OK
Oklahoma House Bill HB2190

Oklahoma 2025 Regular Session

Oklahoma House Bill HB2190 Compare Versions

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2828 STATE OF OKLAHOMA
2929
3030 1st Session of the 60th Legislature (2025)
3131
3232 HOUSE BILL 2190 By: Wolfley
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3838 AS INTRODUCED
3939
4040 An Act relating to revenue and taxation; amending 68
41-O.S. 2021, Section 2358, as last amended by Section
42-2, Chapter 277, O.S.L. 2024 (68 O.S. Supp. 2024,
43-Section 2358), which relates to Oklahoma taxable
44-income and adjusted gross income; modifying exemption
45-amount for income derived from certain government
46-pension plans; modifying exemption amount for income
47-derived from certain retirement plans or sources; and
48-providing an effective date .
41+O.S. 2021, Secion2358, as last amended by Section 2,
42+Chapter 277, O.S.L. 2024 (68 O .S. Supp. 2024, Section
43+2358), which relates to Oklahoma taxable income and
44+adjusted gross income; modifying exemption amount for
45+income derived from certain government pension plans;
46+modifying exemption amount for income derived from
47+certain retirement pl ans or sources; and providing an
48+effective date.
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5454 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
5555 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2358, as
5656 last amended by Section 2, Chapter 277, O.S.L. 2024 (68 O.S. S upp.
5757 2024, Section 2358), is amended to read as follows:
5858 Section 2358. For all tax years beginning after December 31,
5959 1981, taxable income and adjusted gross income shall be adjusted to
6060 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
6161 as required by this section.
6262 A. The taxable income of any taxpayer shall be a djusted to
6363 arrive at Oklahoma taxable income for corporations and Oklahoma
6464 adjusted gross income for individuals, as follows:
6565
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9191 1. There shall be added interest income on obligati ons of any
9292 state or political subdivision thereto which is not otherwise
9393 exempted pursuant to other laws of this state, to the extent that
9494 such interest is not included in taxable income and adjusted gross
9595 income.
9696 2. There shall be deducted amounts includ ed in such income that
9797 the state is prohibited from taxing because of the prov isions of the
9898 Federal Constitution, the State Constitution, federal laws or laws
9999 of Oklahoma.
100100 3. The amount of any federal net operating loss deduction shall
101101 be adjusted as follows:
102102 a. For carryovers and carrybacks to taxable years
103103 beginning before January 1, 1981, the amount of any
104104 net operating loss deduction allowed to a taxpayer for
105105 federal income tax purposes shall be reduced to an
106106 amount which is the same portion thereof as the loss
107107 from sources within this state, as determined pursuant
108108 to this section and Section 2362 of this title, for
109109 the taxable year in which such loss is sustained is of
110110 the total loss for such year;
111111 b. For carryovers and carrybacks to taxable years
112112 beginning after December 31, 1980, the amount of any
113113 net operating loss deduction allowed for the taxable
114114 year shall be an amount equal to the aggregate of the
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141141 Oklahoma net operating loss carryovers and carrybacks
142142 to such year. Oklahoma net operating losses s hall be
143143 separately determined by reference to Section 172 of
144144 the Internal Revenue Code, 26 U.S.C., Section 172, as
145145 modified by the Oklahoma Income Tax Act, Section 2351
146146 et seq. of this title, and shall be allowed without
147147 regard to the existence of a federa l net operating
148148 loss. For tax years beginning after December 31,
149149 2000, and ending before January 1, 2008, the years to
150150 which such losses may be carried shall be determined
151151 solely by reference to Section 172 of the Internal
152152 Revenue Code, 26 U.S.C., Section 172, with the
153153 exception that the terms "net operating loss" and
154154 "taxable income" shall be replaced with "Oklahoma net
155155 operating loss" and "Oklahoma taxable income ". For
156156 tax years beginning after December 31, 2007, and
157157 ending before January 1, 2009, years to which such
158158 losses may be carried back shall be limited to two (2)
159159 years. For tax years beginning after December 31,
160160 2008, the years to which such losses may be carried
161161 back shall be determined solely by reference to
162162 Section 172 of the Internal Revenue Code, 26 U.S.C.,
163163 Section 172, with the exception that the terms "net
164164 operating loss" and "taxable income" shall be replaced
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191191 with "Oklahoma net operating loss " and "Oklahoma
192192 taxable income".
