OK
Oklahoma Senate Bill SB1117

Oklahoma 2023 Regular Session

Oklahoma Senate Bill SB1117 Compare Versions

Only one version of the bill is available at this time.
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5353 STATE OF OKLAHOMA
5454
5555 1st Session of the 59th Legislature (2023)
5656
5757 SENATE BILL 1117 By: Rogers
5858
5959
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6363 AS INTRODUCED
6464
6565 An Act relating to income tax; amending 68 O.S. 2021,
6666 Section 2358, as last amended by Section 1, Chapter
6767 377, O.S.L. 2022 (68 O.S. Supp. 2022, Section 2358),
6868 which relates to adjustment s to arrive at Oklahoma
6969 taxable income; authorizing deduction for certain
7070 business expense incurred conducting licensed medical
7171 marijuana activity; updating statutory language; and
7272 providing an effective da te.
7373
7474
7575
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7777 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
7878 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2358, as
7979 last amended by Section 1, Chapter 377, O.S.L. 2022 (68 O .S. Supp.
8080 2022, Section 2358), is amended to read as follows:
8181 Section 2358. For all tax years beginning after December 31,
8282 1981, taxable income and adjusted gross incom e shall be adjusted to
8383 arrive at Oklahoma taxable income and Okl ahoma adjusted gross income
8484 as required by this section.
8585 A. The taxable income of any taxpayer shall be adjusted to
8686 arrive at Oklahoma taxable income for corporations and Oklahoma
8787 adjusted gross income for individuals, as fol lows:
8888
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139139 1. There shall be added interest income on obligations of any
140140 state or political subdivision the reto which is not otherwise
141141 exempted pursuant to other laws of this state, to the extent that
142142 such interest is not incl uded in taxable income and adjuste d gross
143143 income.
144144 2. There shall be deducted amounts included in such income that
145145 the state is prohibite d from taxing because of the provisions of the
146146 Federal Constitution, the State Constitution, federal laws , or laws
147147 of Oklahoma.
148148 3. The amount of any fede ral net operating loss deducti on shall
149149 be adjusted as follows:
150150 a. For carryovers and carrybacks to tax able years
151151 beginning before January 1, 1981, the amount of any
152152 net operating loss deduction allowed to a taxpayer for
153153 federal income tax purposes shall be reduced to an
154154 amount which is the same portion thereof as the loss
155155 from sources within this state, as determined pursuant
156156 to this section and Section 2362 of this title, for
157157 the taxable year in which such loss is sustaine d is of
158158 the total loss for such ye ar; and
159159 b. For carryovers and carr ybacks to taxable years
160160 beginning after December 31, 1980, the amoun t of any
161161 net operating loss deduction allowed for the taxable
162162 year shall be an amount equal to the aggregate of the
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214214 Oklahoma net operating loss carryovers and carrybacks
215215 to such year. Oklahoma net operating losses shall be
216216 separately determined by referen ce to Section 172 of
217217 the Internal Revenue Code, 26 U.S.C., Section 172, as
218218 modified by the Oklahoma Income Tax Act, Section 2351
219219 et seq. of this title, and sh all be allowed without
220220 regard to the existence of a federal net operating
221221 loss. For tax years beg inning after December 3 1,
222222 2000, and ending before January 1, 2008, the years to
223223 which such losses may be carried shall be de termined
224224 solely by reference to Se ction 172 of the Internal
225225 Revenue Code, 26 U.S.C., Section 172, with the
226226 exception that the terms "net operating loss" and
227227 "taxable income" shall be replaced with "Oklahoma net
228228 operating loss" and "Oklahoma taxable income ". For
229229 tax years beginning after D ecember 31, 2007, and
230230 ending before January 1, 2009, years to which such
231231 losses may be carried bac k shall be limited to t wo (2)
232232 years. For tax years beginning after December 31,
233233 2008, the years to which such losses may be carried
234234 back shall be determined solely by reference to
235235 Section 172 of the Internal Revenue Code, 26 U.S.C.,
236236 Section 172, with the exception that the term s "net
237237 operating loss" and "taxable income" shall be replaced
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289289 with "Oklahoma net operating loss " and "Oklahoma
290290 taxable income".
291291 4. Items of the following nature sha ll be allocated as
292292 indicated. Allowable deductions attributable to items separately
293293 allocable in subparagraphs a, b, and c of this paragraph, whether or
294294 not such items of income were actually received, shall be allocated
295295 on the same basis as those items:
296296 a. Income from real and tangible personal property, such
297297 as rents, oil and mining production or royalties, and
298298 gains or losses from sales of such property, shall be
299299 allocated in accordance with the situs of such
300300 property;
301301 b. Income from intangible personal property, such as
302302 interest, dividends, patent or copyright royaltie s,
303303 and gains or losses f rom sales of such property, shall
304304 be allocated in accordance with the domiciliary situs
305305 of the taxpayer, except that:
306306 (1) where such property has acquired a nonunit ary
307307 business or commercial situs apart from the
308308 domicile of the taxp ayer such income shall be
309309 allocated in accordance with such business or
310310 commercial situs; interest income from
311311 investments held to generate workin g capital for
312312 a unitary business enterpris e shall be included
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364364 in apportionable income; a resident trust or
365365 resident estate shall be treated a s having a
366366 separate commercial or business situs insofar as
367367 undistributed income is concerned, but shall not
368368 be treated as having a separate commercial or
369369 business situs insofar as distributed income is
370370 concerned,
371371 (2) for taxable years beginning after Dece mber 31,
372372 2003, capital or ordinary gains or losses from
373373 the sale of an ownership interest in a publicly
374374 traded partnership, as defined by Section 7704(b)
375375 of the Internal Revenue Code, shall be allocated
376376 to this state in the r atio of the original cost
377377 of such partnership's tangible property in this
378378 state to the original cost of such partnership 's
379379 tangible property every where, as determined at
380380 the time of the sale; if more than fifty percent
381381 (50%) of the value of the partnership 's assets
382382 consists of intangibl e assets, capital or
383383 ordinary gains or losses from the sale of an
384384 ownership interest in the pa rtnership shall be
385385 allocated to this state in accordance with t he
386386 sales factor of the partnership for its first
387387 full tax period immediately preceding its tax
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439439 period during which the ownership interest in the
440440 partnership was sold; the provisions of this
441441 division shall only appl y if the capital or
442442 ordinary gains or loss es from the sale of an
443443 ownership interest in a partnership do not
444444 constitute qualifying gain receiv ing capital
445445 treatment as defined in subparagraph a of
446446 paragraph 2 of subsection F of this sect ion,
447447 (3) income from such property which is required to be
448448 allocated pursuant to the provisions of paragraph
449449 5 of this subsection s hall be allocated as herein
450450 provided;
451451 c. Net income or loss from a business activity which is
452452 not a part of business carried on within or without
453453 the state of a unitary character shall be separately
454454 allocated to the state in which such activity is
455455 conducted;
456456 d. In the case of a manufact uring or processing
457457 enterprise the business of which in Oklahoma consists
458458 solely of marketing its products by:
459459 (1) sales having a situs without this state, s hipped
460460 directly to a point from without the state to a
461461 purchaser within the state, commonly known a s
462462 interstate sales,
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514514 (2) sales of the product stored in public warehouses
515515 within the state purs uant to "in transit"
516516 tariffs, as prescribed and allowed by the
517517 Interstate Commerce Commission, to a purchaser
518518 within the state, or
519519 (3) sales of the product stored in public warehouses
520520 within the state where the shipment to such
521521 warehouses is not covered by "in transit"
522522 tariffs, as prescribed and allowed by the
523523 Interstate Commerce Commission, to a purchaser
524524 within or without the state,
525525 the Oklahoma net income shall, at the option of the
526526 taxpayer, be that portion of the total net income of
527527 the taxpayer for feder al income tax purpose s derived
528528 from the manufacture and/or proc essing and sales
529529 everywhere as determined by the ratio of the sal es
530530 defined in this section made to the purchaser within
531531 the state to the total sales everywhere. The term
532532 "public warehouse" as used in this subpara graph means
533533 a licensed public warehouse, t he principal business of
534534 which is warehousing merchandise for the public;
535535 e. In the case of insuran ce companies, Oklahoma taxable
536536 income shall be taxable income of the taxpayer for
537537 federal tax purposes, as adjusted for the adjustments
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589589 provided pursuant to the provisions of paragraphs 1
590590 and 2 of this subsection, apportio ned as follows:
591591 (1) except as otherwise provided by division (2) of
592592 this subparagraph, taxable income of an insurance
593593 company for a taxable year shal l be apportioned
594594 to this state by multiply ing such income by a
595595 fraction, the numerator of which is the dire ct
596596 premiums written for insurance on property or
597597 risks in this state, and the denominator of which
598598 is the direct premiums writte n for insurance on
599599 property or risks everywhere. For purposes of
600600 this subsection, the term "direct premiums
601601 written" means the total amount of direct
602602 premiums written, assessments, and annuity
603603 considerations as reported for the taxable year
604604 on the annual statement filed by the company with
605605 the Insurance Commissioner i n the form approved
606606 by the National Association of Insurance
607607 Commissioners, or such other form as m ay be
608608 prescribed in lieu thereof,
609609 (2) if the principal source of premiums written by an
610610 insurance company consists of premiums for
611611 reinsurance accepted by it , the taxable income of
612612 such company shall be apportioned to thi s state
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664664 by multiplying such income by a fraction, the
665665 numerator of which is the sum of (a) direct
666666 premiums written for insurance on property or
667667 risks in this state, plus (b) premiums written
668668 for reinsurance accepted in respect of property
669669 or risks in this state, and the denominator of
670670 which is the sum of (c) direct premiums written
671671 for insurance on property or risks everywhere,
672672 plus (d) premiums written for reinsurance
673673 accepted in respect of pr operty or risks
674674 everywhere. For purposes of this paragraph,
675675 premiums written for reinsurance accep ted in
676676 respect of property or risks in this state,
677677 whether or not otherwise determinable, may at the
678678 election of the company be determined on the
679679 basis of the proportion which premiums written
680680 for insurance accepted from companies
681681 commercially domiciled in Oklahoma bears to
682682 premiums written for reinsurance accepted from
683683 all sources, or alternativel y in the proportion
684684 which the sum of the direct premiums writte n for
685685 insurance on property or risks in this state by
686686 each ceding company from which reinsurance is
687687 accepted bears to the sum of the total direct
688688
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739739 premiums written by each such ceding company fo r
740740 the taxable year.
