal
26232623 income tax purposes,
26242624 (2) medical expenses deductible for fe deral income
26252625 tax purposes, and
26262626 (3) gambling losses deductible for federal income tax
26272627 purposes.
26282628
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26792679 4. A resident individual with a physical disability
26802680 constituting a substantial handicap to employment may deduct from
26812681 Oklahoma adjusted gross incom e such expenditures to modify a motor
26822682 vehicle, home or workplace as are necessary to compensate for his or
26832683 her handicap. A veteran certified by the Department of Veterans
26842684 Affairs of the federal government as having a service -connected
26852685 disability shall be conclusively presumed to be an individual with a
26862686 physical disability constituting a substantial handica p to
26872687 employment. The Tax Commission shall promulgate rules containing a
26882688 list of combinations of common disabilities and modifications which
26892689 may be presumed to qualify for this deduction. The Tax Commissi on
26902690 shall prescribe necessary requirements for verif ication.
26912691 5. a. Before July 1, 2010, the first One Thousand Five
26922692 Hundred Dollars ($1,500.00) received by any person
26932693 from the United States as salary or co mpensation in
26942694 any form, other than retirement benefi ts, as a member
26952695 of any component of the Armed Force s of the United
26962696 States shall be deducted from taxable income.
26972697 b. On or after July 1, 2010, one hundred percent (100%)
26982698 of the income received by any perso n from the United
26992699 States as salary or compensation i n any form, other
27002700 than retirement benefits, as a me mber of any component
27012701 of the Armed Forces of the United States shall be
27022702 deducted from taxable income.
27032703
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27542754 c. Whenever the filing of a timely income tax retur n by a
27552755 member of the Armed Forces of the United Stat es is
27562756 made impracticable or impossible of accomplis hment by
27572757 reason of:
27582758 (1) absence from the United States, which term
27592759 includes only the states and the District of
27602760 Columbia;
27612761 (2) absence from the State of O klahoma while on
27622762 active duty; or
27632763 (3) confinement in a hospital within the United
27642764 States for treatment o f wounds, injuries or
27652765 disease,
27662766 the time for filing a return and paying an income tax
27672767 shall be and is hereby extended without incurring
27682768 liability for interest or penalties, to the fifteenth
27692769 day of the third month following the month in which:
27702770 (a) Such individual shall return to the United
27712771 States if the extension is granted pursuant
27722772 to subparagraph a of this paragraph, return
27732773 to the State of Oklahoma if the extension is
27742774 granted pursuant to subparagraph b of t his
27752775 paragraph or be discharged from such
27762776 hospital if the extension is granted
27772777
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28282828 pursuant to subparagraph c of this
28292829 paragraph; or
28302830 (b) An executor, administrator, or conservator
28312831 of the estate of the taxpayer is appointed,
28322832 whichever event occurs the earliest.
28332833 Provided, that the Tax Commission may, in its discre tion, grant
28342834 any member of the Armed Forces of the United States an extension of
28352835 time for filing of income tax returns and payment of income tax
28362836 without incurring liabilities for interest or penalties. Suc h
28372837 extension may be granted only when in the judgmen t of the Tax
28382838 Commission a good cause exists therefor and may be for a period in
28392839 excess of six (6) months. A record of every such extension granted,
28402840 and the reason therefor, shall be kept.
28412841 6. Before July 1, 2010, the salary or any other form of
28422842 compensation, received from the United States by a member of any
28432843 component of the Armed Forces of the United States, shall be
28442844 deducted from taxable income during t he time in which the person is
28452845 detained by the enemy in a conflict, is a prisoner of war or is
28462846 missing in action and not deceased; provided, after July 1, 2010,
28472847 all such salary or compensation shall be subject to the deduction as
28482848 provided pursuant to parag raph 5 of this subsection.
28492849 7. a. An individual taxpayer, whether resident or
28502850 nonresident, may deduct an amount equal to the federal
28512851
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29022902 income taxes paid by the taxpayer during the taxable
29032903 year.
29042904 b. Federal taxes as described in subparagraph a of this
29052905 paragraph shall be deductible by any individual
29062906 taxpayer, whether resident or nonresident, only to the
29072907 extent they relate to income subject to taxation
29082908 pursuant to the provisions of the Oklahoma Income Tax
29092909 Act. The maximum amount allowable in the preceding
29102910 paragraph shall be prorated on the ratio of the
29112911 Oklahoma adjusted gross income to federal adjusted
29122912 gross income.
