OK
Oklahoma House Bill HB2745

Oklahoma 2023 Regular Session

Oklahoma House Bill HB2745 Compare Versions

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2828 STATE OF OKLAHOMA
2929
3030 1st Session of the 59th Legislature (2023)
3131
3232 HOUSE BILL 2745 By: Miller
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3838 AS INTRODUCED
3939
4040 An Act relating to revenue and taxation; amending 68
4141 O.S. 2021, Section 2358, as amende d by Section 2,
4242 Chapter 341, O.S.L. 2022 (68 O.S. Supp. 2022,
4343 Section 2358), which relates to Oklahoma taxable
4444 income and adjusted gross income; providing deduction
4545 for wages paid by qualifying small business entities
4646 to certain persons; providing for partnership tax
4747 treatment; providing limit in tax yea rs deduction may
4848 be claimed; and providing an effective date .
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5656 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
5757 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2358, as
5858 amended by Section 2, Chapter 341, O.S.L. 2022 (68 O.S. Supp. 2022,
5959 Section 2358), is amended to read as follows:
6060 Section 2358. For all tax years beginning after December 31,
6161 1981, taxable income and adjusted gross income shall be adjusted to
6262 arrive at Oklahoma taxable income and Okla homa adjusted gross income
6363 as required by this section.
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9090 A. The taxable income of any taxpayer shall be adjusted to
9191 arrive at Oklahoma taxable inco me for corporations and Oklahoma
9292 adjusted gross income for individuals, as foll ows:
9393 1. There shall be added interest income on obligations of any
9494 state or political subdivision thereto which is not otherwise
9595 exempted pursuant to other laws of this state, to the extent that
9696 such interest is not included in taxable income and adjusted gross
9797 income.
9898 2. There shall be deducted amounts included in such income that
9999 the state is prohibited from taxing because of the provisions of the
100100 Federal Constitution, the St ate Constitution, federal laws or laws
101101 of Oklahoma.
102102 3. The amount of any feder al net operating loss deductio n shall
103103 be adjusted as follows:
104104 a. For carryovers and carrybacks to taxable years
105105 beginning before January 1, 1981, the amount of any
106106 net operating loss deduction allowed to a taxpayer for
107107 federal income tax purposes shall be reduced to an
108108 amount which is the same portion thereof as the loss
109109 from sources within this state, as determined pursuant
110110 to this section and Section 2362 of this title, for
111111 the taxable year in which such loss is sustained is of
112112 the total loss for such yea r;
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139139 b. For carryovers and carry backs to taxable years
140140 beginning after December 31, 1980, the amount of any
141141 net operating loss deduction allowed for the taxable
142142 year shall be an amount equal to the aggregate of the
143143 Oklahoma net operating loss carryovers and carrybacks
144144 to such year. Oklahoma net operating losses shall be
145145 separately determined by reference to Section 172 of
146146 the Internal Revenue Code, 26 U.S.C., Section 172, as
147147 modified by the Oklahoma Income Tax Act, Section 2351
148148 et seq. of this title, and sha ll be allowed without
149149 regard to the existence of a federal net operating
150150 loss. For tax years beginning after December 31,
151151 2000, and ending before January 1, 2008, the years to
152152 which such losses may be carried shall be determined
153153 solely by reference to Sec tion 172 of the Internal
154154 Revenue Code, 26 U.S.C., Section 172, with the
155155 exception that the terms "net operating loss" and
156156 "taxable income" shall be replaced with "Oklahoma net
157157 operating loss" and "Oklahoma taxable income ". For
158158 tax years beginning after De cember 31, 2007, and
159159 ending before January 1, 2009, years to which such
160160 losses may be carried back shall be limited to two (2)
161161 years. For tax years beginning after December 31,
162162 2008, the years to which such losses may be carried
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189189 back shall be determined s olely by reference to
190190 Section 172 of the Internal Revenue Code, 26 U.S.C.,
191191 Section 172, with the exception that the terms "net
192192 operating loss" and "taxable income" shall be replaced
193193 with "Oklahoma net operating loss " and "Oklahoma
194194 taxable income".
195195 4. Items of the following nature shal l be allocated as
196196 indicated. Allowable deductions attributable to items separately
197197 allocable in subparagraphs a, b and c of this paragraph, whethe r or
198198 not such items of income were actually received, shall be allocated
199199 on the same basis as those items:
200200 a. Income from real and tangible personal property, such
201201 as rents, oil and mining production or royalties, and
202202 gains or losses from sales of such pro perty, shall be
203203 allocated in accordance with the situs of such
204204 property;
205205 b. Income from intangible personal p roperty, such as
206206 interest, dividends, patent or copyright royalties,
207207 and gains or losses from sales of such property, shall
208208 be allocated in accorda nce with the domiciliary situs
209209 of the taxpayer, except that:
210210 (1) where such property has acquired a nonunitar y
211211 business or commercial situs apart from the
212212 domicile of the taxpayer such income shall be
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239239 allocated in accordance with such business or
240240 commercial situs; interest income from
241241 investments held to generate working capital for
242242 a unitary business enterprise shall be included
243243 in apportionable income; a resident trust or
244244 resident estate shall be treated as having a
245245 separate commercial or business situs i nsofar as
246246 undistributed income is concerned, but shall not
247247 be treated as having a separate commercial or
248248 business situs insofar as distributed income is
249249 concerned,
250250 (2) for taxable years beginning after December 31,
251251 2003, capital or ordinary gains or losses from
252252 the sale of an ownership interest in a publicly
253253 traded partnership, as de fined by Section 7704(b)
254254 of the Internal Revenue Code, shall be allocated
255255 to this state in the ratio of the original cost
256256 of such partnership's tangible property in this
257257 state to the original cost of such partnership 's
258258 tangible property everywhere, as dete rmined at
259259 the time of the sale ; if more than fifty percent
260260 (50%) of the value of the partnership's assets
261261 consists of intangible assets, capital or
262262 ordinary gains or losses from the sale of an
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289289 ownership interest in the partnership shall be
290290 allocated to this state in accordance with the
291291 sales factor of the partnership for its first
292292 full tax period immediately preceding its tax
293293 period during which the ownership interest in the
294294 partnership was sold; the provisions of this
295295 division shall only apply if the capit al or
296296 ordinary gains or losses from the sale of an
297297 ownership interest in a partnership do not
298298 constitute qualifying gain receiving capital
299299 treatment as defined in subparagraph a of
300300 paragraph 2 of subsection F of this section,
301301 (3) income from such property which is required to be
302302 allocated pursuant to the provisions of paragraph
303303 5 of this subsection shall be allocated as herein
304304 provided;
305305 c. Net income or loss from a business activ ity which is
306306 not a part of business carried on within or without
307307 the state of a unitary character shall be se parately
308308 allocated to the state in which such activity is
309309 conducted;
310310 d. In the case of a manufacturing or processing
311311 enterprise the business of whi ch in Oklahoma consists
312312 solely of marketing its products by:
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339339 (1) sales having a situs without this state, shi pped
340340 directly to a point from without the state to a
341341 purchaser within the state, commonly known as
342342 interstate sales,
343343 (2) sales of the product store d in public warehouses
344344 within the state pursuant to "in transit"
345345 tariffs, as prescribed and allowed by the
346346 Interstate Commerce Commission, to a purchaser
347347 within the state,
348348 (3) sales of the product stored in public warehouses
349349 within the state where the ship ment to such
350350 warehouses is not covered by "in transit"
351351 tariffs, as prescribed a nd allowed by the
352352 Interstate Commerce Commission, to a purchaser
353353 within or without the state,
354354 the Oklahoma net income shall, at the option of the
355355 taxpayer, be that portion of th e total net income of
356356 the taxpayer for federal income tax purposes derived
357357 from the manufacture and/or proces sing and sales
358358 everywhere as determined by the ratio of the sales
359359 defined in this section made to the purchaser within
360360 the state to the total sales everywhere. The term
361361 "public warehouse" as used in this subparagraph means
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388388 a licensed public warehouse, the principal business of
389389 which is warehousing merchandise for the public;
390390 e. In the case of insurance companies, Oklahoma taxable
391391 income shall be taxable income of the taxpayer for
392392 federal tax purposes, as adjusted for the adjus tments
393393 provided pursuant to th e provisions of paragraphs 1
394394 and 2 of this subsection, apportioned as follows:
395395 (1) except as otherwise provided by division (2) of
396396 this subparagraph, taxable income of an insurance
397397 company for a taxable year shall be apportion ed
398398 to this state by multiplyin g such income by a
399399 fraction, the numerator of which is the direct
400400 premiums written for insurance on property or
401401 risks in this state, and the denomi nator of which
402402 is the direct premiums written for insurance on
403403 property or risks everywhere. For purposes of
404404 this subsection, the term "direct premiums
405405 written" means the total amount of direct
406406 premiums written, assessments and annuity
407407 considerations as reported for the taxable year
408408 on the annual statement filed by the company with
409409 the Insurance Commissioner in the form approved
410410 by the National Association of Insurance
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437437 Commissioners, or such other form as may be
438438 prescribed in lieu thereof,
439439 (2) if the principal source of premiums written by an
440440 insurance company consists of premiums fo r
441441 reinsurance accepted by it, the taxable income of
442442 such company shall be apportioned to this state
443443 by multiplying such income by a fraction, the
444444 numerator of which is the sum o f (a) direct
445445 premiums written for insurance on property or
446446 risks in this state, plus (b) premiums written
447447 for reinsurance accepted in respect of property
448448 or risks in this state, and the denominator of
449449 which is the sum of (c) direct premiums written
450450 for insurance on property or risks everywhere,
451451 plus (d) premiums written for reinsuran ce
452452 accepted in respect of prop erty or risks
453453 everywhere. For purposes of this paragraph,
454454 premiums written for reinsurance accepted in
455455 respect of property or risks in this state,
456456 whether or not otherwise determinable, may at the
457457 election of the company be d etermined on the
458458 basis of the proportion which premiums written
459459 for insurance accepted from companies
460460 commercially domiciled in Oklahoma bears to
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487487 premiums written for reinsuranc e accepted from
488488 all sources, or alternatively in the proportion
489489 which the sum of the direct premiums written for
490490 insurance on property or risks in this state by
491491 each ceding company from which reinsurance is
492492 accepted bears to the sum of the total direct
493493 premiums written by each such ceding company for
494494 the taxable year.