741741 5. The net income or loss remaining after the separate
742742 allocation in paragraph 4 of this subsection, being that which is
743743 derived from a unita ry business enterprise, shall be apportioned to
744744 this state on the basis of the arithmetical av erage of three facto rs
745745 consisting of property, payroll, and sales or gross revenue
746746 enumerated as subparagraphs a, b, and c of this paragraph. Net
747747 income or loss as used in this paragraph includes that derived from
748748 patent or copyright royalties, purchase dis counts, and interest on
749749 accounts receivable relating to or ar ising from a business activity,
750750 the income from which is apporti oned pursuant to this subsection ,
751751 including the sale or other disposition of such property and any
752752 other property used in the unita ry enterprise. Dedu ctions used in
753753 computing such net income or loss shall not include taxes based on
754754 or measured by income. Provided, for corporations whose pro perty
755755 for purposes of the tax imposed by Section 2355 of this title has an
756756 initial investment cost equaling or exc eeding Two Hundred Million
757757 Dollars ($200,000,000.00) and such investment is made on or after
758758 July 1, 1997, or for corporations which expand th eir property or
759759 facilities in this state and such expansion has an investment cost
760760 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
761761 over a period not to exceed three (3) years, and such expansion is
762762 commenced on or after January 1, 2000, the three factors shall be
763763
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814814 apportioned with property and payroll, each comprising twenty -five
815815 percent (25%) of the apportionment factor and sales comprisi ng fifty
816816 percent (50%) of the apportionment factor. The apporti onment
817817 factors shall be computed as f ollows:
818818 a. The property factor is a fraction, the numerator of
819819 which is the average value of t he taxpayer's real and
820820 tangible personal property owned or re nted and used in
821821 this state during the tax period and the denomi nator
822822 of which is the average value o f all the taxpayer's
823823 real and tangible personal property everywhere owned
824824 or rented and used d uring the tax period.
825825 (1) Property, the income from which is separately
826826 allocated in paragraph 4 of this subsection,
827827 shall not be included in determining this
828828 fraction. The numerator of the fraction shall
829829 include a portion of the investment in
830830 transportation and other equipment having no
831831 fixed situs, such as rolli ng stock, buses, trucks
832832 and trailers, including machinery and equ ipment
833833 carried thereon, airplanes, sa lespersons'
834834 automobiles, and other similar equipment, in the
835835 proportion that miles traveled in Oklahoma by
836836 such equipment bears to total miles traveled,
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888888 (2) Property owned by the taxpayer is valued at its
889889 original cost. Property rented by the taxpayer
890890 is valued at eight times the net annual rental
891891 rate. Net annual rental rate is the annual
892892 rental rate paid by the taxpayer, less any annual
893893 rental rate received by the taxpayer from
894894 subrentals,
895895 (3) The average value of pr operty shall be determined
896896 by averaging the values at the beginning and
897897 ending of the tax period , but the Oklahoma Tax
898898 Commission may require the averaging of monthly
899899 values during the tax period if reasonably
900900 required to reflect properly the average value of
901901 the taxpayer's property;
902902 b. The payroll factor is a fraction, the numerator of
903903 which is the total compensation for services rende red
904904 in the state during the tax period, and the
905905 denominator of which is the total compensation for
906906 services rendered everyw here during the tax period.
907907 "Compensation", as used in this subsection means those
908908 paid-for services to the extent related to the un itary
909909 business but does not include officers' salaries,
910910 wages, and other compensation.
911911
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962962 (1) In the case of a transportation enterprise, the
963963 numerator of the fractio n shall include a portion
964964 of such expenditure in connection with employees
965965 operating equipment over a fixed route, such as
966966 railroad employees, airline pilots, or bus
967967 drivers, in this state only a part of the time,
968968 in the proportion that mileage traveled in
969969 Oklahoma bears to total mileage traveled by such
970970 employees,
971971 (2) In any case the numerator of the fraction shall
972972 include a portion of such expenditures in
973973 connection with itinerant employees, such as
974974 traveling salespersons, in this state only a part
975975 of the time, in the proportion that time spent in
976976 Oklahoma bears to total time spent in furtherance
977977 of the enterprise by such employees;
978978 c. The sales factor is a fraction, the numerator of which
979979 is the total sales or gross revenue of the taxpayer in
980980 this state during the tax period, and the denominator
981981 of which is the total sales or gross revenue of the
982982 taxpayer everywhere during the tax period. "Sales",
983983 as used in this subsection does not include sales or
984984 gross revenue which are separately allocated in
985985 paragraph 4 of this subsection.
986986
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10371037 (1) Sales of tangible personal property have a situs
10381038 in this state if the property is delivered or
10391039 shipped to a purchaser other than the United
10401040 States government, within this state regardless
10411041 of the FOB point or other conditions of the sale;
10421042 or the property is shipped from an office, store,
10431043 warehouse, factory, or other place of storage in
10441044 this state and (a) t he purchaser is the United
10451045 States government or (b) the taxpayer is not
10461046 doing business in the state of the destination of
10471047 the shipment.
10481048 (2) In the case of a railroad or interurban railway
10491049 enterprise, the numerator of the f raction shall
10501050 not be less than the allocation of revenues to
10511051 this state as shown in its annual report to the
10521052 Corporation Commission.
10531053 (3) In the case of an airline , truck, or bus
10541054 enterprise or freight car, tank car, refrigerator
10551055 car, or other railroad equipme nt enterprise, the
10561056 numerator of the fraction shall include a portion
10571057 of revenue from interstate transportation in the
10581058 proportion that interstate mileage traveled in
10591059 Oklahoma bears to total interstate mileage
10601060 traveled.
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11121112 (4) In the case of an oil, gasoline or gas pipeline
11131113 enterprise, the nume rator of the fraction shall
11141114 be either the total of traffic units of the
11151115 enterprise within Oklahoma or the revenue
11161116 allocated to Oklahoma based upon miles moved, at
11171117 the option of the taxpayer, and the denominator
11181118 of which shall be the total of traffic units of
11191119 the enterprise or the revenue of the enterprise
11201120 everywhere as appropriate to the n umerator. A
11211121 "traffic unit" is hereby defined as the
11221122 transportation for a distance of one (1) mile of
11231123 one (1) barrel of oil, one (1) gall on of
11241124 gasoline, or one thousand (1,000) cubic feet of
11251125 natural or casinghead gas, as the case may be.
11261126 (5) In the case of a telephone or telegraph or other
11271127 communication enterprise, the numerator of the
11281128 fraction shall include that portion of the
11291129 interstate revenue as is allocated pursuant to
11301130 the accounting procedures prescribed by the
11311131 Federal Communications Commission; provi ded that
11321132 in respect to each corporation or b usiness entity
11331133 required by the Federal Communications Commission
11341134 to keep its books and records in accordance with
11351135 a uniform system of accounts prescribed by such
11361136
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11871187 Commission, the intrastate net income shall be
11881188 determined separately in the manner provided by
11891189 such uniform system of accounts and only the
11901190 interstate income shall be subject to allocation
11911191 pursuant to the provisions of thi s subsection.
11921192 Provided further, that the gross revenue factors
11931193 shall be those as ar e determined pursuant to the
11941194 accounting procedures prescribed by the Federal
11951195 Communications Commission.
11961196 In any case where the apportionmen t of the three factors
11971197 prescribed in this paragraph attributes to Oklahoma a portion of net
11981198 income of the enterprise o ut of all appropriate proportion to the
11991199 property owned and/or business transacted within this state, because
12001200 of the fact that one or more of the factors so prescribed are not
12011201 employed to any appreciable extent in furtherance of the enterprise;
12021202 or because one or more factors not so prescribed are emp loyed to a
12031203 considerable extent in furtherance of the enterprise; or because of
12041204 other reasons, the Tax Commission is empowered to permit, after a
12051205 showing by a taxpayer that an excessive portion of net income has
12061206 been attributed to Oklahoma, or require, when i n its judgment an
12071207 insufficient portion of net income has been attributed to Oklahoma,
12081208 the elimination, substitution, or use of a dditional factors, or
12091209 reduction or increase in the weight of such prescribed facto rs.
12101210 Provided, however, that any such variance from such prescribed
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12621262 factors which has the effect of increasing the portion of net income
12631263 attributable to Oklahoma must not be inherently arbitrary, and
12641264 application of the recomputed final apportionment to the net income
12651265 of the enterprise must attribute t o Oklahoma only a reasonable
12661266 portion thereof.
12671267 6. For calendar years 1997 and 1998, the owner of a new or
12681268 expanded agricultural commodity processing facility in this state
12691269 may exclude from Oklahoma taxable inco me, or in the case of an
12701270 individual, the Oklah oma adjusted gross income, fifteen percent
12711271 (15%) of the investment by the owner in the new or expanded
12721272 agricultural commodity pr ocessing facility. For calendar year 1999,
12731273 and all subsequent years, the percenta ge, not to exceed fifteen
12741274 percent (15%), avail able to the owner of a new or expanded
12751275 agricultural commodity processing facility in this stat e claiming
12761276 the exemption shall be adjusted annually so that the total estimated
12771277 reduction in tax liability does not exceed One Million Dollars
12781278 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
12791279 for determining the percentage of the invest ment which each eligible
12801280 taxpayer may exclude. The exclusion provided by this paragraph
12811281 shall be taken in the taxab le year when the investment is made. In
12821282 the event the total reduction in tax liability authorized by this
12831283 paragraph exceeds One Million Dol lars ($1,000,000.00) in any
12841284 calendar year, the Tax Commission shall permit any excess over One
12851285 Million Dollars ($1,0 00,000.00) and shall factor such excess into
12861286
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13371337 the percentage for subsequent years. Any amount of the exemption
13381338 permitted to be excluded purs uant to the provisions of this
13391339 paragraph but not used in any year may be carried forward as an
13401340 exemption from income pursuant to the provisions of this paragraph
13411341 for a period not exceeding six (6) years following the year in which
13421342 the investment was origin ally made.