29132913 c. For the purpose of this paragraph, “federal income
29142914 taxes paid” shall mean federal income taxes, surtaxes
29152915 imposed on incomes or excess profits taxes , as though
29162916 the taxpayer was on the accrual basis. In determining
29172917 the amount of deduction for federal income taxes for
29182918 tax year 2001, the amount of the deduction shall not
29192919 be adjusted by the amount of any accelerated ten
29202920 percent (10%) tax rate bracket cre dit or advanced
29212921 refund of the credit received during the tax year
29222922 provided pursuant to the federal Econ omic Growth and
29232923 Tax Relief Reconciliation Act of 2001, P.L. No. 107 -
29242924 16, and the advanced refund of such credit shall not
29252925 be subject to taxation.
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29772977 d. The provisions of this paragraph shall apply to all
29782978 taxable years ending after December 31, 1978, and
29792979 beginning before January 1, 2006.
29802980 8. Retirement benefits not to exceed Five Thousand Five Hundred
29812981 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Fi ve
29822982 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
29832983 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
29842984 years, which are received by an individual from the civil service of
29852985 the United States, the Oklahoma Public Employees Re tirement System,
29862986 the Teachers’ Retirement System of Oklahoma, the Oklahoma Law
29872987 Enforcement Retirement S ystem, the Oklahoma Firefighters Pension and
29882988 Retirement System, the Oklahoma Police Pension and Retirement
29892989 System, the employee retirement systems create d by counties pursuant
29902990 to Section 951 et seq. of Tit le 19 of the Oklahoma Statutes, the
29912991 Uniform Retirement System for Justices and Judges, the Oklahoma
29922992 Wildlife Conservation Department Retirement Fund, the Oklahoma
29932993 Employment Security Commission Retirement Plan, or the employee
29942994 retirement systems created by municipalities pursuant to Section 48 -
29952995 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
29962996 from taxable income.
29972997 9. In taxable years beginning after December 3l, 1984, Social
29982998 Security benefits received by an individual shall be exempt from
29992999 taxable income, to the extent such benefits are includ ed in the
30003000
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30513051 federal adjusted gross income pursuant to the provisions of Section
30523052 86 of the Internal Revenue Code, 26 U.S.C., Section 86.
30533053 10. For taxable years beginning after December 31, 1994, lump -
30543054 sum distributions from employer plans of deferred compensat ion,
30553055 which are not qualified plans within the meaning of Section 401(a)
30563056 of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which
30573057 are deposited in and accounted for within a separate bank account or
30583058 brokerage account in a financial institution wit hin this state,
30593059 shall be excluded from taxable income in the same manner as a
30603060 qualifying rollover contribution to an individual retirement account
30613061 within the meaning of Section 408 of the Internal Revenue Code, 26
30623062 U.S.C., Section 408. Amounts withdrawn fr om such bank or brokerage
30633063 account, including any earnings thereon, shall be included in
30643064 taxable income when withdrawn in the same manner as withdrawals f rom
30653065 individual retirement accounts within the meanin g of Section 408 of
30663066 the Internal Revenue Code.
30673067 11. In taxable years beginning after December 31, 1995,
30683068 contributions made to and interest received from a medical savings
30693069 account established pursuant to S ections 2621 through 2623 of Title
30703070 63 of the Oklahoma Statutes shall be exempt from taxable income.
30713071 12. For taxable years beginning after December 31, 1996, the
30723072 Oklahoma adjusted gross income of any individual taxpayer who is a
30733073 swine or poultry producer m ay be further adjusted for the deduction
30743074 for depreciation allowed for new construction or expansion cos ts
30753075
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31263126 which may be computed using the same depreciation method elected for
31273127 federal income tax purposes except that the useful life shall be
31283128 seven (7) years for purposes of this paragraph. If depreciation is
31293129 allowed as a deduction in determining the adjusted gross income of
31303130 an individual, any depreciation calculated and claimed pursuant to
31313131 this section shall in no event be a duplication of any depreciation
31323132 allowed or permitted on the federal income tax return of the
31333133 individual.
31343134 13. a. In taxable years beginnin g after December 31, 2002,
31353135 nonrecurring adoption expenses paid by a resident
31363136 individual taxpayer in connection with:
31373137 (1) the adoption of a minor, or
31383138 (2) a proposed adoption of a minor which did not
31393139 result in a decreed adoption,
31403140 may be deducted from the Okl ahoma adjusted gross
31413141 income.