193193 4. Items of the following nature shall be allocated as
194194 indicated. Allowable deductions attributable to items separately
195195 allocable in subparagraphs a, b and c of this paragraph, whether or
196196 not such items of income were actually received, shall be allocated
197197 on the same basis as those items:
198198 a. Income from real and tangi ble personal property, such
199199 as rents, oil and mining production or royalties, and
200200 gains or losses from sales of such property, shall be
201201 allocated in accordance with the situs of such
202202 property;
203203 b. Income from intangible personal property, such as
204204 interest, dividends, patent or copyright royalties,
205205 and gains or losses from sales of such property, shall
206206 be allocated in accordance with the domiciliary situs
207207 of the taxpayer, except that:
208208 (1) where such property has acquired a nonunitary
209209 business or commercial si tus apart from the
210210 domicile of the taxpayer such income shall be
211211 allocated in accordance with such business or
212212 commercial situs; interest income from
213213 investments held to generate working capital for
214214 a unitary business enterprise shall be included
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241241 in apportionable income; a resident trust or
242242 resident estate shall be treated as having a
243243 separate commercial or business situs insofar as
244244 undistributed income is concerned, but shall not
245245 be treated as having a separate commercial or
246246 business situs insofar as distr ibuted income is
247247 concerned,
248248 (2) for taxable years beginning after December 31,
249249 2003, capital or ordinary gains or losses from
250250 the sale of an ownership interest in a publicly
251251 traded partnership, as defined by Section 7704(b)
252252 of the Internal Revenue Code, sh all be allocated
253253 to this state in the ratio of the original cost
254254 of such partnership's tangible property in this
255255 state to the original cost of such partnership 's
256256 tangible property everywhere, as determined at
257257 the time of the sale; if more than fifty percen t
258258 (50%) of the value of the partnership 's assets
259259 consists of intangible assets , capital or
260260 ordinary gains or losses from the sale of an
261261 ownership interest in the partnership shall be
262262 allocated to this state in accordance with the
263263 sales factor of the partne rship for its first
264264 full tax period immediately preceding its tax
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291291 period during which the ownership interest in the
292292 partnership was sold; the provisions of this
293293 division shall only apply if the capital or
294294 ordinary gains or losses from the sale of an
295295 ownership interest in a partnership do not
296296 constitute qualifying gain receiving capi tal
297297 treatment as defined in subparagraph a of
298298 paragraph 2 of subsection F of this section,
299299 (3) income from such property which is required to be
300300 allocated pursuant to the provisi ons of paragraph
301301 5 of this subsection shall be allocated as herein
302302 provided;
303303 c. Net income or loss from a business activity which is
304304 not a part of business carried on within or without
305305 the state of a unitary character shall be separately
306306 allocated to the state in which such activity is
307307 conducted;
308308 d. In the case of a manufacturing or processing
309309 enterprise the business of which in this state
310310 consists solely of marketing its products by:
311311 (1) sales having a situs without this state, shipped
312312 directly to a point from without the state to a
313313 purchaser within the state, commonly known as
314314 interstate sales,
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341341 (2) sales of the product stored in public warehouses
342342 within the state pursuant to "in transit"
343343 tariffs, as prescribed and allowed by the
344344 Interstate Commerce Commiss ion, to a purchaser
345345 within the state,
346346 (3) sales of the product stored in publi c warehouses
347347 within the state where the shipment to such
348348 warehouses is not covered by "in transit"
349349 tariffs, as prescribed and allowed by the
350350 Interstate Commerce Commission, to a purchaser
351351 within or without the state,
352352 the Oklahoma net income shall, at the option of the
353353 taxpayer, be that portion of the total net income of
354354 the taxpayer for federal income tax purposes derived
355355 from the manufacture and/or processing and sales
356356 everywhere as determined by the ratio of the sales
357357 defined in this section made to the p urchaser within
358358 the state to the total sales everywhere. The term
359359 "public warehouse" as used in this subparagraph means
360360 a licensed public warehouse, the principal business of
361361 which is warehousing merchandise for the public;
362362 e. In the case of insurance companies, Oklahoma taxable
363363 income shall be taxable income of the taxpayer for