495495 5. The net income or loss remaining after th e separate
496496 allocation in paragraph 4 of this subsection, being that which is
497497 derived from a unitary business enterprise, shall be apportioned to
498498 this state on the basis of the arithmetical average of three factors
499499 consisting of property, payroll and sales or gross revenue
500500 enumerated as subparagraphs a, b and c of this paragraph. Net
501501 income or loss as used in this paragraph includes that derived from
502502 patent or copyright royalties, purchase discounts, and interest on
503503 accounts receivable relating to or arisin g from a business activity,
504504 the income from which is apportioned pursuant to this subsection,
505505 including the sale or other disposition of such prope rty and any
506506 other property used in the unitary enterprise . Deductions used in
507507 computing such net income or l oss shall not include taxes based on
508508 or measured by income. Provided, for corporations whose property
509509 for purposes of the tax imposed by Section 2 355 of this title has an
510510 initial investment cost equaling or exceeding Two Hund red Million
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537537 Dollars ($200,000,000.00) and such investment is made on or after
538538 July 1, 1997, or for corporations which expand their property or
539539 facilities in this state and such expansion has an investment cost
540540 equaling or exceeding Two Hundred Million Doll ars ($200,000,000.00)
541541 over a period not to exceed three (3) years, and such expansion is
542542 commenced on or after January 1, 2000, the three factors shall be
543543 apportioned with prope rty and payroll, each comprising twenty -five
544544 percent (25%) of the apportionment factor and sales comprising f ifty
545545 percent (50%) of the apportionment factor. The apportionment
546546 factors shall be computed as follows:
547547 a. The property factor is a fraction, the numerator of
548548 which is the average value of the taxpayer 's real and
549549 tangible personal property owned or rented and used in
550550 this state during the tax period and the denominator
551551 of which is the average value of all the taxpayer's
552552 real and tangible personal pr operty everywhere owned
553553 or rented and used during the tax period.
554554 (1) Property, the income from which is sepa rately
555555 allocated in paragraph 4 of this subsection,
556556 shall not be included in determining this
557557 fraction. The numerator of the fraction shall
558558 include a portion of the investment in
559559 transportation and other equipment having no
560560 fixed situs, such as rolling st ock, buses, trucks
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587587 and trailers, including machinery and equipment
588588 carried thereon, airplanes, salespersons'
589589 automobiles and other similar equipmen t, in the
590590 proportion that miles traveled in Oklahoma by
591591 such equipment bears to total miles traveled,
592592 (2) Property owned by the taxpayer is valued at its
593593 original cost. Property rented by the taxpayer
594594 is valued at eight times the net annual rental
595595 rate. Net annual rental rate is the annual
596596 rental rate paid by the taxpayer, less any annual
597597 rental rate received b y the taxpayer from
598598 subrentals,
599599 (3) The average value of property shall be determined
600600 by averaging the values at the beginning and
601601 ending of the tax period but the Oklahoma Tax
602602 Commission may require the averaging of monthly
603603 values during the tax period if reasonably
604604 required to reflect properly the average value of
605605 the taxpayer's property;
606606 b. The payroll factor is a fraction, the numerator of
607607 which is the total compensation for services rendered
608608 in the state during the tax per iod, and the
609609 denominator of which is the total compensation for
610610 services rendered everywhere during the tax period.
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637637 "Compensation", as used in this subsection means those
638638 paid-for services to the extent related to the unitary
639639 business but does not include officers' salaries,
640640 wages and other compensation.
641641 (1) In the case of a transportation enterprise, the
642642 numerator of the fraction shall include a portion
643643 of such expenditure in c onnection with employees
644644 operating equipment over a fixed route, such as
645645 railroad employees, airline pilots, or bus
646646 drivers, in this state only a part of the time,
647647 in the proportion that mileage traveled in
648648 Oklahoma bears to total mileage traveled by such
649649 employees,
650650 (2) In any case the numerator of the fraction shall
651651 include a portion of such expenditures in
652652 connection with itinerant employees, such as
653653 traveling salespersons, in this state only a part
654654 of the time, in the proportion that time spent in
655655 Oklahoma bears to total time spent in furtherance
656656 of the enterprise by such employees ;
657657 c. The sales factor is a fra ction, the numerator of which
658658 is the total sales or gross revenue of the taxpayer in
659659 this state during the tax period, and the denominator
660660 of which is the total sales or gross revenue of the
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687687 taxpayer everywhere during the tax period. "Sales",
688688 as used in this subsection does not include sales or
689689 gross revenue which are separately allocated in
690690 paragraph 4 of this subsection.
691691 (1) Sales of tangible pers onal property have a situs
692692 in this state if the property is delivered or
693693 shipped to a purchaser other than th e United
694694 States government, within this state regardless
695695 of the FOB point or other conditions of the sale;
696696 or the property is shipped from an offic e, store,
697697 warehouse, factory or other place of storage in
698698 this state and (a) th e purchaser is the United
699699 States government or (b) the taxpayer is not
700700 doing business in the state of the destination of
701701 the shipment.
702702 (2) In the case of a railroad or interurba n railway
703703 enterprise, the numerator of the fraction shall
704704 not be less than the allocation of revenues to
705705 this state as shown in its annual report to the
706706 Corporation Commission.
707707 (3) In the case of an airline, truck or bus
708708 enterprise or freight car, tank car , refrigerator
709709 car or other railroad equipment enterprise, the
710710 numerator of the fraction shall include a port ion
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737737 of revenue from interstate transporta tion in the
738738 proportion that interstate mileage traveled in
739739 Oklahoma bears to total interstate mileage
740740 traveled.
741741 (4) In the case of an oil, gasoline or gas pipeline
742742 enterprise, the numer ator of the fraction shall
743743 be either the total of traffic units of the
744744 enterprise within Oklahoma or the revenue
745745 allocated to Oklahoma based upon miles moved, at
746746 the option of the taxpayer, and the denominator
747747 of which shall be the total of traffic units o f
748748 the enterprise or the revenu e of the enterprise
749749 everywhere as appropr iate to the numerator. A
750750 "traffic unit" is hereby defined as the
751751 transportation for a distance of one (1) mile of
752752 one (1) barrel of oil, one (1) gallon of gasoline
753753 or one thousand (1,0 00) cubic feet of natural or
754754 casinghead gas, as the case may be.
755755 (5) In the case of a telephone or telegraph or other
756756 communication enterprise, the numerator of the
757757 fraction shall include that portion of the
758758 interstate revenue as is allocated pursuant to
759759 the accounting procedures presc ribed by the
760760 Federal Communications Commi ssion; provided that
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787787 in respect to each corporation or business entity
788788 required by the Federal Communicati ons Commission
789789 to keep its books and records in accordance with
790790 a uniform system of accounts prescribed by su ch
791791 Commission, the intrastate net income shall be
792792 determined separately in the manner provided by
793793 such uniform system of accounts and only the
794794 interstate income shall be subject to allocation
795795 pursuant to the provisions of this subsection.
796796 Provided further, that the gross revenue factors
797797 shall be those as are determined pursuant to the
798798 accounting procedures prescribed by the Federal
799799 Communications Commission.
800800 In any case where the apportionment of the three factors
801801 prescribed in this paragraph attributes to Oklahoma a portion of net
802802 income of the enterprise out of all appropriate proportion to the
803803 property owned and/or business transacted within this state, because
804804 of the fact that one or more of the factors so prescribed are no t
805805 employed to any appreciable extent in furtherance of the enterprise;
806806 or because one or more factors not so prescribed are employed to a
807807 considerable extent in furtherance of t he enterprise; or because of
808808 other reasons, the Tax Commission is empowered to permit, after a
809809 showing by taxpayer that an excessive portion of net in come has been
810810 attributed to Oklahoma, or require, when in its judgment an
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837837 insufficient portion of net inco me has been attributed to Oklahoma,
838838 the elimination, substitution, or use of ad ditional factors, or
839839 reduction or increase in the weight of such prescr ibed factors.
840840 Provided, however, that any such variance from such prescribed
841841 factors which has the effect of increasing the portion of net income
842842 attributable to Oklahoma must not be i nherently arbitrary, and
843843 application of the recomputed final apportionm ent to the net income
844844 of the enterprise must attribute to Oklahoma only a reasonable
845845 portion thereof.
846846 6. For calendar years 1997 and 1998, the owner of a new or
847847 expanded agricultural c ommodity processing facility i n this state
848848 may exclude from Oklahoma ta xable income, or in the case of an
849849 individual, the Oklahoma adjusted gross income, fifteen percent
850850 (15%) of the investment by the owner in the new or expanded
851851 agricultural commodity pro cessing facility. For calendar year 1999,
852852 and all subsequent years, th e percentage, not to exceed fifteen
853853 percent (15%), available to the owner of a new or expanded
854854 agricultural commodity processing facility in this state claiming
855855 the exemption shall be a djusted annually so that the t otal estimated
856856 reduction in tax liability does not exceed One Million Dollars
857857 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
858858 for determining the percentage of the investment which each eligible
859859 taxpayer may exclude. The exclusion provided by this paragraph
860860 shall be taken in the taxable year when the investment is made. In
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887887 the event the total reduction in tax liability authoriz ed by this
888888 paragraph exceeds One Million Dollars ($1,000,000.00) in any
889889 calendar year, the Tax Commission sha ll permit any excess over One
890890 Million Dollars ($1,000,000.00) and shall factor such excess into
891891 the percentage for subsequent years . Any amount of the exemption
892892 permitted to be excluded pursuant to the provisions of this
893893 paragraph but not used in any year may be carried forward as an
894894 exemption from income pursuant to the provisions of this paragraph
895895 for a period not exceeding six (6) years following the year in which
896896 the investment was originally made.