31423142 b. The deductions for adoptions and proposed adoptions
31433143 authorized by this paragraph shall not exceed Twenty
31443144 Thousand Dollars ($20,000.00) per calendar year.
31453145 c. The Tax Commission shall promulgate rules to implement
31463146 the provisions of this paragraph which shall contain a
31473147 specific list of nonrecurring adoption expenses which
31483148 may be presumed to qualify for the deduction. The Tax
31493149
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32003200 Commission shall prescribe necessary requirements for
32013201 verification.
32023202 d. “Nonrecurring adoption expenses ” means adoption fees,
32033203 court costs, medical expenses, attorney fees and
32043204 expenses which are directly related to the legal
32053205 process of adoption of a child inc luding, but not
32063206 limited to, costs relating to the ad option study,
32073207 health and psychological examinations , transportation
32083208 and reasonable costs of lodging and food for the child
32093209 or adoptive parents which are incurred to complete the
32103210 adoption process and are n ot reimbursed by other
32113211 sources. The term “nonrecurring adoption expenses ”
32123212 shall not include attorney f ees incurred for the
32133213 purpose of litigating a contested adoption, from and
32143214 after the point of the initiation of the contest,
32153215 costs associated with physica l remodeling, renovation
32163216 and alteration of the adopt ive parents’ home or
32173217 property, except for a special needs child as
32183218 authorized by the court.
32193219 14. a. In taxable years beginning before January 1, 2005,
32203220 retirement benefits not to exceed the amounts
32213221 specified in this paragraph, which are received by an
32223222 individual sixty-five (65) years of age or older and
32233223 whose Oklahoma adjusted gross income is Twenty -five
32243224
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32753275 Thousand Dollars ($25,000.00) or less if the filing
32763276 status is single, head of household, or married filin g
32773277 separate, or Fifty Thousand Dollars ($50,000.00) o r
32783278 less if the filing status is married filing joint or
32793279 qualifying widow, shall be exempt from taxable income.
32803280 In taxable years beginning after December 31, 2004,
32813281 retirement benefits not to exceed the amo unts
32823282 specified in this paragraph, which are received by an
32833283 individual whose Oklahoma adjusted gross inc ome is
32843284 less than the qualifying amount specified in this
32853285 paragraph, shall be exempt from taxable income.
32863286 b. For purposes of this paragraph, the qualifyin g amount
32873287 shall be as follows:
32883288 (1) in taxable years beginning after December 31,
32893289 2004, and prior to Janu ary 1, 2007, the
32903290 qualifying amount shall be Thirty -seven Thousand
32913291 Five Hundred Dollars ($37,500.00) or less if the
32923292 filing status is single, head of house hold, or
32933293 married filing separate, or Seventy -five Thousand
32943294 Dollars ($75,000.00) or less if the filing s tatus
32953295 is married filing jointly or qualifying widow,
32963296 (2) in the taxable year beginning January 1, 2007,
32973297 the qualifying amount shall be Fifty Thousand
32983298 Dollars ($50,000.00) or less if the filing status
32993299
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33503350 is single, head of household, or married filing
33513351 separate, or One Hundred Thousand Dollars
33523352 ($100,000.00) or less if the filing status is
33533353 married filing jointly or qualifying widow,
33543354 (3) in the taxable year begin ning January 1, 2008,
33553355 the qualifying amount shall be Sixty-two Thousand
33563356 Five Hundred Dollars ($62,500.0 0) or less if the
33573357 filing status is single, head of household, or
33583358 married filing separate, or One Hundred Twenty -
33593359 five Thousand Dollars ($125,000.00) or le ss if
33603360 the filing status is married filing jointly or
33613361 qualifying widow,
33623362 (4) in the taxable year beginnin g January 1, 2009,
33633363 the qualifying amount shall be One Hundred
33643364 Thousand Dollars ($100,000.00) or less if the
33653365 filing status is single, head of household, o r
33663366 married filing separate, or Two Hundred Thousand
33673367 Dollars ($200,000.00) or less if the filing
33683368 status is married filing jointly or qualifying
33693369 widow, and
33703370 (5) in the taxable year beginning January 1, 2010,
33713371 and subsequent taxable years, there shall be no
33723372 limitation upon the qualifying amount.