364364 federal tax purposes, as adjusted for the adjustments
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391391 provided pursuant to the provisions of paragraph s 1
392392 and 2 of this subsection, apportioned as follows:
393393 (1) except as otherwise provided by division (2) of
394394 this subparagraph, taxable income of an insurance
395395 company for a taxable year shall be apportioned
396396 to this state by multiplying such income by a
397397 fraction, the numerator of which is the direct
398398 premiums written for insurance on property or
399399 risks in this state, and the denominator of which
400400 is the direct premiums written for insurance on
401401 property or risks everywhere. For purposes of
402402 this subsection, the ter m "direct premiums
403403 written" means the total amount of direct
404404 premiums written, assessments and annuity
405405 considerations as reported for the taxable year
406406 on the annual statement filed by the company with
407407 the Insurance Commissioner in the form approved
408408 by the National Association of Insurance
409409 Commissioners, or such other form as may be
410410 prescribed in lieu thereof,
411411 (2) if the principal source of premiums written by an
412412 insurance company consists of premiums for
413413 reinsurance accepted by it, the taxable income of
414414 such company shall be apportioned to this state
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441441 by multiplying such income by a f raction, the
442442 numerator of which is the sum of (a) direct
443443 premiums written for insurance on property or
444444 risks in this state, plus (b) premiums written
445445 for reinsurance accepted in respect of property
446446 or risks in this state, and the denominator of
447447 which is the sum of (c) direct premiums written
448448 for insurance on property or risks everywhere,
449449 plus (d) premiums written for reinsurance
450450 accepted in respect of property or risks
451451 everywhere. For purposes of this paragraph,
452452 premiums written for reinsurance accepted in
453453 respect of property or risks in this state,
454454 whether or not otherwise determinable, may at the
455455 election of the company be determined on the
456456 basis of the proportion which premiums written
457457 for insurance accepted from companies
458458 commercially domiciled in this state bears to
459459 premiums written for reinsurance accepted from
460460 all sources, or alternatively in the proportion
461461 which the sum of the direct premiums written for
462462 insurance on property or risks in this state by
463463 each ceding company from which reinsurance is
464464 accepted bears to the sum of the total direct
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491491 premiums written by each such ceding company for
492492 the taxable year.
493493 5. The net income or loss remaining after the separate
494494 allocation in paragraph 4 of this subsection, being that which is
495495 derived from a unitary business enterprise, shall be apportioned to
496496 this state on the basis of the arithmetical average of three factors
497497 consisting of property, payroll and sales or gross revenue
498498 enumerated as subparagraphs a, b and c of this paragraph. Net
499499 income or loss as use d in this paragraph includes that derived from
500500 patent or copyright royalties, purchase discounts, and interest on
501501 accounts receivable relating to or arising from a business activ ity,
502502 the income from which is apportioned pursuant to this subsection,
503503 including the sale or other disposition of such property and any
504504 other property used in the unitary enterprise. Deductions used in
505505 computing such net income or loss shall not include t axes based on
506506 or measured by income. Provided, for corporations whose propert y
507507 for purposes of the tax imposed by Section 2355 of this title has an
508508 initial investment cost equaling or exceeding Two Hundred Million
509509 Dollars ($200,000,000.00) and such invest ment is made on or after
510510 July 1, 1997, or for corporations which expand their property or
511511 facilities in this state and such expansion has an investment cost
512512 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
513513 over a period not to exceed thr ee (3) years, and such expansion is
514514 commenced on or after January 1, 2000, the three factors shall be
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541541 apportioned with property and payroll, each comprising twenty -five
542542 percent (25%) of the apportionment factor and sales comprising fifty
543543 percent (50%) of the apportionment factor. The apportionment
544544 factors shall be computed as follows:
545545 a. The property factor is a fraction, the numerator of
546546 which is the average value of the taxpayer 's real and
547547 tangible personal property owned or rented and used in
548548 this state during the tax period and the denominator
549549 of which is the average value of al l the taxpayer's
550550 real and tangible personal property everywhere owned
551551 or rented and used during the tax period.