897897 For purposes of this par agraph:
898898 a. "Agricultural commodity processing facility" means
899899 building, structures, fixtures and improvements used
900900 or operated primarily for the processing or production
901901 of marketable products from agricultural commodities .
902902 The term shall also mean a dair y operation that
903903 requires a depreciable investment of at least Two
904904 Hundred Fifty Thousand Dollars ($250,000.00) and which
905905 produces milk from dairy cows . The term does not
906906 include a facility that provides only, and nothing
907907 more than, storage, cleaning, dry ing or transportation
908908 of agricultural commodities, and
909909 b. "Facility" means each part of the facility which is
910910 used in a process primarily for:
911911
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937937 (1) the processing of agricultural commodities,
938938 including receiving or storing agricultural
939939 commodities, or the p roduction of milk at a dairy
940940 operation,
941941 (2) transporting the agricultur al commodities or
942942 product before, during or after the processing,
943943 or
944944 (3) packaging or otherwise preparing the product for
945945 sale or shipment.
946946 7. Despite any provision to the contrary in paragraph 3 of this
947947 subsection, for taxable years beginning after Decem ber 31, 1999, in
948948 the case of a taxpayer which has a farming loss, such farming loss
949949 shall be considered a net operating loss carryback in accordance
950950 with and to the extent of the Intern al Revenue Code, 26 U.S.C .,
951951 Section 172(b)(G). However, the amount of the net operating loss
952952 carryback shall not exceed the lesser of:
953953 a. Sixty Thousand Dollars ($60,000.00), o r
954954 b. the loss properly shown on Schedule F of the Internal
955955 Revenue Service Form 1040 reduced by one-half (1/2) of
956956 the income from all other sources ot her than reflected
957957 on Schedule F.
958958 8. In taxable years beginning after December 31, 1995, all
959959 qualified wages equal to the federal income tax credit set forth in
960960 26 U.S.C.A., Section 45 A, shall be deducted f rom taxable income.
961961
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987987 The deduction allowed pursua nt to this paragraph shall only be
988988 permitted for the tax years in which the federal tax credit pursuant
989989 to 26 U.S.C.A., Section 45A, is allowed . For purposes of this
990990 paragraph, "qualified wages" means those wages used to calculate the
991991 federal credit pursu ant to 26 U.S.C.A., Section 45A.
992992 9. In taxable years beginning after December 31, 2005, an
993993 employer that is eligible for and utilizes the Safety Pays OSHA
994994 Consultation Service provided by the Oklahoma Depa rtment of Labor
995995 shall receive an exemption from ta xable income in the amount of One
996996 Thousand Dollars ($1,000.00) for the tax year that the service is
997997 utilized.
998998 10. For taxable years beginning on or after January 1, 2010,
999999 there shall be added to Oklahoma taxable income an amount equal to
10001000 the amount of deferred income not included in such taxable income
10011001 pursuant to Section 108(i)(1) of the Internal Revenue Cod e of 1986
10021002 as amended by Section 1231 of the American Recovery and Reinvestment
10031003 Act of 2009 (P.L. No . 111-5). There shall be subtracted from
10041004 Oklahoma taxable income an amount equal to the amount of deferred
10051005 income included in such taxable income pursuant t o Section 108(i)(1)
10061006 of the Internal Revenue Code by Section 1231 of the America n
10071007 Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
10081008 11. For taxable years beginning on or after January 1, 2019,
10091009 there shall be subtracted from Oklahoma taxable income or adjusted
10101010 gross income any item of income or gain, and there shall be added to
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10361036
10371037 Oklahoma taxable income or adjusted gross income any item of loss or
10381038 deduction that in the absence of an election pursuant to the
10391039 provisions of the Pass -Through Entity Tax Equit y Act of 2019 would
10401040 be allocated to a member or to an indirect member of an ele cting
10411041 pass-through entity pursuant to Section 2351 et seq. of this titl e,
10421042 if (i) the electing pass-through entity has accounted for such item
10431043 in computing its Oklahoma net entit y income or loss pursuant to the
10441044 provisions of the Pass -Through Entity Tax Equi ty Act of 2019, and
10451045 (ii) the total amount of tax attributable to any re sulting Oklahoma
10461046 net entity income has been paid. The Oklahoma Tax Commission shall
10471047 promulgate rules for the reporting of such exclusion to direct and
10481048 indirect members of the electing pass-through entity. As used in
10491049 this paragraph, "electing pass-through entity", "indirect member",
10501050 and "member" shall be defined in the same manner as prescribed by
10511051 Section 2355.1P-2 of this title. Notwithstanding the application of
10521052 this paragraph, the a djusted tax basis of any ownership interest in
10531053 a pass-through entity for purposes of Section 2351 et seq. of this
10541054 title shall be equal to its adjusted tax basis for federal inco me
10551055 tax purposes.
10561056 B. 1. The taxable income of any corporation shall be further
10571057 adjusted to arrive at Oklahoma taxable income, except those
10581058 corporations electing treatment as provided in subchapter S of the
10591059 Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
10601060 2365 of this title, deductions pursuant to the provisions of the
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10861086
10871087 Accelerated Cost Recovery System as defined and allowed in the
10881088 Economic Recovery Tax Act of 1981, Public Law 97-34, 26 U.S.C.,
10891089 Section 168, for depreciation of assets place d into service after
10901090 December 31, 1981, shall not be allowed in calculating Okl ahoma
10911091 taxable income. Such corporations shall be allowed a deduction f or
10921092 depreciation of assets placed into service after December 31, 1981,
10931093 in accordance with provisions of th e Internal Revenue Code, 26
10941094 U.S.C., Section 1 et seq., in effect immediately pr ior to the
10951095 enactment of the Accelerated Cost Recovery System. The Oklahoma tax
10961096 basis for all such assets placed into service after December 31,
10971097 1981, calculated in this section shall be retained and utilized for
10981098 all Oklahoma income tax purposes through th e final disposition of
10991099 such assets.
11001100 Notwithstanding any other provision s of the Oklahoma Income Tax
11011101 Act, Section 2351 et seq. of this title, or of the Internal Revenue
11021102 Code to the contrary, this subsection shall control calculation of
11031103 depreciation of asset s placed into service after December 31, 1981,
11041104 and before January 1, 19 83.
11051105 For assets placed in service and held by a corporation in which
11061106 accelerated cost recovery system was p reviously disallowed, an
11071107 adjustment to taxable income is required in the first taxable year
11081108 beginning after December 31, 1982, to reconcile the basis of such
11091109 assets to the basis allowed in the Internal Revenue Code. The
11101110 purpose of this adjustment is to eq ualize the basis and allowance
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11371137 for depreciation accounts between that reported to the Internal
11381138 Revenue Service and that reported to Oklahoma.
11391139 2. For tax years beginning on or after January 1, 2009, and
11401140 ending on or before December 31, 2009, there shall be added to
11411141 Oklahoma taxable income any amount in excess of One Hundred Seventy -
11421142 five Thousand Dollars ($175,000.00) which has been deducted as a
11431143 small business expense under Internal Revenue Code, Section 179 as
11441144 provided in the American Recovery and Reinvest ment Act of 2009.
11451145 C. 1. For taxable years beginning after December 31, 1987, the
11461146 taxable income of any corporation shall be further adjusted to
11471147 arrive at Oklahoma taxable income for transfers of technology to
11481148 qualified small businesses located in Oklahom a. Such transferor
11491149 corporation shall be allowed an exemption from taxable inco me of an
11501150 amount equal to the amount of royalty payment received as a re sult
11511151 of such transfer; provided, however, such amount shall not exceed
11521152 ten percent (10%) of the amount of gross proceeds received by such
11531153 transferor corporation as a result of the techn ology transfer. Such
11541154 exemption shall be allowed for a period not to ex ceed ten (10) years
11551155 from the date of receipt of the first royalty payment accruing from
11561156 such transfer. No exemption may be claimed for transfers of
11571157 technology to qualified small busine sses made prior to January 1,
11581158 1988.
11591159 2. For purposes of this subsection :
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11861186 a. "Qualified small business" means an entity, whether
11871187 organized as a corporation, partnership, or
11881188 proprietorship, organized for profit with its
11891189 principal place of business located wi thin this state
11901190 and which meets the following criteria:
11911191 (1) Capitalization of not more than Two Hundred Fifty
11921192 Thousand Dollars ($250,000.00),
11931193 (2) Having at least fifty percent ( 50%) of its
11941194 employees and assets located in Oklahoma at the
11951195 time of the transfer, and
11961196 (3) Not a subsidiary or affiliate of the transferor
11971197 corporation;
11981198 b. "Technology" means a proprietary process, formula,
11991199 pattern, device or compilation of scientific or
12001200 technical information which is not in the public
12011201 domain;
12021202 c. "Transferor corporatio n" means a corporation which is
12031203 the exclusive and undisputed owner of t he technology
12041204 at the time the transfer is made; and
12051205 d. "Gross proceeds" means the total amount of
12061206 consideration for the transfer of technology, whether
12071207 the consideration is in money or otherwise.
12081208 D. 1. For taxable years beginning after December 31, 2005 , the
12091209 taxable income of any corporation, estate or trust, shall be further
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12361236 adjusted for qualifying gains re ceiving capital treatment . Such
12371237 corporations, estates or trusts shall be allow ed a deduction from
12381238 Oklahoma taxable income for the amount of qualifyi ng gains receiving
12391239 capital treatment earned by the corporation, estate or trust during
12401240 the taxable year and included in the federal taxable income of such
12411241 corporation, estate or trust.