13431343 For purposes of this paragraph:
13441344 a. "Agricultural commodity processing facility" means
13451345 building buildings, structures, fixtures , and
13461346 improvements used or operated primarily for the
13471347 processing or production of marketable products from
13481348 agricultural commoditie s. The term shall also mean a
13491349 dairy operation that requires a depreciable investment
13501350 of at least Two Hundred Fifty Thousand Dollars
13511351 ($250,000.00) and which produ ces milk from dairy cows.
13521352 The term does not include a facility that provides
13531353 only, and nothing more than, storage, cleaning,
13541354 drying, or transportation of agricultural commodities,
13551355 and
13561356 b. "Facility" means each part of the facility which is
13571357 used in a process primarily for:
13581358 (1) the processing of agricultural commodities ,
13591359 including receiving or storing agricultural
13601360
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14111411 commodities, or the production of milk at a dairy
14121412 operation,
14131413 (2) transporting the agricultural commodities or
14141414 product before, during , or after the processing,
14151415 or
14161416 (3) packaging or otherwise preparing the product for
14171417 sale or shipment.
14181418 7. Despite any provision to the contrary in paragraph 3 of this
14191419 subsection, for taxable years beginning after December 31, 1999, in
14201420 the case of a taxpayer which has a farm ing loss, such farming loss
14211421 shall be considered a net operating loss carryback in accordance
14221422 with and to the extent of the Internal Revenue Code, 26 U.S.C.,
14231423 Section 172(b)(G). However, the amount of the net operating loss
14241424 carryback shall not exceed the le sser of:
14251425 a. Sixty Thousand Dollars ($60,000.00), or
14261426 b. the loss properly shown on Schedule F of the Internal
14271427 Revenue Service Form 1040 reduced by one-half (1/2) of
14281428 the income from all other sources other than reflected
14291429 on Schedule F.
14301430 8. In taxable years b eginning after December 31, 1995, all
14311431 qualified wages equal to the federal income tax cre dit set forth in
14321432 26 U.S.C.A., Section 4 5A, shall be deducted from taxable income.
14331433 The deduction allowed pursuant to this paragraph shall only be
14341434 permitted for the tax years in which the federal tax credit pursuant
14351435
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14861486 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
14871487 paragraph, "qualified wages" means those wages used to calculate the
14881488 federal credit pursuant to 26 U.S.C.A., Section 45A.
14891489 9. In taxable years be ginning after December 31, 2005, an
14901490 employer that is eligible for and utilizes the Safet y Pays OSHA
14911491 Consultation Service provide d by the Oklahoma Department of Labor
14921492 shall receive an exemption from taxable income in the amount of One
14931493 Thousand Dollars ($1,0 00.00) for the tax year that the service is
14941494 utilized.
14951495 10. For taxable years beginning on or after January 1, 2010,
14961496 there shall be added to Oklahoma taxable income an amount equal to
14971497 the amount of deferred income not included in such taxable income
14981498 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
14991499 as amended by Section 1231 of the American Recovery and Reinvestment
15001500 Act of 2009 (P.L. No. 111-5). There shall be subtracted from
15011501 Oklahoma taxable income an amount equal to the amount of deferred
15021502 income included in such taxable income pursuant to Section 108(i)(1)
15031503 of the Internal Revenue Code by Section 1231 of the Americ an
15041504 Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
15051505 11. For taxable years beginning on or after Ja nuary 1, 2019,
15061506 there shall be subtracted from Oklahoma taxable income or adjusted
15071507 gross income any item of i ncome or gain, and there shall be added to
15081508 Oklahoma taxable income or adjusted gross income any item of loss or
15091509 deduction that in the absence of an election pursuant to t he
15101510
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15611561 provisions of the Pass-Through Entity Tax Equity Act of 2019 would
15621562 be allocated to a member or to an indirect member of an el ecting
15631563 pass-through entity pursuant to Section 2351 et seq. of this title,
15641564 if (i) the electing pass -through entity has accounted for such item
15651565 in computing its Oklahoma net entity income or loss pursuant to the
15661566 provisions of the Pass-Through Entity Tax Equ ity Act of 2019, and
15671567 (ii) the total amount of tax attributable to any resulting Oklahoma
15681568 net entity income has been paid. The O klahoma Tax Commission shall
15691569 promulgate rules for the reporting of such exclusion to d irect and
15701570 indirect members of the electing pass-through entity. As used in
15711571 this paragraph, "electing pass-through entity", "indirect member",
15721572 and "member" shall be defined in the same manner as prescribed by
15731573 Section 2355.1P-2 of this title. Notwithstanding the application of
15741574 this paragraph, the adjusted tax basis of any ownership interest in
15751575 a pass-through entity for purposes of Section 2351 et seq. of this
15761576 title shall be equal to its adjusted tax basis for federal income
15771577 tax purposes.
15781578 12. For tax year 2024 and sub sequent tax years, there shall be
15791579 allowed a deduction from Oklahoma taxable in come equal to the amou nt
15801580 of any deduction for business expense incurred in conducting
15811581 applicable licensed medical marijuana business activity within this
15821582 state which was disallowed for the same tax year pursuant to the
15831583 provisions of 26 U.S.C., Section 280E . Deductions allowed pursuant
15841584 to this paragraph shall be equivalent to deductions allowed for
15851585
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16361636 common business expenses to arrive at federal taxable income for a
16371637 business not engaged in licensed medical marijuana business
16381638 activity. The Tax Commission may promulgate rules to ef fectuate the
16391639 provisions of this para graph and may utilize Internal Revenue
16401640 Service Forms to verify deductions, including I RS Form 2106.
16411641 B. 1. The taxable income of any corporation shall be furth er
16421642 adjusted to arrive at Oklahoma taxable income, except those
16431643 corporations electing treatment as provided in subchapter S of the
16441644 Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
16451645 2365 of this title, deductions pursuant to the provisions of the
16461646 Accelerated Cost Recovery System as defined and allowed in the
16471647 Economic Recovery Tax Act of 1981, Public Law 97 -34, 26 U.S.C.,
16481648 Section 168, for depreciation of assets placed into service after
16491649 December 31, 1981, shall not be allowed in calculating O klahoma
16501650 taxable income. Such corporations shall be allowed a deduction for
16511651 depreciation of assets placed into service after Dece mber 31, 1981,
16521652 in accordance with provisions of the Internal Revenue Cod e, 26
16531653 U.S.C., Section 1 et seq., in effect immediately prior to the
16541654 enactment of the Accelerated Cost Recovery System. The Oklahoma tax
16551655 basis for all such assets placed into service a fter December 31,
16561656 1981, calculated in this section shall be retained and utilized for
16571657 all Oklahoma income tax purposes through the final disposition of
16581658 such assets.
16591659
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17101710 Notwithstanding any other provisions of the Okl ahoma Income Tax
17111711 Act, Section 2351 et seq. o f this title, or of the Internal Revenue
17121712 Code to the contrary, this subs ection shall control calculation o f
17131713 depreciation of assets placed into service after December 31, 1981,
17141714 and before January 1, 1983.
17151715 For assets placed in service and held by a corporati on in which
17161716 accelerated cost recovery system was previously disallowed, an
17171717 adjustment to taxable income is required in the first taxable year
17181718 beginning after December 31, 1982, to reconcile the basis of such
17191719 assets to the basis allowed in the Internal Reve nue Code. The
17201720 purpose of this adjustment is to equalize the basis and a llowance
17211721 for depreciation accounts between that reported to the Internal
17221722 Revenue Service and that reported to Oklahoma.
17231723 2. For tax years be ginning on or after January 1, 2009, and
17241724 ending on or before December 31, 2009, there shall be added to
17251725 Oklahoma taxable income any amount in excess o f One Hundred Seventy-
17261726 five Thousand Dollars ($175,000.00) which has been deducted as a
17271727 small business expense under Internal Revenue Code, Section 179 as
17281728 provided in the American Recovery and Reinvestment Act of 2009.
17291729 C. 1. For taxable years beginning af ter December 31, 1987, the
17301730 taxable income of any corporation shall be further adjusted to
17311731 arrive at Oklahoma taxable income for transfers of technolog y to
17321732 qualified small businesses located in Oklahoma. Such transferor
17331733 corporation shall be allowed an exem ption from taxable income of an
17341734
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17851785 amount equal to the amount of royalty payment received as a result
17861786 of such transfer; provided, however, such amount sh all not exceed
17871787 ten percent (10%) of the amount of gross proceeds receive d by such
17881788 transferor corporation a s a result of the technology transfer. Such
17891789 exemption shall be allowed for a period not to exceed ten (10 ) years
17901790 from the date of receipt of the firs t royalty payment accruing from
17911791 such transfer. No exemption may be clai med for transfers of
17921792 technology to qualified small businesses made prior to January 1,
17931793 1988.