33733373
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34243424 c. For purposes of this paragraph, “retirement benefits”
34253425 means the total distributions or withdrawals from the
34263426 following:
34273427 (1) an employee pension benefit plan which satisfies
34283428 the requirements of Section 401 of the Interna l
34293429 Revenue Code, 26 U.S.C., Section 401,
34303430 (2) an eligible deferred compensation plan that
34313431 satisfies the requirements of Section 457 of the
34323432 Internal Revenue Code, 26 U.S.C., Section 457,
34333433 (3) an individual retirement account, annuity or
34343434 trust or simplified emp loyee pension that
34353435 satisfies the requirements of Sec tion 408 of the
34363436 Internal Revenue Code, 26 U.S.C., S ection 408,
34373437 (4) an employee annuity subject to the provisions of
34383438 Section 403(a) or (b) of the Internal Revenue
34393439 Code, 26 U.S.C., Section 403(a) or (b),
34403440 (5) United States Retirement Bonds which satisfy the
34413441 requirements of Section 86 of the Internal
34423442 Revenue Code, 26 U.S.C., Section 86, or
34433443 (6) lump-sum distributions from a retirement plan
34443444 which satisfies the requirements of Section
34453445 402(e) of the Internal Reven ue Code, 26 U.S.C.,
34463446 Section 402(e).
34473447
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34983498 d. The amount of the exemption provided by this paragraph
34993499 shall be limited to Five Thousand Five Hundred Dollars
35003500 ($5,500.00) for the 2004 tax year, Seven Thousand Five
35013501 Hundred Dollars ($7,500.00) for the 2005 tax year an d
35023502 Ten Thousand Dollars ($10,000.00) for the tax year
35033503 2006 and for all subsequent tax years. Any indivi dual
35043504 who claims the exemption provided for in paragraph 8
35053505 of this subsection shall not be permitted to claim a
35063506 combined total exemption pursuant to this paragraph
35073507 and paragraph 8 of this subsection in an a mount
35083508 exceeding Five Thousand Five Hundred Dollars
35093509 ($5,500.00) for the 2004 tax year, Seven Thousand Five
35103510 Hundred Dollars ($7,500.00) for the 2005 tax year and
35113511 Ten Thousand Dollars ($10,000.00) for the 20 06 tax
35123512 year and all subsequent tax years.
35133513 15. In taxable years beginning after December 31, 1999, for an
35143514 individual engaged in production agriculture who has filed a
35153515 Schedule F form with the taxpayer ’s federal income tax return for
35163516 such taxable year, ther e shall be excluded from taxable income any
35173517 amount which was included as federal taxable income or fede ral
35183518 adjusted gross income and which consists of the discharge of an
35193519 obligation by a creditor of the taxpayer incurred to finance the
35203520 production of agricu ltural products.
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35723572 16. In taxable years beginning Dec ember 31, 2000, an amount
35733573 equal to one hundred perc ent (100%) of the amount of any scholarship
35743574 or stipend received from participation in the Oklahoma Police Corps
35753575 Program, as established in Section 2 -140.3 of Title 47 of the
35763576 Oklahoma Statutes shall be exem pt from taxable income.
35773577 17. a. In taxable years beg inning after December 31, 2001,
35783578 and before January 1, 2005, there shall be allowed a
35793579 deduction in the amount of contributions to accounts
35803580 established pursuant to the Oklahoma College Savings
35813581 Plan Act. The deduction shall equal the amount of
35823582 contributions to accounts, but in no event shall the
35833583 deduction for each contributor exceed Two Thousand
35843584 Five Hundred Dollars ($2,500.00) each taxable year for
35853585 each account.
35863586 b. In taxable years beginning after December 3 1, 2004,
35873587 each taxpayer shall be allowed a deduction for
35883588 contributions to accounts established pursuant to the
35893589 Oklahoma College Savings Plan Act. The maximum annual
35903590 deduction shall equal the amount of con tributions to
35913591 all such accounts plus any contributio ns to such
35923592 accounts by the taxpayer for prior taxab le years after
35933593 December 31, 2004, which were not deducted, but in no
35943594 event shall the deduction for each tax year exceed Ten
35953595 Thousand Dollars ($10,000.00) for each individual
35963596
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36473647 taxpayer or Twenty Thousand Dol lars ($20,000.00) for
36483648 taxpayers filing a joint retu rn. Any amount of a
36493649 contribution that is not deducted by the taxpayer in
36503650 the year for which the contribution is made may be
36513651 carried forward as a deducti on from income for the
36523652 succeeding five (5) years. F or taxable years
36533653 beginning after December 31, 2005, deductions may be
36543654 taken for contributions and rollovers made during a
36553655 taxable year and up to April 15 of the succeeding
36563656 year, or the due date of a taxpa yer’s state income tax
36573657 return, excluding extensions, whichever is later.