12421242 2. As used in this subsection:
12431243 a. "qualifying gains receiving capita l treatment" means
12441244 the amount of net capital gains, as defined in Section
12451245 1222(11) of the Internal Revenue Co de, included in the
12461246 federal income tax return of the corporation, estate
12471247 or trust that result from:
12481248 (1) the sale of real property or tangible pers onal
12491249 property located within Oklahoma that has been
12501250 directly or indirectly owned by the corporation,
12511251 estate or trust for a holding period of at least
12521252 five (5) years prior to the date of the
12531253 transaction from which such net capital gains
12541254 arise,
12551255 (2) the sale of stock or on the sale of an ownership
12561256 interest in an Oklahoma company, limited
12571257 liability company, or partner ship where such
12581258 stock or ownership interest has been directly or
12591259 indirectly owned by the corporation, estate or
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12861286 trust for a holding period of at least three (3)
12871287 years prior to the date of the transaction from
12881288 which the net capital gains arise, or
12891289 (3) the sale of real property, tangible personal
12901290 property or intangible personal propert y located
12911291 within Oklahoma as part of the sale of all or
12921292 substantially all of the assets of an Oklahoma
12931293 company, limited liability company, or
12941294 partnership where such property has been directly
12951295 or indirectly owned by such entity owned by the
12961296 owners of such entity, and used in or derived
12971297 from such entity for a period of at least three
12981298 (3) years prior to the date of the transaction
12991299 from which the net capital gains arise,
13001300 b. "holding period" means an uninterrupted period of
13011301 time. The holding period shall inclu de any additional
13021302 period when the property was held by another
13031303 individual or entity, if such additional period is
13041304 included in the taxpayer's holding period for the
13051305 asset pursuant to the Internal Revenue Code,
13061306 c. "Oklahoma company", "limited liability comp any", or
13071307 "partnership" means an entity whose primary
13081308 headquarters have been located in Oklahoma for at
13091309 least three (3) uninterrupted years prior to the date
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13361336 of the transaction fro m which the net capital gains
13371337 arise,
13381338 d. "direct" means the taxpayer directly owns the asset,
13391339 and
13401340 e. "indirect" means the taxpayer owns an interest in a
13411341 pass-through entity (or chain of pass-through
13421342 entities) that sells the asset that gives rise to the
13431343 qualifying gains receiving capital treatment.
13441344 (1) With respect to sales of rea l property or
13451345 tangible personal pro perty located within
13461346 Oklahoma, the deduction described in this
13471347 subsection shall not apply unless the pass-
13481348 through entity that makes the sale has he ld the
13491349 property for not less than five (5) uninterrupted
13501350 years prior to the date of the transaction that
13511351 created the capital gain, and each pass-through
13521352 entity included in the chain of ownership has
13531353 been a member, partner, or shareholder of the
13541354 pass-through entity in the tier immediately below
13551355 it for an uninterrupted period of n ot less than
13561356 five (5) years.
13571357 (2) With respect to sales of stock or ownership
13581358 interest in or sales of all or substantially all
13591359 of the assets of an Oklahoma company, limited
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13851385
13861386 liability company, or partnership, the deduction
13871387 described in this subsection shall not apply
13881388 unless the pass-through entity that makes the
13891389 sale has held the stock or ownership interest or
13901390 the assets for not less than three (3)
13911391 uninterrupted years prior to the date of the
13921392 transaction that created the capital gain, and
13931393 each pass-through entity included in the chain of
13941394 ownership has been a member, partner or
13951395 shareholder of the pass-through entity in the
13961396 tier immediately below it for an uninterrupted
13971397 period of not less than three (3) years.
13981398 E. The Oklahoma adjusted gross income of any indi vidual
13991399 taxpayer shall be further adju sted as follows to arrive at Oklahoma
14001400 taxable income:
14011401 1. a. In the case of individuals, there shall be added or
14021402 deducted, as the case may be, the d ifference necessary
14031403 to allow personal exemptions of One Thousand Dollar s
14041404 ($1,000.00) in lieu of the personal exemptions allowed
14051405 by the Internal Revenue Code.
14061406 b. There shall be allowed an additional exemption of One
14071407 Thousand Dollars ($1,000.00) for each tax payer or
14081408 spouse who is blind at the close of the tax year . For
14091409 purposes of this subparagraph, an individual is blind
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14361436 only if the central visual acuity of the individual
14371437 does not exceed 20/200 in the better eye with
14381438 correcting lenses, or if the visual acui ty of the
14391439 individual is greater than 20/200, but is accompanied
14401440 by a limitation in the fields of vision such that the
14411441 widest diameter of the visual field subtends an angle
14421442 no greater than twenty (20) degrees.
14431443 c. There shall be allowed an additional exempti on of One
14441444 Thousand Dollars ($1,000.00) for each taxpayer or
14451445 spouse who is sixty-five (65) years of age or old er at
14461446 the close of the tax year based upon the filing status
14471447 and federal adjusted gross income of the taxpayer.
14481448 Taxpayers with the following filin g status may claim
14491449 this exemption if the federal adjusted gross incom e
14501450 does not exceed:
14511451 (1) Twenty-five Thousand Dollars ($25,000.00) if
14521452 married and filing jointly;
14531453 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
14541454 if married and filing separately;
14551455 (3) Fifteen Thousand Dollars ($15,000.00) if single;
14561456 and
14571457 (4) Nineteen Thousand Dollars ($19,000.00) if a
14581458 qualifying head of household.
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14851485 Provided, for taxable years beginning after December
14861486 31, 1999, amounts included in the calculation of
14871487 federal adjusted gross income pursuant to the
14881488 conversion of a traditional individual r etirement
14891489 account to a Roth individual retire ment account shall
14901490 be excluded from federal adjusted gross income for
14911491 purposes of the income thresholds provided in this
14921492 subparagraph.
14931493 2. a. For taxable years beginning on or before December 31,
14941494 2005, in the case of individuals who use the standard
14951495 deduction in determining taxable income, there shall
14961496 be added or deducted, as the case may be, the
14971497 difference necessary to allow a standard deduction in
14981498 lieu of the standard deduction allowed by the Internal
14991499 Revenue Code, in an amount equal to the larger of
15001500 fifteen percent (15%) of the Oklahoma adjusted gross
15011501 income or One Thousand Dollars ($1,000.00), but not to
15021502 exceed Two Thousand Dollars ($2,000.00), exc ept that
15031503 in the case of a married individual filing a separate
15041504 return such deduction shall be the larger of f ifteen
15051505 percent (15%) of such Oklahoma adjusted gross income
15061506 or Five Hundred Dollars ($500.00), but not to exceed
15071507 the maximum amount of One Thousand Dollars
15081508 ($1,000.00).
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15351535 b. For taxable years beginning on or aft er January 1,
15361536 2006, and before January 1, 2007, in the case of
15371537 individuals who use the standard deduction in
15381538 determining taxable income, there shall be added or
15391539 deducted, as the case may be, the difference necessary
15401540 to allow a standard deduction in lieu of the standard
15411541 deduction allowed by the Internal Revenue Code, in an
15421542 amount equal to:
15431543 (1) Three Thousand Dollars ($3,000.00), if the filing
15441544 status is married filing joint, head of household
15451545 or qualifying widow; or
15461546 (2) Two Thousand Dollars ($2,000.00), if the filing
15471547 status is single or married filing sep arate.
15481548 c. For the taxable year beginning on January 1, 2007, and
15491549 ending December 31, 2007, in the case of individuals
15501550 who use the standard deductio n in determining taxable
15511551 income, there shall be added or de ducted, as the case
15521552 may be, the difference necessa ry to allow a standard
15531553 deduction in lieu of the standard deduction allowed by
15541554 the Internal Revenue Code, in an amount equal to:
15551555 (1) Five Thousand Five Hundred Dollars ($5,500.00),
15561556 if the filing status is m arried filing joint or
15571557 qualifying widow; or
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15841584 (2) Four Thousand One Hundred Twenty-five Dollars
15851585 ($4,125.00) for a head of household; or
15861586 (3) Two Thousand Seven Hundred Fifty Dollars
15871587 ($2,750.00), if the filing status is single or
15881588 married filing separate.
15891589 d. For the taxable year beginning on January 1, 2008, an d
15901590 ending December 31, 2008, in the case o f individuals
15911591 who use the standard deduction in determining taxable
15921592 income, there shall be added or deduct ed, as the case
15931593 may be, the difference necessary to all ow a standard
15941594 deduction in lieu of the standard deduct ion allowed by
15951595 the Internal Revenue Code, in an amount equal to:
15961596 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
15971597 the filing status is married filing joint or
15981598 qualifying widow, or
15991599 (2) Four Thousand Eight Hundred Seventy-five Dollars
16001600 ($4,875.00) for a head of household, or
16011601 (3) Three Thousand Two Hundred Fifty Dollars
16021602 ($3,250.00), if the filing status is single or
16031603 married filing separate.
16041604 e. For the taxable year beginning on January 1, 2009, and
16051605 ending December 31, 2009, in the case of individuals
16061606 who use the standard deduction in determining t axable
16071607 income, there shall be added or deducted, as the case
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16341634 may be, the difference necessary to allow a s tandard
16351635 deduction in lieu of the standard deduction allowed by
16361636 the Internal Revenue Code, in an amount equal to:
16371637 (1) Eight Thousand Five Hundred Dolla rs ($8,500.00),
16381638 if the filing status is married filing joint or
16391639 qualifying widow, or
16401640 (2) Six Thousand Three Hundred Seventy-five Dollars
16411641 ($6,375.00) for a head of household, or
16421642 (3) Four Thousand Two Hundred Fifty Do llars
16431643 ($4,250.00), if the filing status i s single or
16441644 married filing separate.