552552 (1) Property, the income from which is separately
553553 allocated in paragraph 4 of this subsection,
554554 shall not be included in determining this
555555 fraction. The numerator of the fraction shall
556556 include a portion of the investment in
557557 transportation and other equipment having no
558558 fixed situs, such as rolling stock, buses, trucks
559559 and trailers, including machinery and equipment
560560 carried thereon, airplanes, salesp ersons'
561561 automobiles and other similar equipment, in the
562562 proportion that miles traveled in this state by
563563 such equipment bears to total miles traveled,
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590590 (2) Property owned by the ta xpayer is valued at its
591591 original cost. Property rented by the taxpayer
592592 is valued at eight times the net annual rental
593593 rate. Net annual rental rate is the annual
594594 rental rate paid by the taxpayer, less any annual
595595 rental rate received by the taxpayer from
596596 subrentals,
597597 (3) The average value of property shall be determined
598598 by averaging the values at the beginning and
599599 ending of the tax period but the Oklahoma Tax
600600 Commission may require the averaging of monthly
601601 values during the tax period if reasonably
602602 required to reflect properly the average value of
603603 the taxpayer's property;
604604 b. The payroll factor is a fraction, the numerator of
605605 which is the total compensation for services rendered
606606 in the state during the tax period, and the
607607 denominator of which is the total comp ensation for
608608 services rendered everywhere during the tax period.
609609 "Compensation", as used in this subsection, means
610610 those paid-for services to the extent related to the
611611 unitary business but does not include officers '
612612 salaries, wages and other compensation.
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639639 (1) In the case of a transportation enterprise, the
640640 numerator of the fraction shall include a portion
641641 of such expenditure in connection with employees
642642 operating equipment over a fixed route, such as
643643 railroad employees, airline pilots, or bus
644644 drivers, in this state only a part of the time,
645645 in the proportion that mileage traveled in this
646646 state bears to total mileage traveled by such
647647 employees,
648648 (2) In any case the numerator of the fraction shall
649649 include a portion of such expenditures in
650650 connection with itiner ant employees, such as
651651 traveling salespersons, in this state only a part
652652 of the time, in the proportion that time spent in
653653 this state bears to total time spent in
654654 furtherance of the enterprise by such employees;
655655 c. The sales factor is a fraction, the numer ator of which
656656 is the total sales or gross revenue of the taxpayer in
657657 this state during the tax period, and the denominator
658658 of which is the total sales or gross revenue of the
659659 taxpayer everywhere during the tax period. "Sales",
660660 as used in this subsection, does not include sales or
661661 gross revenue which are separately allocated in
662662 paragraph 4 of this subsection.
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689689 (1) Sales of tangible personal property have a situs
690690 in this state if the property is delivered or
691691 shipped to a purchaser other than the United
692692 States government, within this state regardless
693693 of the FOB point or other conditions of the sale;
694694 or the property is shipped from an office, store,
695695 warehouse, factory or other place of storage in
696696 this state and (a) the purchaser is the United
697697 States government or (b) the taxpayer is not
698698 doing business in the state of the destination of
699699 the shipment.