17941794 2. For purposes of this subsection:
17951795 a. "Qualified small business" means an entity, whether
17961796 organized as a corporation, partnership, or
17971797 proprietorship, organized f or profit with its
17981798 principal place of business located within this state
17991799 and which meets the following criteria:
18001800 (1) Capitalization capitalization of not more than
18011801 Two Hundred Fifty Thousand Dollars ($250,000.00),
18021802 (2) Having having at least fifty percent (50%) of its
18031803 employees and assets located in Oklahoma at the
18041804 time of the transfer, and
18051805 (3) Not not a subsidiary or affiliate of the
18061806 transferor corporation;
18071807 b. "Technology" means a proprietary process, formula,
18081808 pattern, device, or compilation of scientific or
18091809
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18601860 technical information whi ch is not in the public
18611861 domain;
18621862 c. "Transferor corporation" means a corporation which is
18631863 the exclusive and undi sputed owner of the technolog y
18641864 at the time the transfer is made; and
18651865 d. "Gross proceeds" means the total amount of
18661866 consideration for the transfer of technology, whether
18671867 the consideration is in money or otherwise.
18681868 D. 1. For taxable years beginning after D ecember 31, 2005, the
18691869 taxable income of any corporation, estate , or trust, shall be
18701870 further adjusted for qualifying gains receiving capital treatm ent.
18711871 Such corporations, estates , or trusts shall be allowed a deduction
18721872 from Oklahoma taxable income for the amount of qualifying gains
18731873 receiving capital treatment earned by the corpor ation, estate, or
18741874 trust during the taxable year and included in the feder al taxable
18751875 income of such corporat ion, estate, or trust.
18761876 2. As used in this subsection:
18771877 a. "qualifying gains receiving capital treatment " means
18781878 the amount of net capital gains, as defi ned in Section
18791879 1222(11) of the Internal Revenue Code, included in the
18801880 federal income tax return of the cor poration, estate,
18811881 or trust that result from:
18821882 (1) the sale of real property or tangible personal
18831883 property located within Oklahoma that has been
18841884
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19351935 directly or indirectly owned by the corporation,
19361936 estate, or trust for a holdin g period of at least
19371937 five (5) years prior to the date of the
19381938 transaction from which such net capital gains
19391939 arise,
19401940 (2) the sale of stock or on the sale of an ownership
19411941 interest in an Oklah oma company, limited
19421942 liability company, or partnership where such
19431943 stock or ownership interest has been d irectly or
19441944 indirectly owned by the corporation, estate, or
19451945 trust for a holding period of at least three (3)
19461946 years prior to the date of the transaction fr om
19471947 which the net capital gains arise, or
19481948 (3) the sale of real prope rty, tangible personal
19491949 property, or intangible personal property located
19501950 within Oklahoma as part of the sale of all or
19511951 substantially all of the assets of an Oklahoma
19521952 company, limited liabili ty company, or
19531953 partnership where such property has been directly
19541954 or indirectly owned by such entity ow ned by the
19551955 owners of such entity, and used in or derived
19561956 from such entity for a period of at least three
19571957 (3) years prior to the date of the transaction
19581958 from which the net capital gains arise,
19591959
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20102010 b. "holding period" means an uninterrupted period of
20112011 time. The holding period shall inclu de any additional
20122012 period when the property was held by another
20132013 individual or entity, if such additional period is
20142014 included in the taxpayer's holding period for the
20152015 asset pursuant to the Internal Revenue Code,
20162016 c. "Oklahoma company", "limited liability compa ny", or
20172017 "partnership" means an entity whose primary
20182018 headquarters have been located in Oklahoma for at
20192019 least three (3) uninterrup ted years prior to the date
20202020 of the transaction from which the net capital gains
20212021 arise,
20222022 d. "direct" means the taxpayer directly o wns the asset,
20232023 and
20242024 e. "indirect" means the taxpayer owns an interest in a
20252025 pass-through entity (or chain of pass -through
20262026 entities) that sells the asset that gives rise to the
20272027 qualifying gains receiving capital treatment.
20282028 (1) With respect to sales of real pr operty or
20292029 tangible personal property located within
20302030 Oklahoma, the deduction described in this
20312031 subsection shall not apply unless the pass-
20322032 through entity that makes the sale has held the
20332033 property for not less than five (5) uninterrupted
20342034
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20852085 years prior to the da te of the transaction that
20862086 created the capital gain, and each pass -through
20872087 entity included in the chain of ownership has
20882088 been a member, partner, or shareholder of the
20892089 pass-through entity in the tier immediately below
20902090 it for an uninterrupted period of not l ess than
20912091 five (5) years.
20922092 (2) With respect to sales of stock or ownership
20932093 interest in or sales of all or substantially all
20942094 of the assets of an Oklahoma company, limited
20952095 liability company, or partnership, the deduction
20962096 described in this subsection shall not apply
20972097 unless the pass-through entity that makes the
20982098 sale has held the stock or ownership interest or
20992099 the assets for not less tha n three (3)
21002100 uninterrupted years prior to the date of the
21012101 transaction that created the capital gain, and
21022102 each pass-through entity included in the chain of
21032103 ownership has been a member, partner or
21042104 shareholder of the pass -through entity in the
21052105 tier immediately below it for an uninterrupted
21062106 period of not less than three (3) years.
21072107
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21582158 E. The Oklahoma adjusted gross income of any individual
21592159 taxpayer shall be further adjusted as follows to arrive at Oklahoma
21602160 taxable income:
21612161 1. a. In the case of individuals, there sha ll be added or
21622162 deducted, as the case may be, the difference necessary
21632163 to allow personal exemptions of One Thousand Dollars
21642164 ($1,000.00) in lieu of the personal exemptions allowed
21652165 by the Internal Revenue Code.
21662166 b. There shall be allowed an additional exemptio n of One
21672167 Thousand Dollars ($1,000.00) for each taxpayer or
21682168 spouse who is blind at the close of the tax year. For
21692169 purposes of this subparagraph, an individual is blind
21702170 only if the central visual acuity of the individual
21712171 does not exceed 20/200 in the better eye with
21722172 correcting lenses, or if the visual acuity of the
21732173 individual is greater than 20/200, but is accompanied
21742174 by a limitation in the fields of vision such that the
21752175 widest diameter of the visual field subtends an angle
21762176 no greater than twenty (20) degree s.
21772177 c. There shall be allowed an additional exemption of One
21782178 Thousand Dollars ($1,000.00) for each taxpayer or
21792179 spouse who is sixty-five (65) years of age or older at
21802180 the close of the tax year based upon the filing status
21812181 and federal adjusted gross income of the taxpayer.
21822182
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22332233 Taxpayers with the following filing status may claim
22342234 this exemption if the federal adjusted gross income
22352235 does not exceed:
22362236 (1) Twenty-five Thousand Dollars ($25,000.00) if
22372237 married and filing jointly ;,
22382238 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
22392239 if married and filing separately;,
22402240 (3) Fifteen Thousand Dollars ($15,000.00) if single;,
22412241 and
22422242 (4) Nineteen Thousand Dollars ($19,000.00) if a
22432243 qualifying head of household.
22442244 Provided, for taxable years beginning after December
22452245 31, 1999, amounts inc luded in the calculation of
22462246 federal adjusted gross income pursuant to the
22472247 conversion of a traditional individual retirement
22482248 account to a Roth individual retirement account shall
22492249 be excluded from federal adjusted gross income for
22502250 purposes of the income thre sholds provided in this
22512251 subparagraph.
22522252 2. a. For taxable years beginning on or before December 31,
22532253 2005, in the case of individuals who use the standard
22542254 deduction in determining taxable income, there shall
22552255 be added or deducted, as the case may be, the
22562256 difference necessary to allow a standard deduction in
22572257
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23082308 lieu of the standard deduction allowed by the Internal
23092309 Revenue Code, in an amount equal to the larger of
23102310 fifteen percent (15%) of the Oklahoma adjusted gross
23112311 income or One Thousand Dollars ($1,000.00), but n ot to
23122312 exceed Two Thousand Dollars ($2,000.00), except that
23132313 in the case of a married individual filing a separate
23142314 return such deduction shall be the larger of fifteen
23152315 percent (15%) of such Oklahoma adjusted gross income
23162316 or Five Hundred Dollars ($500.00), bu t not to exceed
23172317 the maximum amount of One Thousand Dollars
23182318 ($1,000.00).
23192319 b. For taxable years beginning on or after January 1,
23202320 2006, and before January 1, 2007, in the case of
23212321 individuals who use the standard deduction in
23222322 determining taxable income, there s hall be added or
23232323 deducted, as the case may be, the difference necessary
23242324 to allow a standard deduction in lieu of the standard
23252325 deduction allowed by the Internal Revenue Code, in an
23262326 amount equal to:
23272327 (1) Three Thousand Dollars ($3,000.00), if the filing
23282328 status is married filing joint, head of
23292329 household, or qualifying widow;, or
23302330 (2) Two Thousand Dollars ($2,000.00), if the filing
23312331 status is single or married filing separate.
23322332
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23832383 c. For the taxable year beginning on January 1, 2007, and
23842384 ending December 31, 2007, in the case of individuals
23852385 who use the standard deduction in determining taxable
23862386 income, there shall be added or deducted, as the case
23872387 may be, the difference necessary to allow a standard
23882388 deduction in lieu of the standard deduction allowed by
23892389 the Internal Revenue Code, in an amount equal to:
23902390 (1) Five Thousand Five Hundred Dollars ($5,500.00),
23912391 if the filing status is married filing joint or
23922392 qualifying widow; or,
23932393 (2) Four Thousand One Hundred Twenty -five Dollars
23942394 ($4,125.00) for a head of household ;, or
23952395 (3) Two Thousand Seven Hundred Fifty Dollars
23962396 ($2,750.00), if the filing status is single or
23972397 married filing separate.
23982398 d. For the taxable year beginning on January 1, 2008, and
23992399 ending December 31, 2008, in the case of individuals
24002400 who use the standard deduction in determin ing taxable
24012401 income, there shall be added or deducted, as the case
24022402 may be, the difference necessary to allow a standard
24032403 deduction in lieu of the standard deduction allowed by
24042404 the Internal Revenue Code, in an amount equal to:
24052405
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24562456 (1) Six Thousand Five Hundred Do llars ($6,500.00), if
24572457 the filing status is married filing joint or
24582458 qualifying widow, or
24592459 (2) Four Thousand Eight Hundred Seventy-five Dollars
24602460 ($4,875.00) for a head of household, or
24612461 (3) Three Thousand Two Hundred Fifty Dollars
24622462 ($3,250.00), if the filing sta tus is single or
24632463 married filing separate.