16451645 Oklahoma adjusted gross income shall be increased by
16461646 any amounts paid for motor vehicle excise taxes which
16471647 were deducted as allowed by the Internal Revenue Code.
16481648 f. For taxable years beginning on or after January 1,
16491649 2010, and ending on December 31, 2016, in the case of
16501650 individuals who use the standard deduction in
16511651 determining taxable income, there shall be added or
16521652 deducted, as the case may be, the difference necessary
16531653 to allow a standard deduction equal to the standard
16541654 deduction allowed by the Internal Revenue Code, based
16551655 upon the amount and filing status prescribed by such
16561656 Code for purposes of filing federal individua l income
16571657 tax returns.
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16841684 g. For taxable years beginning on or afte r January 1,
16851685 2017, in the case of individ uals who use the standard
16861686 deduction in determining taxable income, there shall
16871687 be added or deducted, as th e case may be, the
16881688 difference necessary to al low a standard deduction in
16891689 lieu of the standard deduction allow ed by the Internal
16901690 Revenue Code, as follo ws:
16911691 (1) Six Thousand Three Hundred Fifty Dollars
16921692 ($6,350.00) for single or married filing
16931693 separately,
16941694 (2) Twelve Thousand Seven Hundred Dollars
16951695 ($12,700.00) for married filing jointly o r
16961696 qualifying widower with dep endent child, and
16971697 (3) Nine Thousand Three Hundred Fifty Dollars
16981698 ($9,350.00) for head of household.
16991699 3. a. In the case of resident and part -year resident
17001700 individuals having adjusted gross inc ome from sources
17011701 both within and witho ut the state, the itemized or
17021702 standard deductions and personal exemptio ns shall be
17031703 reduced to an amount which is the same portion of the
17041704 total thereof as Oklahoma adjusted gross income is of
17051705 adjusted gross income . To the extent itemized
17061706 deductions include allowable moving expense, proration
17071707 of moving expense shall not be req uired or permitted
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17341734 but allowable moving expense shall be fully deductible
17351735 for those taxpayers moving withi n or into Oklahoma and
17361736 no part of moving expense shall be deductible for
17371737 those taxpayers moving without or out of Oklahoma.
17381738 All other itemized or sta ndard deductions and personal
17391739 exemptions shall be subject to proration as provided
17401740 by law.
17411741 b. For taxable years beginning on or after January 1,
17421742 2018, the net amount of itemized deducti ons allowable
17431743 on an Oklahoma income tax return, subject to the
17441744 provisions of paragraph 24 of this subsection, shall
17451745 not exceed Seventeen Thousand Dollars ($17,000.00) .
17461746 For purposes of this subparagraph, charitable
17471747 contributions and medical expenses deduct ible for
17481748 federal income tax purposes shall be excluded from the
17491749 amount of Seventeen Thousand Dollars ($17,000.00) as
17501750 specified by this subparagraph.
17511751 4. A resident individual wi th a physical disability
17521752 constituting a substantial handicap to employment may deduct from
17531753 Oklahoma adjusted gross income such expenditures to modify a motor
17541754 vehicle, home or workplace as are necessary to compensate for his or
17551755 her handicap. A veteran certified by the Department of Veterans
17561756 Affairs of the federal government as having a service-connected
17571757 disability shall be conclusively presumed to be an individual with a
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17841784 physical disability constituting a substantial handicap to
17851785 employment. The Tax Commission shall promulgate rules containing a
17861786 list of combinations of common disabili ties and modifications wh ich
17871787 may be presumed to qualify for this deduct ion. The Tax Commission
17881788 shall prescribe necessary requirements for verification.
17891789 5. a. Before July 1, 2010, the first One Thousand Five
17901790 Hundred Dollars ($1,500.00) received by any pers on
17911791 from the United State s as salary or compensation in
17921792 any form, other than retirement benefits, as a member
17931793 of any component of the Armed Forces of the United
17941794 States shall be deducted from taxable income.
17951795 b. On or after July 1, 2010, one hundred percent ( 100%)
17961796 of the income received by any person from the United
17971797 States as salary or compensation in any form, other
17981798 than retirement benefits, as a member of any component
17991799 of the Armed Forces of the United States shall b e
18001800 deducted from taxable income.
18011801 c. Whenever the filing of a time ly income tax return by a
18021802 member of the Armed For ces of the United States is
18031803 made impracticable or impossible of accomplishment by
18041804 reason of:
18051805 (1) absence from the United States, which term
18061806 includes only the states and the District of
18071807 Columbia;
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18341834 (2) absence from the State of Oklahoma while on
18351835 active duty; or
18361836 (3) confinement in a hospital within the United
18371837 States for treatment of wounds, injuries or
18381838 disease,
18391839 the time for filing a return and p aying an income tax
18401840 shall be and is hereby exte nded without incurring
18411841 liability for interest or penalties, to the fift eenth
18421842 day of the third month following the month in which:
18431843 (a) Such individual shall return to the United
18441844 States if the extension is gran ted pursuant
18451845 to subparagraph a of this paragraph , return
18461846 to the State of Oklahoma if the extension is
18471847 granted pursuant to subparagraph b of this
18481848 paragraph or be discharged from such
18491849 hospital if the extension is granted
18501850 pursuant to subparagraph c of this
18511851 paragraph; or
18521852 (b) An executor, administrator, or c onservator
18531853 of the estate of the taxpayer is appointed,
18541854 whichever event occurs the earliest.
18551855 Provided, that the Tax Commission may, in its discretion, grant
18561856 any member of the Arm ed Forces of the United State s an extension of
18571857 time for filing of income tax re turns and payment of income tax
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18841884 without incurring liabilities for inter est or penalties. Such
18851885 extension may be granted only when in the judgment of the Tax
18861886 Commission a good ca use exists therefor and may b e for a period in
18871887 excess of six (6) months . A record of every such extension granted,
18881888 and the reason therefor, shall be kept.
18891889 6. Before July 1, 2010, the salary or any other form of
18901890 compensation, received from the United Stat es by a member of any
18911891 component of the Armed Forces of the United States, shall be
18921892 deducted from taxable income during the time in which the person is
18931893 detained by the enemy in a conflict, is a prisoner of war or is
18941894 missing in action and not deceased; provi ded, after July 1, 2010,
18951895 all such salary or compensation shall be subject to th e deduction as
18961896 provided pursuant to paragraph 5 of this subsection.
18971897 7. a. An individual taxpayer, whether resident or
18981898 nonresident, may deduct an amount equal to the federal
18991899 income taxes paid by the taxpay er during the taxable
19001900 year.
19011901 b. Federal taxes as desc ribed in subparagraph a of this
19021902 paragraph shall be deductible by any in dividual
19031903 taxpayer, whether resident or nonresident, only to the
19041904 extent they relate to income subject to ta xation
19051905 pursuant to the provisions of the Oklahoma Income Tax
19061906 Act. The maximum amount allowable in the preceding
19071907 paragraph shall be prorated on the ra tio of the
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19331933
19341934 Oklahoma adjusted gross income to federal adjusted
19351935 gross income.
19361936 c. For the purpose of this par agraph, "federal income
19371937 taxes paid" shall mean federal income taxes, surtaxes
19381938 imposed on incomes or excess profits taxes, as though
19391939 the taxpayer was on the accrual basis. In determining
19401940 the amount of deduction for federal income taxes for
19411941 tax year 2001, the amount of the deductio n shall not
19421942 be adjusted by the amount of any accelerat ed ten
19431943 percent (10%) tax rate bracket credit or advanced
19441944 refund of the credit received during the tax year
19451945 provided pursuant to the federal Economic Growth and
19461946 Tax Relief Reconciliation Act of 2001, P.L . No. 107-
19471947 16, and the advanced refund of such credit s hall not
19481948 be subject to taxation.
19491949 d. The provisions of this paragraph sh all apply to all
19501950 taxable years ending after December 31, 1978, and
19511951 beginning before January 1, 2006.
19521952 8. Retirement benefits not to exceed Five Thousand Five Hundred
19531953 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
19541954 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
19551955 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
19561956 years, which are receiv ed by an individual from the civil service of
19571957 the United States, the Oklahoma Public Employees Retirement System,
19581958
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19831983
19841984 the Teachers' Retirement System of Oklahoma, the Oklahoma Law
19851985 Enforcement Retirement System, the Oklahoma Firefighters Pension and
19861986 Retirement System, the Oklahoma Police Pension and Retirement
19871987 System, the employee retirement systems created by counties pursuant
19881988 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the
19891989 Uniform Retirement System for Justices and Judge s, the Oklahoma
19901990 Wildlife Conservation Department Retirement Fund, the Oklahoma
19911991 Employment Security Commission Retirement Plan, or the employee
19921992 retirement systems created by municipalities pursuant to Section 48-
19931993 101 et seq. of Title 11 of the Oklahoma Statu tes shall be exempt
19941994 from taxable income.
19951995 9. In taxable years beginning after D ecember 3l, 1984, Social
19961996 Security benefits received by an individual sh all be exempt from
19971997 taxable income, to the extent such benefits are included in the
19981998 federal adjusted gross income pursuant to the provisions of Section
19991999 86 of the Internal Revenue Code, 2 6 U.S.C., Section 86.