36583658 Provided, a deduction for the same contribution may
36593659 not be taken for two (2) different taxable years.
36603660 c. In taxable years beginning after December 31, 2006,
36613661 deductions for contributi ons made pursuant to
36623662 subparagraph b of this paragrap h shall be limited as
36633663 follows:
36643664 (1) for a taxpayer who qualified for the five -year
36653665 carryforward election and who takes a rollover or
36663666 nonqualified withdrawal during that period, the
36673667 tax deduction otherwise available pursuant to
36683668 subparagraph b of this paragra ph shall be reduced
36693669 by the amount which is equal to the rollover or
36703670 nonqualified withdrawal, and
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37223722 (2) for a taxpayer who elects to take a rollover or
37233723 nonqualified withdrawal within the same tax year
37243724 in which a contribution was made to the
37253725 taxpayer’s account, the tax deduction otherwise
37263726 available pursuant to subparagraph b of this
37273727 paragraph shall be reduced by the amount of the
37283728 contribution which is equal to the rollover or
37293729 nonqualified withdrawal.
37303730 d. If a taxpayer elects to take a rollover on a
37313731 contribution for which a deduction has been taken
37323732 pursuant to subparagraph b of this paragraph within
37333733 one (1) year of the date of contribution, the amount
37343734 of such rollover shall be included in the adjusted
37353735 gross income of the taxpayer in the taxable year of
37363736 the rollover.
37373737 e. If a taxpayer makes a nonqualified withdrawal of
37383738 contributions for which a deduction was taken pursuant
37393739 to subparagraph b of this paragraph, such nonqualified
37403740 withdrawal and any earnings thereon sha ll be included
37413741 in the adjusted gross income of the t axpayer in the
37423742 taxable year of the nonqualified wit hdrawal.
37433743 f. As used in this paragraph:
37443744
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37953795 (1) “non-qualified withdrawal ” means a withdrawal
37963796 from an Oklahoma College Savings Plan account
37973797 other than one of the following:
37983798 (a) a qualified withdrawal,
37993799 (b) a withdrawal made as a result of the death
38003800 or disability of the designated beneficiary
38013801 of an account,
38023802 (c) a withdrawal that is made on the account of
38033803 a scholarship or the allowance or payment
38043804 described in Section 135(d)(1)(B) or (C) or
38053805 by the Internal Revenue C ode, received by
38063806 the designated beneficiary to the extent the
38073807 amount of the refund does not exceed the
38083808 amount of the scholarship, allowance, or
38093809 payment, or
38103810 (d) a rollover or change of designated
38113811 beneficiary as permitted by subsection F of
38123812 Section 3970.7 of Title 70 of Oklahoma
38133813 Statutes, and
38143814 (2) “rollover” means the transfer of funds from the
38153815 Oklahoma College Savings Plan to any other plan
38163816 under Section 529 of the Internal Revenue Code.
38173817 18. For taxable yea rs beginning after December 31, 2005,
38183818 retirement benefits received by an individual from any component of
38193819
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38703870 the Armed Forces of the United States in an amount not to exceed the
38713871 greater of seventy-five percent (75%) of such benefits or Ten
38723872 Thousand Dollars ($10,000.00) shall be exempt from taxable income
38733873 but in no case less than the amount of the exemption pro vided by
38743874 paragraph 14 of this subsection.
38753875 19. For taxable years beginning after December 31, 2006,
38763876 retirement benefits received by federal civil service retirees,
38773877 including survivor annuities, paid in lie u of Social Security
38783878 benefits shall be exempt from taxable income to the extent such
38793879 benefits are included in the federal adjusted gross income pursuant
38803880 to the provisions of Section 86 of the Internal Rev enue Code, 26
38813881 U.S.C., Section 86, according to the f ollowing schedule:
38823882 a. in the taxable year beginning January 1, 2007, twenty
38833883 percent (20%) of such benefits shall be exempt,
38843884 b. in the taxable year beginning January 1, 2008, forty
38853885 percent (40%) of such be nefits shall be exempt,
38863886 c. in the taxable year begin ning January 1, 2009, sixty
38873887 percent (60%) of such b enefits shall be exempt,
38883888 d. in the taxable year beginning January 1, 2010, eighty
38893889 percent (80%) of such benefits shall be exempt, and
38903890 e. in the taxable year beginning January 1, 2011, and
38913891 subsequent taxable years, one hundred percent (100%)
38923892 of such benefits shall be exempt.