24642464 e. For the taxable year beginning on January 1, 2009, and
24652465 ending December 31, 2009, in the case of individuals
24662466 who use the standard deduction in determining taxable
24672467 income, there shall be added or deducted, as the case
24682468 may be, the difference necessary to allow a standard
24692469 deduction in lieu of the standard deduction allowed by
24702470 the Internal Revenue Code, in an amount equal to:
24712471 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
24722472 if the filing status is married filing j oint or
24732473 qualifying widow, or
24742474 (2) Six Thousand Three Hundred Seventy-five Dollars
24752475 ($6,375.00) for a head of household, or
24762476 (3) Four Thousand Two Hundred Fifty Dollars
24772477 ($4,250.00), if the filing status is single or
24782478 married filing separate.
24792479
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25302530 Oklahoma adjusted gross income shall be increased by
25312531 any amounts paid for motor vehicle excise taxes which
25322532 were deducted as allowed by the Internal Revenue Code.
25332533 f. For taxable years beginning on or after January 1,
25342534 2010, and ending on December 31, 2016, in the case of
25352535 individuals who use the standard deduction in
25362536 determining taxable income, there shall be added or
25372537 deducted, as the case may be, the difference necessary
25382538 to allow a standard deduction equal to the standard
25392539 deduction allowed by the Internal Revenue Code, based
25402540 upon the amount and filing status prescribed by such
25412541 Code for purposes of filing federal individual income
25422542 tax returns.
25432543 g. For taxable years beginning on or after January 1,
25442544 2017, in the case of individuals who use the standard
25452545 deduction in determining taxab le income, there shall
25462546 be added or deducted, as the case may be, the
25472547 difference necessary to allow a standard deduction in
25482548 lieu of the standard deduction allowed by the Internal
25492549 Revenue Code, as follows:
25502550 (1) Six Thousand Three Hundred Fifty Dollars
25512551 ($6,350.00) for single or married filing
25522552 separately,
25532553
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26042604 (2) Twelve Thousand Seven Hundred Dollars
26052605 ($12,700.00) for married filing jointly or
26062606 qualifying widower with dependent child, and
26072607 (3) Nine Thousand Three Hundred Fifty Dollars
26082608 ($9,350.00) for head of household.
26092609 3. a. In the case of resident and part-year resident
26102610 individuals having adjusted gross income from sources
26112611 both within and without the state, the itemized or
26122612 standard deductions and personal exemptions shall be
26132613 reduced to an amount which is the same porti on of the
26142614 total thereof as Oklahoma adjusted gross income is of
26152615 adjusted gross income. To the extent itemized
26162616 deductions include allowable moving expense, proration
26172617 of moving expense shall not be required or permitted
26182618 but allowable moving expense shall be fully deductible
26192619 for those taxpayers moving within or into Oklahoma and
26202620 no part of moving expense shall be deductible for
26212621 those taxpayers moving without or out of Oklahoma.
26222622 All other itemized or standard deductions and personal
26232623 exemptions shall be subjec t to proration as provided
26242624 by law.
26252625 b. For taxable years beginning on or after January 1,
26262626 2018, the net amount of itemized deductions allowable
26272627 on an Oklahoma income tax return, subject to the
26282628
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26792679 provisions of paragraph 24 of this subsection, shall
26802680 not exceed Seventeen Thousand Dollars ($17,000.00).
26812681 For purposes of this subparagraph, charitable
26822682 contributions and medical expenses deductible for
26832683 federal income tax purposes shall be excluded from the
26842684 amount of Seventeen Thousand Dollars ($17,000.00) as
26852685 specified by this subparagraph.
26862686 4. A resident individual with a physical disability
26872687 constituting a substantial handicap to employment may deduct from
26882688 Oklahoma adjusted gross income such expenditures to modify a motor
26892689 vehicle, home, or workplace as are necessary to c ompensate for his
26902690 or her handicap. A veteran certified by the Department of Veterans
26912691 Affairs of the federal government as having a service-connected
26922692 disability shall be conclusively presumed to be an individual with a
26932693 physical disability constituting a su bstantial handicap to
26942694 employment. The Tax Commission shall promulgate rules containing a
26952695 list of combinations of common disabilities and modifications which
26962696 may be presumed to qualify for this deduction. The Tax Commission
26972697 shall prescribe necessary requi rements for verification.
26982698 5. a. Before July 1, 2010, the first One Thousand Five
26992699 Hundred Dollars ($1,500.00) received by any person
27002700 from the United States as salary or compensation in
27012701 any form, other than retirement benefits, as a member
27022702
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27532753 of any component of the Armed Forces of the United
27542754 States shall be deducted from taxable income.
27552755 b. On or after July 1, 2010, one hundred percent (100%)
27562756 of the income received by any person from the United
27572757 States as salary or compensation in any form, other
27582758 than retirement benefits, as a member of any component
27592759 of the Armed Forces of the United States shall be
27602760 deducted from taxable income.
27612761 c. Whenever the filing of a timely inco me tax return by a
27622762 member of the Armed Forces of the United States is
27632763 made impracticable or imposs ible of accomplishment by
27642764 reason of:
27652765 (1) absence from the United States, which term
27662766 includes only the states and the District of
27672767 Columbia;,
27682768 (2) absence from the State of Oklahoma this state
27692769 while on active duty ;, or
27702770 (3) confinement in a hospital within the United
27712771 States for treatment of wounds, injuries, or
27722772 disease,
27732773 the time for filing a return and paying an income ta x
27742774 shall be and is hereby extended without incurring
27752775 liability for interest or penalties, to the fifteenth
27762776 day of the third month following the month in whic h:
27772777
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28282828 (a) Such such individual shall return to the
28292829 United States if the extension is granted
28302830 pursuant to subparagraph a of this
28312831 paragraph, return to the State of Oklahoma
28322832 this state if the extension is granted
28332833 pursuant to subparagraph b of this paragraph
28342834 or be discharged from such hospital if the
28352835 extension is granted pursuant to
28362836 subparagraph c of this paragraph;, or
28372837 (b) An an executor, administrator, or
28382838 conservator of the estate of t he taxpayer is
28392839 appointed, whichever event occurs the
28402840 earliest.
28412841 Provided, that the Tax Commission may, in its discretion, grant
28422842 any member of the Armed Forces of the United States an extension of
28432843 time for filing of income tax r eturns and payment of income t ax
28442844 without incurring liabilities for interest or penalties. Such
28452845 extension may be granted only when in the judgment of the Tax
28462846 Commission a good cause exists therefor and may be for a period in
28472847 excess of six (6) months. A re cord of every such extension g ranted,
28482848 and the reason therefor, shall be kept.
28492849 6. Before July 1, 2010, the salary o r any other form of
28502850 compensation, received from the United States by a member of any
28512851 component of the Armed Forces of the United States, shal l be
28522852
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29032903 deducted from taxable inc ome during the time in which the person is
29042904 detained by the enemy in a conflict, is a prisoner of war or is
29052905 missing in action and not deceased; provided, after July 1, 2010,
29062906 all such salary or compensa tion shall be subject to t he deduction as
29072907 provided pursuant to paragraph 5 of this subsection.
29082908 7. a. An individual taxpayer, whether reside nt or
29092909 nonresident, may deduct an amount equal to the federal
29102910 income taxes paid by the taxpayer during the taxable
29112911 year.
29122912 b. Federal taxes as des cribed in subparagraph a of th is
29132913 paragraph shall be deductible by any individual
29142914 taxpayer, whether resident or no nresident, only to the
29152915 extent they relate to income subject to taxation
29162916 pursuant to the provisions of the Oklahoma Income Tax
29172917 Act. The maximum amount allowable in the prece ding
29182918 paragraph shall be prorated on the ratio of the
29192919 Oklahoma adjusted gross income to federal adjusted
29202920 gross income.
29212921 c. For the purpose of this paragraph, "federal income
29222922 taxes paid" shall mean federal income taxes, surtaxes
29232923 imposed on incomes or excess p rofits taxes, as though
29242924 the taxpayer was on the accrual basis. In determining
29252925 the amount of deduction for federal income taxes for
29262926 tax year 2001, the amount of the deduction shall not
29272927
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29782978 be adjusted by the amount of any accelera ted ten
29792979 percent (10%) tax rate bracket credit or advanced
29802980 refund of the credit received during the tax year
29812981 provided pursuant to the federal Economic Growth and
29822982 Tax Relief Reconciliation Act of 2001, P.L. No. 107-
29832983 16, and the advanced refund of such credit shall not
29842984 be subject to taxati on.
29852985 d. The provisions of this paragraph shall apply to all
29862986 taxable years ending aft er December 31, 1978, and
29872987 beginning before January 1, 2006.
29882988 8. Retirement benefits not to exceed Five Thousand Fiv e Hundred
29892989 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
29902990 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
29912991 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
29922992 years, which are received by an individual from th e civil service of
29932993 the United States, the Oklahoma Public Employees Retirement System,
29942994 the Teachers' Retirement System of Oklahoma, the Oklah oma Law
29952995 Enforcement Retirement System, the Oklahoma Firefighters Pension and
29962996 Retirement System, the Oklahoma Police Pension and Retirement
29972997 System, the employee retirement sy stems created by counties pursuant
29982998 to Section 951 et seq. of Title 19 of the Oklaho ma Statutes, the
29992999 Uniform Retirement System for Justices and Judges, the Oklahoma
30003000 Wildlife Conservation Department R etirement Fund, the Oklahoma
30013001 Employment Security Commissio n Retirement Plan, or the employee
30023002
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30533053 retirement systems created by municipalities pur suant to Section 48-
30543054 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
30553055 from taxable income.