700700 (2) In the case of a railroad or interurban railway
701701 enterprise, the numerator of the fraction shall
702702 not be less than the allocation of revenues to
703703 this state as shown in its annual report to the
704704 Corporation Commission.
705705 (3) In the case of an air line, truck or bus
706706 enterprise or freight car, tank car, refrigerator
707707 car or other railroad equipment enterprise, the
708708 numerator of the fraction shall include a portion
709709 of revenue from interstate transportation in the
710710 proportion that interstate mileage traveled in
711711 this state bears to total interstate mileage
712712 traveled.
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739739 (4) In the case of an oil, gasoline or gas pipeline
740740 enterprise, the numerator of the fraction shall
741741 be either the total of traffic units of the
742742 enterprise within this state or the revenue
743743 allocated to this state based upon miles moved,
744744 at the option of the taxpayer, and the
745745 denominator of which shall be the total of
746746 traffic units of the enterprise or the revenue of
747747 the enterprise everywhere as appropriate to the
748748 numerator. A "traffic unit" is hereby defined as
749749 the transportation for a distance of one (1) mile
750750 of one (1) barrel of oil, one (1) gallon of
751751 gasoline or one thousand (1,000) cubic feet of
752752 natural or casinghead gas, as the case may be.
753753 (5) In the case of a telephone or telegraph or other
754754 communication enterprise, the numerator of the
755755 fraction shall include that portion of the
756756 interstate revenue as is allocated pursuant to
757757 the accounting procedures prescribed by the
758758 Federal Communications Commission; provided that
759759 in respect to each corporation or business entity
760760 required by the Federal Communications Commission
761761 to keep its books and records in accordance with
762762 a uniform system of accounts prescribed by such
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789789 Commission, the intrastate net income shall be
790790 determined separately in the manner p rovided by
791791 such uniform system of accounts and only the
792792 interstate income shall be subject to allocation
793793 pursuant to the provisions of this subsection.
794794 Provided further, that th e gross revenue factors
795795 shall be those as are determined pursuant to the
796796 accounting procedures prescribed by the Federal
797797 Communications Commission.
798798 In any case where the apportionment of the three factors
799799 prescribed in this paragraph attributes to this sta te a portion of
800800 net income of the enterprise out of all appropriate proportion to
801801 the property owned and/or business transacted within this state,
802802 because of the fact that one or more of the factors so prescribed
803803 are not employed to any appreciable extent in furtherance of the
804804 enterprise; or because one or more factors not so prescribed are
805805 employed to a considerable extent in furtherance of the enterprise;
806806 or because of other reasons, the Tax Commission is empowered to
807807 permit, after a showing by taxpayer t hat an excessive portion of net
808808 income has been attributed to this state, or r equire, when in its
809809 judgment an insufficient portion of net income has been attributed
810810 to this state, the elimination, substitution, or use of additional
811811 factors, or reduction or increase in the weight of such prescribed
812812 factors. Provided, however, that any such variance from such
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839839 prescribed factors which has the effect of increasing the portion of
840840 net income attributable to this state must not be inherently
841841 arbitrary, and applic ation of the recomputed final apportionment to
842842 the net income of the enterpris e must attribute to this state only a
843843 reasonable portion thereof.
844844 6. For calendar years 1997 and 1998, the owner of a new or
845845 expanded agricultural commodity processing facility in this state
846846 may exclude from Oklahoma taxable income, or in the case of an
847847 individual, the Oklahoma adjusted gross income, fifteen percent
848848 (15%) of the investment by the owner in the new or expanded
849849 agricultural commodity processing facility. For calend ar year 1999,
850850 and all subsequent years, the percentage, not to exceed fifteen
851851 percent (15%), available to the owner of a new or expanded
852852 agricultural commodity processing facility in this state claiming
853853 the exemption shall be adjusted annually so that the total estimated
854854 reduction in tax liability does not exceed One Million Dollars
855855 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
856856 for determining the percentage of the investment which each eligible
857857 taxpayer may exclude. The exclusion pr ovided by this paragraph
858858 shall be taken in the taxable year when the investmen t is made. In
859859 the event the total reduction in tax liability authorized by this
860860 paragraph exceeds One Million Dollars ($1,000,000.00) in any
861861 calendar year, the Tax Commission sh all permit any excess over One
862862 Million Dollars ($1,000,000.00) and shall factor such excess into
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889889 the percentage for subsequent years. Any amount of the exemption
890890 permitted to be excluded pursuant to the provisions of this
891891 paragraph but not used in any yea r may be carried forward as an
892892 exemption from income pursuant to the provision s of this paragraph
893893 for a period not exceeding six (6) years following the year in which
894894 the investment was originally made.