20002000 10. For taxable years beginning after December 3 1, 1994, lump-
20012001 sum distributions from employer plans of deferred compensation,
20022002 which are not qualified plan s within the meaning of Section 401(a)
20032003 of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which
20042004 are deposited in and accounted for within a separate bank account or
20052005 brokerage account in a financial institution within this state,
20062006 shall be excluded from taxable income in the same manner as a
20072007 qualifying rollover contribution t o an individual retirement account
20082008
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20342034 within the meaning of Section 408 of the Internal Revenue Code, 26
20352035 U.S.C., Section 408. Amounts withdrawn from such bank or brokerage
20362036 account, including any earni ngs thereon, shall be included in
20372037 taxable income when with drawn in the same manner as withdrawals from
20382038 individual retirement acco unts within the meaning of Section 408 of
20392039 the Internal Revenue Code.
20402040 11. In taxable years beginning after December 31, 1995,
20412041 contributions made to and interest received from a medical savings
20422042 account established pursuant to Sections 2621 through 2623 of T itle
20432043 63 of the Oklahoma Statutes shall be exempt from taxable income.
20442044 12. For taxable years beginning aft er December 31, 1996, the
20452045 Oklahoma adjusted gross income of any individual taxp ayer who is a
20462046 swine or poultry producer may be further adjusted for the deduction
20472047 for depreciation allowed for new construction or expansion costs
20482048 which may be computed using th e same depreciation method elected for
20492049 federal income tax purposes except that the useful life shall be
20502050 seven (7) years for purposes of this paragraph . If depreciation is
20512051 allowed as a deduction in determining the adjusted gross income of
20522052 an individual, any depreciation calculated and claimed pursuant to
20532053 this section shall in no even t be a duplication of any depreciation
20542054 allowed or permitted on the fede ral income tax return of the
20552055 individual.
20562056 13. a. In taxable years beginning before January 1, 2005,
20572057 retirement benefits not to exceed the amounts
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20842084 specified in this paragraph, which are received by an
20852085 individual sixty-five (65) years of age or older and
20862086 whose Oklahoma adjusted gross income is Twenty-five
20872087 Thousand Dollars ($25,000.00) or less if the filing
20882088 status is single, head of household, or married filing
20892089 separate, or Fifty Thousand Dollars ($50,000.00) or
20902090 less if the filing status is married filing joint or
20912091 qualifying widow, shall be ex empt from taxable income.
20922092 In taxable years beginning after December 31, 200 4,
20932093 retirement benefits not to exceed the amounts
20942094 specified in this paragra ph, which are received by an
20952095 individual whose Oklahoma adjusted gross income is
20962096 less than the qualifying a mount specified in this
20972097 paragraph, shall be exempt from taxable income.
20982098 b. For purposes of this paragraph, the qualifying amount
20992099 shall be as follows:
21002100 (1) in taxable years beginning after December 31,
21012101 2004, and prior to January 1, 2007, the
21022102 qualifying amount shall be Thirty-seven Thousand
21032103 Five Hundred Dollars ($37,500.00) or less if the
21042104 filing status is single, head of household, or
21052105 married filing separa te, or Seventy-five Thousand
21062106 Dollars ($75,000.00) or less if the filing statu s
21072107 is married filing jointly o r qualifying widow,
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21342134 (2) in the taxable year beginning January 1, 2007,
21352135 the qualifying amount shall be Fifty Thousand
21362136 Dollars ($50,000.00) or less if t he filing status
21372137 is single, head of household, or married filing
21382138 separate, or One Hundred Thousand Dollars
21392139 ($100,000.00) or less if the filing status is
21402140 married filing jointly or qualifying widow,
21412141 (3) in the taxable year beginning January 1, 2008,
21422142 the qualifying amount shall be Sixty-two Thousand
21432143 Five Hundred Dollars ($62,500.00) o r less if the
21442144 filing status is single, head of household, or
21452145 married filing separate, or One Hundred Twenty-
21462146 five Thousand Dollars ($125,000.00) or less if
21472147 the filing status is mar ried filing jointly or
21482148 qualifying widow,
21492149 (4) in the taxable year beginning Ja nuary 1, 2009,
21502150 the qualifying amount shall be One Hundred
21512151 Thousand Dollars ($100,000.00) or less if the
21522152 filing status is single, head of household, or
21532153 married filing separate, or Two Hundred Thousand
21542154 Dollars ($200,000.00) or less if the filing
21552155 status is married filing jointly or quali fying
21562156 widow, and
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21832183 (5) in the taxable year beginning January 1, 2010,
21842184 and subsequent taxable years, there shall be no
21852185 limitation upon the qualifying amo unt.
21862186 c. For purposes of this paragraph, "retirement benefits"
21872187 means the total distributions or withdrawals from the
21882188 following:
21892189 (1) an employee pension benefit plan which sati sfies
21902190 the requirements of Section 401 of the Internal
21912191 Revenue Code, 26 U.S.C., Sec tion 401,
21922192 (2) an eligible deferred compensation plan that
21932193 satisfies the requirements of Section 457 of the
21942194 Internal Revenue Code, 26 U.S.C., Section 457,
21952195 (3) an individual retirement account, annuity or
21962196 trust or simplified employee pension that
21972197 satisfies the requirements of Section 408 of the
21982198 Internal Revenue Code, 26 U.S.C., Secti on 408,
21992199 (4) an employee annuity subject to the provisions of
22002200 Section 403(a) or (b) of the Inte rnal Revenue
22012201 Code, 26 U.S.C., Section 403(a) or (b),
22022202 (5) United States Retirement Bon ds which satisfy the
22032203 requirements of Section 86 of the Internal
22042204 Revenue Code, 26 U.S.C., Section 86, or
22052205 (6) lump-sum distributions from a retirement plan
22062206 which satisfies the requirements of Section
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22332233 402(e) of the Internal Revenue Code, 26 U.S.C.,
22342234 Section 402(e).
22352235 d. The amount of the exemption provided by this paragraph
22362236 shall be limited to Five Thousand Five Hundred Dollars
22372237 ($5,500.00) for the 2004 tax year, Seven Thousand Five
22382238 Hundred Dollars ($7,500.00) for the 2005 tax year and
22392239 Ten Thousand Dollars ($10,00 0.00) for the tax year
22402240 2006 and for all subsequent tax years. Any individual
22412241 who claims the exemption provided for in paragraph 8
22422242 of this subsection shall not be permi tted to claim a
22432243 combined total exemption pursuant to this paragraph
22442244 and paragraph 8 of t his subsection in an amount
22452245 exceeding Five Thousand Five Hundred Dollars
22462246 ($5,500.00) for the 2004 tax y ear, Seven Thousand Five
22472247 Hundred Dollars ($7,500.00) for the 2005 tax year and
22482248 Ten Thousand Dollars ($10,000.00) for the 2006 tax
22492249 year and all subsequent tax years.
22502250 14. In taxable years beginning after December 31, 1999, for an
22512251 individual engaged in production agriculture who has fi led a
22522252 Schedule F form with the t axpayer's federal income tax return for
22532253 such taxable year, there shall be excluded from t axable income any
22542254 amount which was included as federal taxable income or federal
22552255 adjusted gross income and which consists of the discha rge of an
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22822282 obligation by a credit or of the taxpayer incurred to finance the
22832283 production of agricultural products.
22842284 15. In taxable years beginning December 31, 2000, an amount
22852285 equal to one hundred percent (100%) of the amount of any scholarship
22862286 or stipend received from participation in the Oklahoma Police Corps
22872287 Program, as established in Section 2-140.3 of Title 47 of the
22882288 Oklahoma Statutes shall be exempt from ta xable income.
22892289 16. a. In taxable years beginni ng after December 31, 2001,
22902290 and before January 1, 2005 , there shall be all owed a
22912291 deduction in the amount of contributions to accounts
22922292 established pursuant to the Oklaho ma College Savings
22932293 Plan Act. The deduction shall equal the amount of
22942294 contributions to accounts, but in no event shall the
22952295 deduction for each contributor exceed T wo Thousand
22962296 Five Hundred Dollars ($2,500.00) each taxable year for
22972297 each account.
22982298 b. In taxable years beginning after December 31, 2004,
22992299 each taxpayer shall be allowed a deduction for
23002300 contributions to accounts established pursuant to the
23012301 Oklahoma College Savings Plan Act. The maximum annual
23022302 deduction shall equal the amount of contributions to
23032303 all such accounts plus any contributions to such
23042304 accounts by the taxpayer for prior taxable y ears after
23052305 December 31, 2004, which were not deducted, but in no
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23322332 event shall the deduction for each tax year exceed Ten
23332333 Thousand Dollars ($10,000.00) for each individua l
23342334 taxpayer or Twenty Thousand Dollars ($20, 000.00) for
23352335 taxpayers filing a joint return . Any amount of a
23362336 contribution that is not deducted by the taxpayer in
23372337 the year for which the c ontribution is made may be
23382338 carried forward as a deduction from income for the
23392339 succeeding five (5) years. For taxable years
23402340 beginning after December 31, 2005, ded uctions may be
23412341 taken for contributions and rollovers m ade during a
23422342 taxable year and up to Apri l 15 of the succeeding
23432343 year, or the due date of a taxpayer's state income tax
23442344 return, excluding extensions, whichever is later.
23452345 Provided, a deduction for the sam e contribution may
23462346 not be taken for two (2) different taxable years.
23472347 c. In taxable years begi nning after December 31, 2006,
23482348 deductions for contributions made pursuant t o
23492349 subparagraph b of this paragraph shall be limited as
23502350 follows:
23512351 (1) for a taxpayer who q ualified for the five-year
23522352 carryforward election and w ho takes a rollover or
23532353 nonqualified withdrawal during that period, the
23542354 tax deduction otherwise available pursuant to
23552355 subparagraph b of this paragraph shall b e reduced
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23822382 by the amount which is equal to the rollover or
23832383 nonqualified withdrawal, and
23842384 (2) for a taxpayer who elects to take a rollover or
23852385 nonqualified withdrawal within the same tax year
23862386 in which a contribution w as made to the
23872387 taxpayer's account, the tax deduction otherwise
23882388 available pursuant to sub paragraph b of this
23892389 paragraph shall be reduced by the amount of the
23902390 contribution which is e qual to the rollover or
23912391 nonqualified withdrawal.