30563056 9. In taxable years beginning after December 3l, 1984, Social
30573057 Security benefits received by an individual shall be exempt from
30583058 taxable income, to the extent such benefits are included in the
30593059 federal adjusted gross income pursuant to the provisions of Section
30603060 86 of the Internal Revenue Code, 26 U.S.C., Section 86.
30613061 10. For taxable years beginning after December 31, 1994, lump -
30623062 sum distributions from empl oyer plans of deferred compensation,
30633063 which are not qualified plans within the meaning of Section 401(a)
30643064 of the Internal Revenue Code, 26 U.S.C. , Section 401(a), and which
30653065 are deposited in and accounted for within a separate bank account or
30663066 brokerage account in a financial institution within this state,
30673067 shall be excluded from taxable income in the same manner as a
30683068 qualifying rollover contribution to an individual retirement ac count
30693069 within the meaning of Section 408 of the Internal Revenue Code, 26
30703070 U.S.C., Section 408. Amounts withdrawn from such bank or brokerage
30713071 account, including any earnings thereon, shall be include d in
30723072 taxable income when wit hdrawn in the same manner as w ithdrawals from
30733073 individual retirement accounts within the meaning of Section 408 of
30743074 the Internal Revenue Code.
30753075 11. In taxable years beginning after December 31, 1995,
30763076 contributions made to and inte rest received from a medical savings
30773077
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31283128 account established p ursuant to Sections 2621 through 2623 of Title
31293129 63 of the Oklahoma Statutes shall be exempt from taxable income.
31303130 12. For taxable years beginning after December 31, 1996, the
31313131 Oklahoma adjusted gross income of any individual tax payer who is a
31323132 swine or poultry producer may be further adjusted for the deduction
31333133 for depreciation allowed for n ew construction or expansion costs
31343134 which may be computed using the same depreciation method elected for
31353135 federal income tax purposes except that the useful life shall be
31363136 seven (7) years for purposes of this paragraph. If depreciation is
31373137 allowed as a deduction in determining the adjusted gross income of
31383138 an individual, any depreciation calculated and claimed pursuant to
31393139 this section shall in no eve nt be a duplication of any dep reciation
31403140 allowed or permitted on the federal income tax return of the
31413141 individual.
31423142 13. a. In taxable years beginning after December 31, 2002,
31433143 nonrecurring adoption expenses paid by a resident
31443144 individual taxpayer in connection with:
31453145 (1) the adoption of a mi nor, or
31463146 (2) a proposed adoption of a minor which did not
31473147 result in a decreed adopti on,
31483148 may be deducted from the Oklahoma adjusted gross
31493149 income.
31503150
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32013201 b. The deductions for adoptions and proposed adoptions
32023202 authorized by this paragrap h shall not exceed Twenty
32033203 Thousand Dollars ($20,000.00) per calendar year.
32043204 c. The Tax Commission shall promulgate rules to implement
32053205 the provisions of this paragraph which shall contain a
32063206 specific list of nonrecurring adoption e xpenses which
32073207 may be presumed to qualify for the deduction . The Tax
32083208 Commission shall prescribe necessary requirements for
32093209 verification.
32103210 d. "Nonrecurring adoption expenses" means adoption fees,
32113211 court costs, medical expenses, attorney fees, and
32123212 expenses which are directly related to th e legal
32133213 process of adoption of a child including, but not
32143214 limited to, costs relating to the adoption study,
32153215 health and psychological examinations, transportation,
32163216 and reasonable costs of lodging and food for the child
32173217 or adoptive parents which are incurred to complete the
32183218 adoption process and are not reimbursed by other
32193219 sources. The term "nonrecurring adoption expe nses"
32203220 shall not include attorney fees incurred for the
32213221 purpose of litigating a contested adoption, from and
32223222 after the point of the initiation of the contest,
32233223 costs associated with physical remodeling, renovation
32243224 and alteration of the adoptive parents ' home or
32253225
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32763276 property, except for a special needs child as
32773277 authorized by the court.
32783278 14. a. In taxable years beginning befo re January 1, 2005,
32793279 retirement benefits not to exceed the amou nts
32803280 specified in this paragraph, which are received by an
32813281 individual sixty-five (65) years of age or older and
32823282 whose Oklahoma adjusted gross income is Twenty-five
32833283 Thousand Dollars ($25,000.00) o r less if the filing
32843284 status is single, head of household, or m arried filing
32853285 separate, or Fifty Thousand Dollars ($50,000.00) or
32863286 less if the filing status is married filing joint or
32873287 qualifying widow, shall be exempt from taxable income.
32883288 In taxable years beginning after December 31, 2004,
32893289 retirement benefits not to ex ceed the amounts
32903290 specified in this paragraph, which are received by an
32913291 individual whose Oklahoma adjusted gross income is
32923292 less than the qualifying amount specified in this
32933293 paragraph, shall be ex empt from taxable income.
32943294 b. For purposes of this paragraph, t he qualifying amount
32953295 shall be as follows:
32963296 (1) in taxable years beginning after December 31,
32973297 2004, and prior to January 1, 2007, the
32983298 qualifying amount shall be Thirty-seven Thousand
32993299 Five Hundred Dollars ($37,500.00) or less if the
33003300
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33513351 filing status is single, h ead of household, or
33523352 married filing separate, or Seventy -five Thousand
33533353 Dollars ($75,000.00) or less if the filing status
33543354 is married filing jointly or qualifying widow,
33553355 (2) in the taxable year be ginning January 1, 2007,
33563356 the qualifying amount shall be Fifty Thousand
33573357 Dollars ($50,000.00) or less if the filing status
33583358 is single, head of h ousehold, or married filing
33593359 separate, or One Hundred Thousand Dollars
33603360 ($100,000.00) or less if the filing status is
33613361 married filing jointly or quali fying widow,
33623362 (3) in the taxable year beginning January 1, 2008,
33633363 the qualifying amount shall be Sixty -two Thousand
33643364 Five Hundred Dollars ($62,500.00) or less if the
33653365 filing status is single, head of household, or
33663366 married filing separate, or One Hundred Twenty -
33673367 five Thousand Dollars ($125,0 00.00) or less if
33683368 the filing status is married filing jointly or
33693369 qualifying widow,
33703370 (4) in the taxable year beginning January 1, 2009,
33713371 the qualifying amount shall be One Hundred
33723372 Thousand Dollars ($100,000.00) or less if the
33733373 filing status is single, head of household, or
33743374 married filing separate, or Two Hundred Thousand
33753375
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34263426 Dollars ($200,000.00) or less if the filing
34273427 status is married filing jointly or qualifying
34283428 widow, and
34293429 (5) in the taxable year begin ning January 1, 2010,
34303430 and subsequent taxable years, there shal l be no
34313431 limitation upon the qualifying amount.
34323432 c. For purposes of this paragrap h, "retirement benefits"
34333433 means the total distributions or withdrawals from the
34343434 following:
34353435 (1) an employee pension b enefit plan which satisfies
34363436 the requirements of Section 401 of the Internal
34373437 Revenue Code, 26 U.S.C., Section 401,
34383438 (2) an eligible deferred co mpensation plan that
34393439 satisfies the requirements of Section 457 of the
34403440 Internal Revenue Code, 26 U.S.C., Section 457 ,
34413441 (3) an individual retirement a ccount, annuity or
34423442 trust, or simplified employee pension that
34433443 satisfies the requirements of Section 408 of th e
34443444 Internal Revenue Code, 26 U.S.C., Section 408,
34453445 (4) an employee annuity subject to the provisions of
34463446 Section 403(a) or (b) of the Internal Revenue
34473447 Code, 26 U.S.C., Section 403(a ) or (b),
34483448
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34993499 (5) United States Retirement Bonds which satisfy the
35003500 requirements of Section 86 of the Internal
35013501 Revenue Code, 26 U.S.C., Section 86, or
35023502 (6) lump-sum distributions from a retirement pl an
35033503 which satisfies the requiremen ts of Section
35043504 402(e) of the Internal Revenue Code, 26 U.S.C.,
35053505 Section 402(e).
35063506 d. The amount of the exemption provided by this paragraph
35073507 shall be limited to Five Thousand Five Hundred Dollars
35083508 ($5,500.00) for the 2004 tax yea r, Seven Thousand Five
35093509 Hundred Dollars ($7,500.00) for the 2005 tax year and
35103510 Ten Thousand Dollars ($10,000.00) for the tax year
35113511 2006 and for all subsequent tax years. Any individual
35123512 who claims the exemption provided for in paragraph 8
35133513 of this subsection s hall not be permitted to claim a
35143514 combined total exemption pursu ant to this paragraph
35153515 and paragraph 8 of this subse ction in an amount
35163516 exceeding Five Thousand Five Hundred Dollars
35173517 ($5,500.00) for the 2004 tax year, Seven Thousand Five
35183518 Hundred Dollars ($7,500 .00) for the 2005 tax year and
35193519 Ten Thousand Dollars ($10,000.00 ) for the 2006 tax
35203520 year and all subsequent tax year s.
35213521 15. In taxable years be ginning after December 31, 1999, for an
35223522 individual engaged in production agriculture who has filed a
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35743574 Schedule F form with the taxpayer's federal income tax return for
35753575 such taxable year, there shall be excluded from taxable income any
35763576 amount which was inclu ded as federal taxable income or federal
35773577 adjusted gross income and which consists of the discharge of an
35783578 obligation by a creditor of the taxpayer in curred to finance the
35793579 production of agricultural products.
35803580 16. In taxable years beginning December 31, 2000 , an amount
35813581 equal to one hundred percent (100%) of the amount of any scholarship
35823582 or stipend received from participa tion in the Oklahoma Police Corps
35833583 Program, as established in Se ction 2-140.3 of Title 47 of the
35843584 Oklahoma Statutes shall be exempt from taxabl e income.
35853585 17. a. In taxable years beginning after December 31, 2001,
35863586 and before January 1, 2005, there shall be all owed a
35873587 deduction in the amount of contributions to accounts
35883588 established pursuant to the Oklahoma College Savings
35893589 Plan Act. The deduction sha ll equal the amount of
35903590 contributions to accounts, but in no event shall the
35913591 deduction for each contributor exceed T wo Thousand
35923592 Five Hundred Dollars ($2,500.00) each taxable year for
35933593 each account.