895895 For purposes of this paragraph:
896896 a. "Agricultural commodity processing facility " means
897897 buildings, structures, fixtures and improvements used
898898 or operated primarily for the processing or production
899899 of marketable products from agricultural commodities.
900900 The term shall also mean a dairy operation that
901901 requires a depreciable investment of at least Two
902902 Hundred Fifty Thousand Dollars ($250,00 0.00) and which
903903 produces milk from dairy cows. The term does not
904904 include a facility that provides only, and nothing
905905 more than, storage, cleaning, drying or transportation
906906 of agricultural commodities, and
907907 b. "Facility" means each part of the facility which is
908908 used in a process primarily for:
909909 (1) the processing of agricultural commodities,
910910 including receiving or storing agricultural
911911 commodities, or the production of milk at a dairy
912912 operation,
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939939 (2) transporting the agricultural commodities or
940940 product before, during or after the processing,
941941 or
942942 (3) packaging or otherwise preparing the product for
943943 sale or shipment.
944944 7. Despite any provision to the contrary in paragraph 3 of this
945945 subsection, for taxable years beginning after December 31, 1999, in
946946 the case of a taxpayer which has a farming loss, such farming loss
947947 shall be considered a net operating loss carryback in accordance
948948 with and to the extent of the Internal Revenue Code, 26 U.S.C.,
949949 Section 172(b)(G). However, the amount of the net operating loss
950950 carryback shall not exceed the lesser of:
951951 a. Sixty Thousand Dollars ($60,000.00), or
952952 b. the loss properly shown on Schedule F of the Internal
953953 Revenue Service Form 1040 reduced by one -half (1/2) of
954954 the income from all other sources other than reflected
955955 on Schedule F.
956956 8. In taxable years beginning after December 31, 1995, all
957957 qualified wages equal to the federal income tax credit set forth in
958958 26 U.S.C.A., Section 45A, shall be deducted from ta xable income.
959959 The deduction allowed pursuant to this paragraph shall only be
960960 permitted for the tax years in which the federal tax credit pursuant
961961 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
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988988 paragraph, "qualified wages" means those wages used to calculate the
989989 federal credit pursuant to 26 U.S.C.A., Section 45A.
990990 9. In taxable years beginning after December 31, 2005, an
991991 employer that is eligible for and utilizes the Safety Pays OSHA
992992 Consultation Service provided by the Oklahoma Department of Labor
993993 shall receive an exemption from taxable income in the amount of One
994994 Thousand Dollars ($1,000.00) for the tax year that the service is
995995 utilized.
996996 10. For taxable years beginning on or after January 1, 2010,
997997 there shall be added to Oklahoma taxable income an amount equal to
998998 the amount of deferred income not included in such taxable income
999999 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
10001000 as amended by Section 1231 of the American Recovery and Reinvestment
10011001 Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
10021002 Oklahoma taxable income an amount equal to t he amount of deferred
10031003 income included in such taxable income pursuant to Section 108(i)(1)