23922392 d. If a taxpayer elects to t ake a rollover on a
23932393 contribution for which a deduction has been taken
23942394 pursuant to subparagraph b of this paragraph within
23952395 one (1) year of the date of contribution, the amount
23962396 of such rollover shall be included in the adjusted
23972397 gross income of the taxpayer i n the taxable year of
23982398 the rollover.
23992399 e. If a taxpayer makes a nonqualified withdrawal of
24002400 contributions for which a deduction was taken pursuant
24012401 to subparagraph b of this paragrap h, such nonqualified
24022402 withdrawal and any earnings thereon shall be included
24032403 in the adjusted gross income of the taxpayer in the
24042404 taxable year of the nonqualified withdra wal.
24052405 f. As used in this paragraph:
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24322432 (1) "non-qualified withdrawal" means a withdrawal
24332433 from an Oklahoma College Savings Plan account
24342434 other than one of the following:
24352435 (a) a qualified withdrawal,
24362436 (b) a withdrawal made as a result of the death
24372437 or disability of the designated beneficiary
24382438 of an account,
24392439 (c) a withdrawal that is made on the accou nt of
24402440 a scholarship or the allowance or payment
24412441 described in Section 135(d)(1)(B) or (C) or
24422442 by the Internal Revenue Code, recei ved by
24432443 the designated beneficiary to the ex tent the
24442444 amount of the refund does not exceed the
24452445 amount of the scholarship, allowance , or
24462446 payment, or
24472447 (d) a rollover or change of designated
24482448 beneficiary as permitted by subsection F of
24492449 Section 3970.7 of Title 70 of Oklahoma
24502450 Statutes, and
24512451 (2) "rollover" means the transfer of funds from the
24522452 Oklahoma College Savi ngs Plan to any other plan
24532453 under Section 529 of the Internal Revenue Cod e.
24542454 17. For taxable years beginning aft er December 31, 2005,
24552455 retirement benefits rece ived by an individual from any component of
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24822482 the Armed Forces of the United States in an amount not to exceed the
24832483 greater of seventy-five percent (75%) of such benefits or Ten
24842484 Thousand Dollars ($10,000.00) shall be exempt from taxable income
24852485 but in no case less than the amount of the exemption provided by
24862486 paragraph 13 of this subsection.
24872487 18. For taxable years beginning after Dec ember 31, 2006,
24882488 retirement benefits received by federal civi l service retirees,
24892489 including survivor annuities, paid in lieu of Social Security
24902490 benefits shall be exempt from taxable income to the extent such
24912491 benefits are included in the federal adjusted gros s income pursuant
24922492 to the provisions of Section 86 of the Int ernal Revenue Code, 26
24932493 U.S.C., Section 86, according to the follo wing schedule:
24942494 a. in the taxable year beginning January 1, 2007, twenty
24952495 percent (20%) of such benefits shall be exempt,
24962496 b. in the taxable year beginning January 1, 2008, forty
24972497 percent (40%) of such benefits shall be exempt,
24982498 c. in the taxable year beginning January 1, 2009, sixty
24992499 percent (60%) of such benefits shall be exempt,
25002500 d. in the taxable year beginning January 1, 2010, eight y
25012501 percent (80%) of such benefits shall be exempt, and
25022502 e. in the taxable year beginning January 1, 2011, and
25032503 subsequent taxable ye ars, one hundred percent (100%)
25042504 of such benefits shall be exempt.
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25312531 19. a. For taxable years beginning after December 31, 2007, a
25322532 resident individual may deduct up to Ten Thousand
25332533 Dollars ($10,000.00) from Oklahoma adjusted gross
25342534 income if the individua l, or the dependent of the
25352535 individual, while living, don ates one or more human
25362536 organs of the individual to another human being for
25372537 human organ transplantation. As used in this
25382538 paragraph, "human organ" means all or part of a liver,
25392539 pancreas, kidney, intest ine, lung, or bone marrow. A
25402540 deduction that is claimed under this paragraph may be
25412541 claimed in the taxable year in which the human organ
25422542 transplantation occurs.
25432543 b. An individual may claim this ded uction only once, and
25442544 the deduction may be claimed only for unreimbursed
25452545 expenses that are incurred by the individua l and
25462546 related to the organ don ation of the individual.
25472547 c. The Oklahoma Tax Commission shall promulgate rules to
25482548 implement the provisions of this paragraph which shall
25492549 contain a specific list of expens es which may be
25502550 presumed to qualify for the deduction. The Tax
25512551 Commission shall presc ribe necessary requirements for
25522552 verification.
25532553 20. For taxable years beginning after December 31, 2009, there
25542554 shall be exempt from taxable income any amount received by the
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25812581 beneficiary of the death benefit for an emergency med ical technician
25822582 or a registered emergency medical resp onder provided by Section 1-
25832583 2505.1 of Title 63 of the Oklahoma Statutes.
25842584 21. For taxable years beginning after December 31, 2008,
25852585 taxable income shall be increased by any unemployment compensation
25862586 exempted under Section 85(c) of the Internal Revenue Code, 26
25872587 U.S.C., Section 85(c)(2009).
25882588 22. For taxable years beginning after December 31, 2 008, there
25892589 shall be exempt from taxable income a ny payment in an amoun t less
25902590 than Six Hundred Dollars ($600.00) rec eived by a person as an award
25912591 for participation in a co mpetitive livestock show event. For
25922592 purposes of this paragraph, the payment shall be treated as a
25932593 scholarship amount paid by the enti ty sponsoring the even t and the
25942594 sponsoring entity shall cause the p ayment to be categorized as a
25952595 scholarship in its books and records.
25962596 23. For taxable years beginning on or after January 1, 2016,
25972597 taxable income shall be increased by any amount of stat e and local
25982598 sales or income taxes deducted under 26 U.S.C., Section 164 of the
25992599 Internal Revenue Code. If the amount of state and local taxes
26002600 deducted on the feder al return is limited, taxable income on the
26012601 state return shall be increased only by the amoun t actually deducted
26022602 after any such limitations are applied.
26032603 24. For taxable years beginning after Dec ember 31, 2020, each
26042604 taxpayer shall be allowed a deduction f or contributions to accounts
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26312631 established pursuant to the Achieving a Better Life Experienc e
26322632 (ABLE) Program as established in Section 4001.1 et seq. of Title 56
26332633 of the Oklahoma Statutes. For any tax year, the deduction p rovided
26342634 for in this paragraph shall not exceed Ten Thousand Dollars
26352635 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
26362636 ($20,000.00) for taxpayers filing a joint return. Any amount of
26372637 contribution not deducted by the taxpayer in the tax yea r for which
26382638 the contribution is made may be carried forward as a deduction from
26392639 income for up to five (5) tax years. Deductions may be taken for
26402640 contributions made during the tax year and throug h April 15 of the
26412641 succeeding tax year, or through the due dat e of a taxpayer's state
26422642 income tax return excluding extensions, whichever is later .
26432643 Provided, a deduction for the same contri bution may not be taken in
26442644 more than one (1) tax year.
26452645 F. 1. For taxable years beginning after December 31, 2004, a
26462646 deduction from the Oklahoma adjusted gross inco me of any individual
26472647 taxpayer shall be allowed for qualifying gains receiving capital
26482648 treatment that are included in the federal adjusted gross income of
26492649 such individual taxpayer during the taxable year.
26502650 2. As used in this subsection:
26512651 a. "qualifying gains receiving capital treatment " means
26522652 the amount of net capital gains, as defined in Section
26532653 1222(11) of the Internal Revenue Code, included in an
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26802680 individual taxpayer's federal income tax return that
26812681 result from:
26822682 (1) the sale of real property or tangible personal
26832683 property located within Oklahoma that has bee n
26842684 directly or indirectly owned by the in dividual
26852685 taxpayer for a holding period of at least five
26862686 (5) years prior to the date of the transaction
26872687 from which such net capital gains arise,
26882688 (2) the sale of stock or the sale of a direct or
26892689 indirect ownership inte rest in an Oklahoma
26902690 company, limited lia bility company, or
26912691 partnership where such stock or ownership
26922692 interest has been directly or indirectly owne d by
26932693 the individual taxpayer for a holding period of
26942694 at least two (2) years prior to the date of the
26952695 transaction from which the net capital gains
26962696 arise, or
26972697 (3) the sale of real property, tangible personal
26982698 property or intangible personal property located
26992699 within Oklahoma as part of the sale of all or
27002700 substantially all of the assets of an Oklahoma
27012701 company, limited liability company, or
27022702 partnership or an Ok lahoma proprietorship
27032703 business enterprise where such property has been
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27302730 directly or indirectly owned by suc h entity or
27312731 business enterprise or owned by the owners of
27322732 such entity or business enterprise for a period
27332733 of at least two (2) years prior to the date of
27342734 the transaction from which the net capital gains
27352735 arise,
27362736 b. "holding period" means an uninterrupted peri od of
27372737 time. The holding period shall include any add itional
27382738 period when the property was held by another
27392739 individual or entity, if such additional per iod is
27402740 included in the taxpayer's holding period for the
27412741 asset pursuant to the Internal Revenue Code,
27422742 c. "Oklahoma company," "limited liability company," or
27432743 "partnership" means an entity whose primary
27442744 headquarters have been located in Oklahoma for at
27452745 least three (3) uninterrupted years prior to the date
27462746 of the transaction fr om which the net capital gains
27472747 arise,
27482748 d. "direct" means the individual taxpayer directl y owns
27492749 the asset,
27502750 e. "indirect" means the individual taxpay er owns an
27512751 interest in a pass-through entity (or chain of pass-
27522752 through entities) that sells the asset that giv es rise
27532753 to the qualifying gains rece iving capital treatment.