38933893
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39443944 20. a. For taxable years beginning after December 31, 2007, a
39453945 resident individual may deduct up to Ten Thousand
39463946 Dollars ($10,000.00) f rom Oklahoma adjusted gross
39473947 income if the individual , or the dependent of the
39483948 individual, while living, donates one or more human
39493949 organs of the individual to another human being for
39503950 human organ transplantation. As used in this
39513951 paragraph, “human organ” means all or part of a liver,
39523952 pancreas, kidney, intesti ne, lung, or bone marrow. A
39533953 deduction that is clai med under this paragraph may be
39543954 claimed in the taxable year in which the human organ
39553955 transplantation occurs.
39563956 b. An individual may claim this deduction on ly once, and
39573957 the deduction may be claimed only for u nreimbursed
39583958 expenses that are incurred by the indiv idual and
39593959 related to the organ donation of the individual.
39603960 c. The Oklahoma Tax Commission shall promulgate rules to
39613961 implement the provisions of this para graph which shall
39623962 contain a specific list of expense s which may be
39633963 presumed to qualify for the deductio n. The Tax
39643964 Commission shall prescribe necessary requirements for
39653965 verification.
39663966 21. For taxable years beginning after December 31, 2009, there
39673967 shall be exempt from taxable income any amount received by th e
39683968
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40194019 beneficiary of the death benefit for an emergency medical technician
40204020 or a registered emergency medical responder provided by Section 1 -
40214021 2505.1 of Title 63 of the Oklahoma Statutes.
40224022 22. For taxable years beginning after December 31, 2008,
40234023 taxable income shall be increased by any unemployment compensation
40244024 exempted under Section 85(c) of the Internal Revenue Code, 26
40254025 U.S.C., Section 85(c)(2009).
40264026 23. For taxable years beginning after December 31, 2008, ther e
40274027 shall be exempt from taxable income any payment in an amount less
40284028 than Six Hundred Dollars ($600.00) received by a person as an award
40294029 for participation in a competitive livestock show event. For
40304030 purposes of this paragraph, the payment shall be treated a s a
40314031 scholarship amount paid by the entity sponsoring the event and the
40324032 sponsoring entity shall cause th e payment to be categorized as a
40334033 scholarship in its books and records.
40344034 24. For taxable years beginning on or after January 1, 2016,
40354035 taxable income shall be increased by any amount of state and local
40364036 sales or income taxes deducted under 26 U.S.C., Section 164 of the
40374037 Internal Revenue Code. If the amount of state and local taxes
40384038 deducted on the federal return is limited, taxable income on the
40394039 state return shall be increased only by the amount actually deduct ed
40404040 after any such limitations are applied.
40414041 F. 1. For taxable years beginning after December 31, 2004, a
40424042 deduction from the Oklahoma adjusted gross income of any individual
40434043
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40944094 taxpayer shall be allowed for qualifying gains receiving capital
40954095 treatment that are included in the federal adjusted gross income of
40964096 such individual taxpayer during the taxable year.
40974097 2. As used in this subsection:
40984098 a. “qualifying gains receiving capital treatment ” means
40994099 the amount of net capital gains, as defined in Section
41004100 1222(11) of the Internal Revenue Code, included in an
41014101 individual taxpayer’s federal income tax return that
41024102 result from:
41034103 (1) the sale of real property or tangible personal
41044104 property located within Oklahoma that has bee n
41054105 directly or indirectly owned by the individual
41064106 taxpayer for a holding period of at least five
41074107 (5) years prior to the date of the transaction
41084108 from which such net capital gains arise,
41094109 (2) the sale of stock or the sale of a direct or
41104110 indirect ownership inte rest in an Oklahoma
41114111 company, limited liability compa ny, or
41124112 partnership where such stock or ownership
41134113 interest has been directly or indirectly owned by
41144114 the individual taxpayer for a holding period of
41154115 at least two (2) years prior to the date of the
41164116 transaction from which the net capital gains
41174117 arise, or
41184118
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41694169 (3) the sale of real property, tangible personal
41704170 property or intangible personal property located
41714171 within Oklahoma as part of the sale of all or
41724172 substantially all of the assets of an Oklahoma
41734173 company, limited liability company, or
41744174 partnership or an Oklahoma propr ietorship
41754175 business enterprise where such property h as been
41764176 directly or indirectly owned by such entity or
41774177 business enterprise or owned by the owners of
41784178 such entity or business enterprise for a period
41794179 of at least two (2) years prior to the date of
41804180 the transaction from which the net capital gains
41814181 arise,
41824182 b. “holding period” means an uninterrupted period of
41834183 time. The holding period shall include any additional
41844184 period when the property was held by another
41854185 individual or entity, if such additional period is
41864186 included in the taxpayer’s holding period for the
41874187 asset pursuant to the Internal Revenue Code,
41884188 c. “Oklahoma company,” “limited liability company, ” or
41894189 “partnership” means an entity whose primary
41904190 headquarters have been located in Oklahoma for at
41914191 least three (3) uninterrupted years prior to the date
41924192
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42434243 of the transaction from which the net capital gains
42444244 arise,
42454245 d. “direct” means the individual taxpayer directly owns
42464246 the asset,
42474247 e. “indirect” means the individual taxpay er owns an
42484248 interest in a pass-through entity (or cha in of pass-
42494249 through entities) that sells the asset t hat gives rise
42504250 to the qualifying gains receiving capital treatment.