35943594 b. In taxable years beginning aft er December 31, 2004,
35953595 each taxpayer shall be allowed a deduction for
35963596 contributions to accounts established pursuant to the
35973597 Oklahoma College Savings Plan Act. The maximum annu al
35983598
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36493649 deduction shall equal the a mount of contributions to
36503650 all such accounts plus an y contributions to such
36513651 accounts by the taxpayer for prior taxable years after
36523652 December 31, 2004, which were not deducted, but in no
36533653 event shall the deduction for each tax yea r exceed Ten
36543654 Thousand Dollars ($10,000.00) for each individual
36553655 taxpayer or Twenty Thousand Dollars ($20,000. 00) for
36563656 taxpayers filing a joint return. Any amount of a
36573657 contribution that is not deducted by the taxpayer in
36583658 the year for which the contribution i s made may be
36593659 carried forward as a deduction from income for the
36603660 succeeding five (5) years. For taxable yea rs
36613661 beginning after December 31, 2005, deductions may be
36623662 taken for contributions and rollovers made during a
36633663 taxable year and up to April 15 of the s ucceeding
36643664 year, or the due dat e of a taxpayer's state income tax
36653665 return, excluding extensions, whichever is later.
36663666 Provided, a deduction for the same contribution may
36673667 not be taken for two (2) different taxable years.
36683668 c. In taxable years beginning after De cember 31, 2006,
36693669 deductions for contributions made pursuant to
36703670 subparagraph b of this paragraph shall be lim ited as
36713671 follows:
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37233723 (1) for a taxpayer who qualified for the five-year
37243724 carryforward election and who takes a rollover or
37253725 nonqualified withdrawal during that period, the
37263726 tax deduction otherwise available pursuant to
37273727 subparagraph b of this paragraph shall be r educed
37283728 by the amount which is equal to the rollover or
37293729 nonqualified withdrawal, and
37303730 (2) for a taxpayer who elects to take a rollover or
37313731 nonqualified withdrawal within the same tax year
37323732 in which a contribution was made to the
37333733 taxpayer's account, the tax de duction otherwise
37343734 available pursuant to subparagraph b of this
37353735 paragraph shall be reduced by the amount of the
37363736 contribution which is equal to the roll over or
37373737 nonqualified withdrawa l.
37383738 d. If a taxpayer elects to take a rollover on a
37393739 contribution for which a deduction has been tak en
37403740 pursuant to subparagraph b of this paragraph within
37413741 one (1) year of the date of contribution , the amount
37423742 of such rollover sha ll be included in the adjusted
37433743 gross income of the taxpayer in the taxable year o f
37443744 the rollover.
37453745 e. If a taxpayer makes a nonqua lified withdrawal of
37463746 contributions for which a deduction was taken pursuant
37473747
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37983798 to subparagraph b of this paragraph, such nonqualifi ed
37993799 withdrawal and any earnings thereon shall be included
38003800 in the adjusted gross in come of the taxpayer in the
38013801 taxable year of the nonqualified withdrawal.
38023802 f. As used in this paragraph:
38033803 (1) "non-qualified withdrawal" means a withdrawal
38043804 from an Oklahoma Colle ge Savings Plan account
38053805 other than one of the following:
38063806 (a) a qualified withdraw al,
38073807 (b) a withdrawal made as a result of the de ath
38083808 or disability of the designated beneficiary
38093809 of an account,
38103810 (c) a withdrawal that is made on the account of
38113811 a scholarship or the allowance or payment
38123812 described in Section 135(d)(1)(B) or (C) or
38133813 by the Internal Revenue Code, received by
38143814 the designated beneficiary to the extent the
38153815 amount of the refund does not exceed the
38163816 amount of the scholarship, allowance, or
38173817 payment, or
38183818 (d) a rollover or change of designat ed
38193819 beneficiary as permitted by subsection F of
38203820 Section 3970.7 of Tit le 70 of Oklahoma
38213821 Statutes, and
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38733873 (2) "rollover" means the transfer of funds from the
38743874 Oklahoma College Savings Plan to any othe r plan
38753875 under Section 529 of the I nternal Revenue Code.
38763876 18. For tax years 2006 through 2021, retirement benefits
38773877 received by an individual from any component of the Armed Forces of
38783878 the United States in an amount not to exceed the greater of seventy-
38793879 five percent (75%) of such benefits or Ten Thousand Dollars
38803880 ($10,000.00) shall be exempt from taxable income but in no case less
38813881 than the amount of the exemption provided by paragraph 14 of t his
38823882 subsection. For tax year 2022 and subsequent tax years, retirement
38833883 benefits received by an individual from any component of the A rmed
38843884 Forces of the United States shall be exempt from taxable income.
38853885 19. For taxable years beginning after December 31, 2006,
38863886 retirement benefits received by federal civil service retirees,
38873887 including survivor annuities, paid in lieu of Social Security
38883888 benefits shall be exempt from taxable income to the extent suc h
38893889 benefits are included in the federal adjusted gross income p ursuant
38903890 to the provisions of Section 86 of the Internal Revenue Code, 26
38913891 U.S.C., Section 86, according to the following schedule:
38923892 a. in the taxable year beginning January 1, 2007, twenty
38933893 percent (20%) of such benefits shall be exempt,
38943894 b. in the taxable year beginning January 1, 2008, forty
38953895 percent (40%) of such benefits shall be exempt,
38963896
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39473947 c. in the taxable year beginning January 1, 2009, s ixty
39483948 percent (60%) of such benefits shall be exempt,
39493949 d. in the taxable year beginning January 1, 2010, eighty
39503950 percent (80%) of such benefits shall be exempt, and
39513951 e. in the taxable year beginning January 1, 2011, and
39523952 subsequent taxable years, one hundred pe rcent (100%)
39533953 of such benefits shall be exempt.
39543954 20. a. For taxable years beginning after December 31, 2007, a
39553955 resident individual may deduct up to Ten Thousand
39563956 Dollars ($10,000.00) from Oklahoma adjusted gross
39573957 income if the individual, or the dependent of t he
39583958 individual, while living, donates one or more human
39593959 organs of the individual to another human being for
39603960 human organ transplantation. As used in this
39613961 paragraph, "human organ" means all or part of a liver,
39623962 pancreas, kidney, intestine, lung, or bone marro w. A
39633963 deduction that is claimed under this paragraph m ay be
39643964 claimed in the taxable year in which the human organ
39653965 transplantation occurs.
39663966 b. An individual may claim this deduction only once, and
39673967 the deduction may be claimed only for unreimbursed
39683968 expenses that are incurred by the individual and
39693969 related to the organ donation of the individual.
39703970
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40214021 c. The Oklahoma Tax Commission shal l promulgate rules to
40224022 implement the provisions of this paragraph which shall
40234023 contain a specific list of expenses which may be
40244024 presumed to qualify for the deduction. The Tax
40254025 Commission shall prescribe necessary requirements for
40264026 verification.
40274027 21. For taxable years beginning after December 31, 2009, there
40284028 shall be exempt from taxable income any amount received by the
40294029 beneficiary of the de ath benefit for an emergency medical technician
40304030 or a registered emergency medical responder provided by Section 1-
40314031 2505.1 of Title 63 of the Oklahoma Statutes.
40324032 22. For taxable years beginning after December 31, 2008,
40334033 taxable income shall be increased by any unemployment compensation
40344034 exempted under Section 85(c) of the Internal Revenue Code, 26
40354035 U.S.C., Section 85(c)(2009).
40364036 23. For taxable years beginning after December 31, 2008, there
40374037 shall be exempt from taxable income any payment in an amou nt less
40384038 than Six Hundred Dollars ($600.00) received by a person as an award
40394039 for participation in a competitive livestock show event. For
40404040 purposes of this paragraph, the payment shall be treated as a
40414041 scholarship amount paid by the entity sponsoring the eve nt and the
40424042 sponsoring entity shall cause the payment to be categ orized as a
40434043 scholarship in its books and records.
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40954095 24. For taxable years beginning on or after January 1, 2016,
40964096 taxable income shall be increased by any amount of state and local
40974097 sales or income taxes deducted under 26 U.S.C., Section 164 of the
40984098 Internal Revenue Code. If the amount of state and local taxes
40994099 deducted on the fede ral return is limited, taxable income on the
41004100 state return shall be increased only by the amount actually deducted
41014101 after any such limitations are applied.
41024102 25. For taxable years begi nning after December 31, 2020, each
41034103 taxpayer shall be allowed a deduction f or contributions to accounts
41044104 established pursuant to the Achieving a Better Life Experience
41054105 (ABLE) Program as established in Section 40 01.1 et seq. of Title 56
41064106 of the Oklahoma Statu tes. For any tax year, the deduction provided
41074107 for in this paragraph shall not exceed Ten Thousand Dollars
41084108 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
41094109 ($20,000.00) for taxpayers filing a joint return. Any amount of
41104110 contribution not deducted by the taxpayer in the tax year for which
41114111 the contribution is made may be carried forward as a deduction from
41124112 income for up to five (5) tax years. Deductions may be taken for
41134113 contributions made during the tax year and through April 15 of the
41144114 succeeding tax year, or through the due date of a taxpayer's state
41154115 income tax return excluding extensions, whichever is later.
41164116 Provided, a deduction for the same contribution may not be taken in
41174117 more than one (1) tax year.
41184118
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41694169 F. 1. For taxable years beginning after December 31, 2004, a
41704170 deduction from the Oklahoma adjusted gross income of any individual
41714171 taxpayer shall be allowed for qualifying gains receiving capital
41724172 treatment that are includ ed in the federal adjuste d gross income of
41734173 such individual taxpayer du ring the taxable year.