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27792779
27802780 (1) With respect to sales of real property or
27812781 tangible personal property located with in
27822782 Oklahoma, the deduction described in this
27832783 subsection shall not apply unless the pass-
27842784 through entity that ma kes the sale has held the
27852785 property for not less than five (5 ) uninterrupted
27862786 years prior to the date of the transaction that
27872787 created the capital ga in, and each pass-through
27882788 entity included in the chain of ownership has
27892789 been a member, partner, or shareholder of the
27902790 pass-through entity in the t ier immediately below
27912791 it for an uninterrupted period of not less than
27922792 five (5) years.
27932793 (2) With respect to sale s of stock or ownership
27942794 interest in or sales of all or substantially all
27952795 of the assets of an Oklahoma company, limited
27962796 liability company, partners hip or Oklahoma
27972797 proprietorship business enterprise, the deduction
27982798 described in this subsection shall not apply
27992799 unless the pass-through entity that mak es the
28002800 sale has held the stock or ownership interest for
28012801 not less than two (2) uninterrupted years prior
28022802 to the date of the transa ction that created the
28032803 capital gain, and each pass-through entity
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28302830 included in the chai n of ownership has been a
28312831 member, partner or shareholder of the pass-
28322832 through entity in the tier immediately be low it
28332833 for an uninterrupted period o f not less than two
28342834 (2) years. For purposes of this division,
28352835 uninterrupted ownership prior to July 1, 2007,
28362836 shall be included in the determination o f the
28372837 required holding period prescribed by this
28382838 division, and
28392839 f. "Oklahoma proprietorship business enterp rise" means a
28402840 business enterprise whose income and expenses have
28412841 been reported on Schedule C or F of an indivi dual
28422842 taxpayer's federal income tax retur n, or any similar
28432843 successor schedule published by the Internal Revenue
28442844 Service and whose primary headquart ers have been
28452845 located in Oklahoma for at least three (3)
28462846 uninterrupted years prior to the date of the
28472847 transaction from which the net capital gains ari se.
28482848 G. 1. For purposes of computing its Oklahoma taxable income
28492849 under this section, the dividends -paid deduction otherwise allow ed
28502850 by federal law in computing net income of a real estate investment
28512851 trust that is subject to federal income tax shall be add ed back in
28522852 computing the tax imposed by this state under this title if the real
28532853 estate investment trust is a captive real estate i nvestment trust.
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28802880 2. For purposes of computing its Oklahoma taxable income under
28812881 this section, a taxpayer shall add back other wise deductible rents
28822882 and interest expenses paid to a captive real est ate investment trust
28832883 that is not subject to the provisions of paragraph 1 of this
28842884 subsection. As used in this subsection:
28852885 a. the term "real estate investment trust" or "REIT"
28862886 means the meaning ascribed to such term in Section 856
28872887 of the Internal Revenue Code,
28882888 b. the term "captive real estate investment trust" means
28892889 a real estate investment trust, the shares or
28902890 beneficial interests of which are not regularly traded
28912891 on an established secur ities market and more than
28922892 fifty percent (50%) of the voting power o r value of
28932893 the beneficial interests or shares of which are owned
28942894 or controlled, directly or indirectly, or
28952895 constructively, by a single entity that i s:
28962896 (1) treated as an association taxable as a
28972897 corporation under the Int ernal Revenue Code, and
28982898 (2) not exempt from federal income tax pursuant to
28992899 the provisions of Section 501(a) of the Internal
29002900 Revenue Code.
29012901 The term shall not include a real estate invest ment
29022902 trust that is intended to be regula rly traded on an
29032903 established securities market, and that satisfies the
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29302930 requirements of Section 856(a)(5) a nd (6) of the U.S.
29312931 Internal Revenue Code by reason of Section 856(h)(2)
29322932 of the Internal Revenue Code,
29332933 c. the term "association taxable as a corporati on" shall
29342934 not include the follow ing entities:
29352935 (1) any real estate investment trust as defined in
29362936 paragraph a of this subsection other than a
29372937 "captive real estate invest ment trust", or
29382938 (2) any qualified real estate inv estment trust
29392939 subsidiary under Section 856(i) of the Internal
29402940 Revenue Code, other than a qualified REIT
29412941 subsidiary of a "captive real estate inves tment
29422942 trust", or
29432943 (3) any Listed Australian Property Trust (me aning an
29442944 Australian unit trust registered as a "Managed
29452945 Investment Scheme" under the Australian
29462946 Corporations Act in whic h the principal class of
29472947 units is listed on a recognized stock exchange in
29482948 Australia and is regularly traded on an
29492949 established securitie s market), or an entity
29502950 organized as a trust, pro vided that a Listed
29512951 Australian Property Trust owns or controls,
29522952 directly or indirectly, seventy-five percent
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29792979 (75%) or more of the voting power or value of the
29802980 beneficial interests or shares of such trust, or
29812981 (4) any Qualified Foreign Entity, meaning a
29822982 corporation, trust, association or partnership
29832983 organized outside the laws o f the United States
29842984 and which satisfies the following criteria:
29852985 (a) at least seventy-five percent (75%) of the
29862986 entity's total asset value at the close of
29872987 its taxable year is represented by real
29882988 estate assets, as defined in Section
29892989 856(c)(5)(B) of the Inter nal Revenue Code,
29902990 thereby including shares or certificates of
29912991 beneficial interest in any real estate
29922992 investment trust, cash and cash equ ivalents,
29932993 and U.S. Government securities,
29942994 (b) the entity receives a dividend-paid
29952995 deduction comparable to Section 561 of the
29962996 Internal Revenue Code, or is exempt from
29972997 entity level tax,
29982998 (c) the entity is required to distribute at
29992999 least eighty-five percent (85%) of its
30003000 taxable income, as computed in the
30013001 jurisdiction in which it is organized, to
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30283028 the holders of its shares or cer tificates of
30293029 beneficial interest on an annual basis,
30303030 (d) not more than ten percent (10%) of the
30313031 voting power or value in such entity is held
30323032 directly or indirectly or constructively by
30333033 a single entity or individual, or the shares
30343034 or beneficial interests of such entity are
30353035 regularly traded on an established
30363036 securities market, and
30373037 (e) the entity is organized in a country which
30383038 has a tax treaty with the United States.
30393039 3. For purposes of this subsection, the constructive ownership
30403040 rules of Section 318(a) of th e Internal Revenue Code, as modified by
30413041 Section 856(d)(5) of the Internal R evenue Code, shall apply in
30423042 determining the ownership of stoc k, assets, or net profits of any
30433043 person.
30443044 4. A real estate investment trust that does not become
30453045 regularly traded on an established securities market within one (1)
30463046 year of the date on which it f irst becomes a real estate investment
30473047 trust shall be deemed n ot to have been regularly traded on an
30483048 established securities market, retroactive to the date it first
30493049 became a real estate investment trust, and shall file an amended
30503050 return reflecting such retr oactive designation for any tax year or
30513051 part year occurring d uring its initial year of status as a real
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30783078 estate investment trust. For purposes of this subsection, a real
30793079 estate investment trust becomes a real estate investment trust on
30803080 the first day it has both met the requirements of Section 856 of the
30813081 Internal Revenue Code and has elected to be treated as a real estate
30823082 investment trust pursuant to Section 856(c)(1) of the Internal
30833083 Revenue Code.
30843084 H. For taxable years beginning on or after January 1, 2024, but
30853085 beginning not later than December 31, 2028 if the taxable income
30863086 includes income or loss from a qualified small business operated by
30873087 the taxpayer, an additional deduction shall be allowed in com puting
30883088 the income or loss fr om the small business if the small business
30893089 hired for employment in the state during its annual accou nting
30903090 period ending with or during the taxpayer's tax year an individual
30913091 domiciled in this state at the time of the hiring who meets any of
30923092 the following conditions:
30933093 1. Has been convicted of a felony in this or any other state or
30943094 the District of Columbia .
30953095 2. Is on parole pursuant to the law of the jurisdiction in
30963096 which the person was convicted or pursuant to the law applicable to
30973097 the person after conviction.
30983098 3. Is on probation pursuant to the law of the jurisdiction in
30993099 which the person was convicted, for any offense other than a simple
31003100 misdemeanor.
31013101 4. Is in a work release program authorized by law.
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31283128 The amount of the additional deduction shall be sixty-five
31293129 percent (65%) of the wages paid to individuals, but shall not exceed
31303130 Twenty Thousand Dollars ($20,000.00) per individual as provided in
31313131 paragraphs 1 through 4 of this subsection who were hired for the
31323132 first time by that business during the annual accounting period for
31333133 work done in the state. The deduction authorized by this subsection
31343134 shall be allowed for the wages paid to those individuals
31353135 successfully completing a probationary period during the twelve (12)
31363136 months following the date of first employment by the small business
31373137 and may only be claimed on the income tax return for the tax year
31383138 during which the wages were paid. The deduction authorized by this
31393139 subsection shall not be allowed for wages paid to an individual who
31403140 was hired to replace an individual whose employment was terminated
31413141 within the twelve-month period preceding the date of first
31423142 employment; provided, however, if the individual being replaced left
31433143 employment voluntarily without good cause attributable to the
31443144 employer or if the individual was discharged for misconduct in
31453145 connection with the individual 's employment as determined by the
31463146 Oklahoma Employment Security Commission , the additional deduction
31473147 shall be allowed. A taxpayer who is a partner of a partnership or a
31483148 shareholder of a Subchapter S corporation, or other entity having
31493149 pass-through treatment for the applicable income tax year may deduct
31503150 that portion of wages qualified under this subsection paid by the
31513151 qualified employer entity.
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31783178 SECTION 2. This act shall become effective November 1, 2023.
31793179
31803180 59-1-5882 MAH 01/17/23