42514251 (1) With respect to sales of real property or
42524252 tangible personal property located with in
42534253 Oklahoma, the deduction described in this
42544254 subsection shall not apply unless the pass -
42554255 through entity that makes the sale has held the
42564256 property for not less than five (5) uninterrupted
42574257 years prior to the date of the transaction that
42584258 created the capital ga in, and each pass-through
42594259 entity included in the cha in of ownership has
42604260 been a member, partner, or shar eholder of the
42614261 pass-through entity in the tier immediately below
42624262 it for an uninterrupted period of not less than
42634263 five (5) years.
42644264 (2) With respect to sale s of stock or ownership
42654265 interest in or sales of all or substantially all
42664266 of the assets of an Oklahoma c ompany, limited
42674267
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43184318 liability company, partnership or Oklahoma
43194319 proprietorship business enterprise, the deduction
43204320 described in this subsection shall not apply
43214321 unless the pass-through entity that makes the
43224322 sale has held the stock or ownership interest for
43234323 not less than two (2) uninterrupted years prior
43244324 to the date of the transaction that created the
43254325 capital gain, and each pass -through entity
43264326 included in the chai n of ownership has been a
43274327 member, partner or shareho lder of the pass-
43284328 through entity in the tier immedia tely below it
43294329 for an uninterrupted period of not less than two
43304330 (2) years. For purposes of this division,
43314331 uninterrupted ownership prior to July 1, 2007,
43324332 shall be included in the determination of the
43334333 required holding period prescribed by this
43344334 division, and
43354335 f. “Oklahoma proprietorship business enterprise ” means a
43364336 business enterprise whose income and expenses have
43374337 been reported on Schedule C or F of an indivi dual
43384338 taxpayer’s federal income tax return, or any si milar
43394339 successor schedule published by the Internal Revenue
43404340 Service and whose primary headquarters have been
43414341 located in Oklahoma for at least three (3)
43424342
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43934393 uninterrupted years prior to the date of the
43944394 transaction from which the net capital gains arise.
43954395 G. 1. For purposes of computing its Oklahoma taxable inco me
43964396 under this section, the dividends -paid deduction otherwise allowed
43974397 by federal law in computing net income of a real estate investment
43984398 trust that is subject to federal income tax shall be added back in
43994399 computing the tax imposed by this state under this t itle if the real
44004400 estate investment trust is a captive real estate investment trust.
44014401 2. For purposes of computing its Oklahoma taxable income under
44024402 this section, a taxpayer shall add back otherwise deducti ble rents
44034403 and interest expenses paid to a captive r eal estate investment trust
44044404 that is not subject to the provisions of paragraph 1 of this
44054405 subsection. As used in this subsection:
44064406 a. the term “real estate investment trust” or “REIT”
44074407 means the meaning ascr ibed to such term in Section 856
44084408 of the Internal Revenue Code,
44094409 b. the term “captive real estate investment trust ” means
44104410 a real estate investment trust, the shares or
44114411 beneficial interests of which are not regularly traded
44124412 on an established securities market and more than
44134413 fifty percent (50%) of the voting po wer or value of
44144414 the beneficial interests or shares of which are owned
44154415 or controlled, directly or indirectly, or
44164416 constructively, by a single entity that i s:
44174417
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44684468 (1) treated as an association taxable as a
44694469 corporation under the Internal Revenue Code, and
44704470 (2) not exempt from federal income tax pursuant to
44714471 the provisions of Section 501(a) of the Internal
44724472 Revenue Code.
44734473 The term shall not include a real estate invest ment
44744474 trust that is intended to be regularly traded o n an
44754475 established securities market, and that satisf ies the
44764476 requirements of Section 856(a)(5) and (6) of the U.S.