41744174 2. As used in this subsection:
41754175 a. "qualifying gains receiving capital treatment" means
41764176 the amount of net capital gains, as defined in Section
41774177 1222(11) of the Inte rnal Revenue Code, includ ed in an
41784178 individual taxpayer's federal income tax return that
41794179 result from:
41804180 (1) the sale of real property or tangible personal
41814181 property located within Oklahoma that has been
41824182 directly or indirectly owned by the individual
41834183 taxpayer for a holding period of at least five
41844184 (5) years prior to the date of the transaction
41854185 from which such net capital gains arise,
41864186 (2) the sale of stock or the sale of a direct or
41874187 indirect ownership interest in an Oklahoma
41884188 company, limited liability company, or
41894189 partnership where such st ock or ownership
41904190 interest has been directl y or indirectly owned by
41914191 the individual taxpayer for a holding period of
41924192 at least two (2) years prior to the date of the
41934193
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42444244 transaction from which the net capital gains
42454245 arise, or
42464246 (3) the sale of real property, tangib le personal
42474247 property, or intangible persona l property located
42484248 within Oklahoma as part of the sale of all or
42494249 substantially all of the assets of an Oklahoma
42504250 company, limited liability company, or
42514251 partnership, or an Oklahoma proprietorshi p
42524252 business enterprise w here such property has been
42534253 directly or indirectly owned by such entity or
42544254 business enterprise or owned by the owners of
42554255 such entity or business enterprise for a period
42564256 of at least two (2) years prior to the date of
42574257 the transaction from which the net capit al gains
42584258 arise,
42594259 b. "holding period" means an uninterrupted period of
42604260 time. The holding period shall include any additional
42614261 period when the property was held by another
42624262 individual or entity, if such additional period is
42634263 included in the taxpayer's holding period for the
42644264 asset pursuant to the Internal Revenue Code,
42654265 c. "Oklahoma company," company", "limited liability
42664266 company," company", or "partnership" means an entity
42674267 whose primary headquarters h ave been located in
42684268
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43194319 Oklahoma for at least three ( 3) uninterrupted years
43204320 prior to the date of the transaction from wh ich the
43214321 net capital gains arise,
43224322 d. "direct" means the individual taxpayer directly owns
43234323 the asset,
43244324 e. "indirect" means the individual taxpa yer owns an
43254325 interest in a pass-through entity (or chain of pass-
43264326 through entities) that sells the asset that gives ri se
43274327 to the qualifying gains receiving capital treatment.
43284328 (1) With respect to sales of real property or
43294329 tangible personal property located wit hin
43304330 Oklahoma, the deduction described in this
43314331 subsection shall not apply unless the pass-
43324332 through entity that makes t he sale has held the
43334333 property for not less than five (5) uninterrupted
43344334 years prior to the date of the transaction tha t
43354335 created the capital g ain, and each pass-through
43364336 entity included in the chain of ownership has
43374337 been a member, partner, or shareholder of t he
43384338 pass-through entity in the tier immediately below
43394339 it for an uninterrupted period of not less than
43404340 five (5) years.
43414341 (2) With respect to sales of stock or ownership
43424342 interest in or sales of all or substantially all
43434343
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43944394 of the assets of an Oklahoma company, limi ted
43954395 liability company, partnership, or Oklahoma
43964396 proprietorship business enterprise, the deduction
43974397 described in this su bsection shall not app ly
43984398 unless the pass-through entity that makes the
43994399 sale has held the stock or ownership interest for
44004400 not less than two (2) uninterrupted years prior
44014401 to the date of the transaction that created the
44024402 capital gain, and each pass-through entity
44034403 included in the chain of ownership has been a
44044404 member, partner, or shareholder of the pass-
44054405 through entity in the tier immediately below it
44064406 for an uninterrupted period of not less than two
44074407 (2) years. For purposes of this division,
44084408 uninterrupted ownershi p prior to July 1, 200 7,
44094409 shall be included in the determination of the
44104410 required holding period prescribed by this
44114411 division, and
44124412 f. "Oklahoma proprietorship business enterprise" means a
44134413 business enterprise whose income and expenses have
44144414 been reported on Sch edule C or F of an ind ividual
44154415 taxpayer's federal income tax return, or any similar
44164416 successor schedule published by the Internal Revenue
44174417 Service and whose primary headquarters have been
44184418
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44694469 located in Oklahoma for at least three (3)
44704470 uninterrupted years prior to the date of the
44714471 transaction from which the net capital gains arise.
44724472 G. 1. For purposes of computing its Oklahoma taxable income
44734473 under this section, the dividends-paid deduction otherwise allowed
44744474 by federal law in computing net income of a real estate in vestment
44754475 trust that is subject to federal income tax shall be added bac k in
44764476 computing the tax imposed by this state under this title if the real
44774477 estate investment trust is a captive real estate investment trust.
44784478 2. For purposes of computing its Oklahoma t axable income under
44794479 this section, a taxpayer shall add back otherwise d eductible rents
44804480 and interest expenses paid to a captive real estate investment trust
44814481 that is not subject to the provisions of paragraph 1 of this
44824482 subsection. As used in this subsection :
44834483 a. the term "real estate investment trust" or "REIT"
44844484 means the meaning ascribed to such term in Section 856
44854485 of the Internal Revenue Code,
44864486 b. the term "captive real estate investment trust" means
44874487 a real estate investment trust, the shares or
44884488 beneficial interests of which are n ot regularly traded
44894489 on an established securities market and more than
44904490 fifty percent (50%) of the voting power or valu e of
44914491 the beneficial interests or shares of which are owned
44924492
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45434543 or controlled, directly or indirectly, or
45444544 constructively, by a single entity tha t is:
45454545 (1) treated as an association taxable as a
45464546 corporation under the Int ernal Revenue Code, and
45474547 (2) not exempt from federal income tax pursuant t o
45484548 the provisions of Section 501(a) of the Internal
45494549 Revenue Code.
45504550 The term shall not inc lude a real estate inv estment
45514551 trust that is intended to be regularly tr aded on an
45524552 established securities market, and that satisfies the
45534553 requirements of Section 856(a)(5) and (6) of the U.S.
45544554 Internal Revenue Code by reason of Section 856(h)(2)
45554555 of the Internal Revenue Code,
45564556 c. the term "association taxable as a corporation " shall
45574557 not include the following entities:
45584558 (1) any real estate inve stment trust as defined in
45594559 paragraph a of this subsection other than a
45604560 "captive real estate investment trust", or
45614561 (2) any qualified real estate investment trust
45624562 subsidiary under Section 856(i) of the Internal
45634563 Revenue Code, other than a qualified REIT
45644564 subsidiary of a "captive captive real estate
45654565 investment trust", or trust,
45664566
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46174617 (3) any Listed Australian Property Trust (meaning an
46184618 Australian unit trust registered as a "Managed
46194619 Investment Scheme" under the Australian
46204620 Corporations Act in which the principa l class of
46214621 units is listed on a recognized stock exchange i n
46224622 Australia and is regularly traded on an
46234623 established securities market), or an entity
46244624 organized as a trust, provided th at a Listed
46254625 Australian Property Trust owns or controls,
46264626 directly or indirectl y, seventy-five percent
46274627 (75%) or more of the voting power o r value of the
46284628 beneficial interests or shares of such trust, or
46294629 (4) any Qualified Foreign Entity, meaning a
46304630 corporation, trust, association or partnership
46314631 organized outside the laws of the United S tates
46324632 and which satisfies the following criteria:
46334633 (a) at least seventy-five percent (75%) of the
46344634 entity's total asset value at the close of
46354635 its taxable year is represented by real
46364636 estate assets, as defined in Section
46374637 856(c)(5)(B) of the Internal Revenue Co de,
46384638 thereby including shares or certificates of
46394639 beneficial interest in any real estate
46404640
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46914691 investment trust, cash and cash equivalents,
46924692 and U.S. Government securities,
46934693 (b) the entity receives a dividend-paid
46944694 deduction comparable to Section 561 of the
46954695 Internal Revenue Code, or is exempt from
46964696 entity level tax,
46974697 (c) the entity is required to distribute at
46984698 least eighty-five percent (85%) of its
46994699 taxable income, as computed in the
47004700 jurisdiction in which it is organized, to
47014701 the holders of its shares or certificates of
47024702 beneficial interest on an annual basis,
47034703 (d) not more than ten percent (10%) of the
47044704 voting power or value in such entity is held
47054705 directly or indirectly or constructively by
47064706 a single entity or individual, or the shares
47074707 or beneficial interests of such entity a re
47084708 regularly traded on an established
47094709 securities market, an d
47104710 (e) the entity is organized in a country which
47114711 has a tax treaty with the United States.
47124712 3. For purposes of this subse ction, the constructive ownership
47134713 rules of Section 318(a) of the Internal Rev enue Code, as modified by
47144714 Section 856(d)(5) of the Internal Revenue Code, shall apply in
47154715
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47664766 determining the ownership of stock, assets, or net profits of any
47674767 person.
47684768 4. A real estate investment trust that does not become
47694769 regularly traded on an established se curities market within one (1)
47704770 year of the date on which it first becomes a real estate investment
47714771 trust shall be deemed not to have been regularly traded on an
47724772 established securities market, retroactive to the date it first
47734773 became a real estate investment trust, and shall file an amended
47744774 return reflecting such re troactive designation for any tax year or
47754775 part year occurring during its initial year of status as a real
47764776 estate investment trust. For purposes of this subsection, a re al
47774777 estate investment trust b ecomes a real estate investment trust on
47784778 the first day it has both met the requirements of Section 856 of the
47794779 Internal Revenue Code and has elected to be treated as a real estate
47804780 investment trust pursuant to Section 856(c)(1) of the Internal
47814781 Revenue Code.
47824782 SECTION 2. This act shall become effective November 1, 2023.
47834783
47844784 59-1-96 QD 1/19/2023 3:37:51 PM