44774477 Internal Revenue Code by reason of Section 856(h)(2)
44784478 of the Internal Revenue Code,
44794479 c. the term “association taxable as a corporation ” shall
44804480 not include the following entities:
44814481 (1) any real estate investment trust as defined in
44824482 paragraph a of this subsection other than a
44834483 “captive real estate investment trust ”, or
44844484 (2) any qualified real estate inv estment trust
44854485 subsidiary under Section 856(i) of the Internal
44864486 Revenue Code, other than a qualified REIT
44874487 subsidiary of a “captive real estate investment
44884488 trust”, or
44894489 (3) any Listed Australian Property Trust (meaning an
44904490 Australian unit trust registered as a “Managed
44914491 Investment Scheme” under the Australian
44924492
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45434543 Corporations Act in which the principal class of
45444544 units is listed on a recognized stock exchange in
45454545 Australia and is regularly traded on an
45464546 established securities market), or an entity
45474547 organized as a trust, pro vided that a Listed
45484548 Australian Property Trust owns o r controls,
45494549 directly or indirectly, seventy -five percent
45504550 (75%) or more of the voting power or value of the
45514551 beneficial interests or shares of such trust, or
45524552 (4) any Qualified Foreign Entity, meaning a
45534553 corporation, trust, association or partnership
45544554 organized outside the laws of the United States
45554555 and which satisfies the following criteria:
45564556 (a) at least seventy-five percent (75%) of the
45574557 entity’s total asset value at the close of
45584558 its taxable year is represented by real
45594559 estate assets, as defined in Section
45604560 856(c)(5)(B) of the Internal Revenue Code,
45614561 thereby including shares or certificates of
45624562 beneficial interest in any real estate
45634563 investment trust, cash and cash equivalents,
45644564 and U.S. Government securities,
45654565 (b) the entity receives a dividend-paid
45664566 deduction comparable to Section 561 of the
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46184618 Internal Revenue Code, or i s exempt from
46194619 entity level tax,
46204620 (c) the entity is required to distribute at
46214621 least eighty-five percent (85%) of its
46224622 taxable income, as computed in the
46234623 jurisdiction in which it is organized, to
46244624 the holders of its shares or certificates of
46254625 beneficial interest on an annual basis,
46264626 (d) not more than ten percent (10%) of the
46274627 voting power or value in such entity is held
46284628 directly or indirectly or constructively by
46294629 a single entity or individual, or the shares
46304630 or beneficial interests of such entity are
46314631 regularly traded on an established
46324632 securities market, and
46334633 (e) the entity is organized in a country which
46344634 has a tax treaty with the United States.
46354635 3. For purposes of th is subsection, the constructive ownership
46364636 rules of Section 318(a) of the Internal Revenue Code, as modi fied by
46374637 Section 856(d)(5) of the Internal Revenue Code, shall apply in
46384638 determining the ownership of stock, assets, or net profits of any
46394639 person.
46404640 4. A real estate investment trust that does not become
46414641 regularly traded on an established securities market wi thin one (1)
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46934693 year of the date on which it first becomes a real estate investment
46944694 trust shall be deemed not to have been regularly traded on an
46954695 established securities market, retroactive to the date it firs t
46964696 became a real estate investment trust, and shall file an amended
46974697 return reflecting such retroactive designation for any tax year or
46984698 part year occurring during its initial year of status as a real
46994699 estate investment trust. For purposes of this subsection, a real
47004700 estate investment trust becomes a real esta te investment trust on
47014701 the first day it has both met the requirements of Section 856 of the
47024702 Internal Revenue Code and has elected to be treated as a real estate
47034703 investment trust pursuant to Section 856(c)( 1) of the Internal
47044704 Revenue Code.
47054705 SECTION 2. It being immediately necessary for the preservation
47064706 of the public peace, health or safety, an emergency is hereby
47074707 declared to exist, by reason whereof this act shall take effect and
47084708 be in full force from and after its passage an d approval.
47094709
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