10041004 of the Internal Revenue Code by Section 1231 of the American
10051005 Recovery and Reinvestment Act of 2009 (P.L. No. 111 -5).
10061006 11. For taxable years beginning on or after January 1, 2019,
10071007 there shall be subtracted from Oklahoma taxable income or adjusted
10081008 gross income any item of income or gain, and there shall be added to
10091009 Oklahoma taxable income or a djusted gross income any item of loss or
10101010 deduction that in the absence of an e lection pursuant to the
10111011 provisions of the Pass -Through Entity Tax Equity Act of 2019 would
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10381038 be allocated to a member or to an indirect member of an electing
10391039 pass-through entity pursuant to Section 2351 et seq. of this title,
10401040 if (i) the electing pass -through entity has accounted for such item
10411041 in computing its Oklahoma net entity income or loss pursuant to the
10421042 provisions of the Pass -Through Entity Tax Equity Act of 2019, and
10431043 (ii) the total amount of tax attributable to any resulting Oklahoma
10441044 net entity income has been paid. The Oklahoma Tax Commission shall
10451045 promulgate rules for the reporting of such exclusion to direct and
10461046 indirect members of the electing pass -through entity. As use d in
10471047 this paragraph, "electing pass-through entity", "indirect member",
10481048 and "member" shall be defined in the same manner as prescribed by
10491049 Section 2355.1P-2 of this title. Notwithstanding the application of
10501050 this paragraph, the adjusted tax basis of any own ership interest in
10511051 a pass-through entity for purposes of Section 2351 et seq. of this
10521052 title shall be equal to its adjusted tax basis for federal income
10531053 tax purposes.
10541054 B. 1. The taxable income of any corporation shall be further
10551055 adjusted to arrive at Oklah oma taxable income, except those
10561056 corporations electing treatment as provided in subchapter S of the
10571057 Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section
10581058 2365 of this title, deductions pursuant to the provisions of the
10591059 Accelerated Cost Recove ry System as defined and allowed in the
10601060 Economic Recovery Tax Act of 1981, Pub lic Law 97-34, 26 U.S.C.,
10611061 Section 168, for depreciation of assets placed into service after
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10881088 December 31, 1981, shall not be allowed in calculating Oklahoma
10891089 taxable income. Such corporations shall be allowed a deduction for
10901090 depreciation of assets placed into service after December 31, 1981,
10911091 in accordance with provisions of the Internal Revenue Code, 26
10921092 U.S.C., Section 1 et seq., in effect immediately prior to the
10931093 enactment of the Accelerated Cost Recovery System. The Oklahoma tax
10941094 basis for all such assets placed into service after December 31,
10951095 1981, calculated in this section shall be retained and utilized for
10961096 all Oklahoma income tax purposes through the final disposition of
10971097 such assets.
10981098 Notwithstanding any other provisions of the Oklahoma Income Tax
10991099 Act, Section 2351 et seq. of this title, or of the Internal Revenue
11001100 Code to the contrary, this subsection shall control calculation of
11011101 depreciation of assets placed into service after December 31, 1981,
11021102 and before January 1, 1983.
11031103 For assets placed in service an d held by a corporation in which
11041104 the Accelerated Cost Recovery System was previously disallowed, an
11051105 adjustment to taxable income is required in the first taxable year
11061106 beginning after December 31, 1982, to reconcile the basis of such
11071107 assets to the basis allowed in the Internal Revenue Code. The
11081108 purpose of this adjustment is to equalize the basis and allowance
11091109 for depreciation accounts between that reported to the Internal
11101110 Revenue Service and that reported to this state.
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11371137 2. For tax years beginning on or aft er January 1, 2009, and
11381138 ending on or before December 31, 2009, there shall be added to
11391139 Oklahoma taxable income any amount in excess of One Hundred Seventy -
11401140 five Thousand Dollars ( $175,000.00) which has been deducted as a
11411141 small business expense under Internal Revenue Code, Section 179 as
11421142 provided in the American Recovery and Reinvestment Act of 2009.
11431143 C. 1. For taxable years beginning after December 31, 1987, the
11441144 taxable income of any corporation shall be further adjusted to
11451145 arrive at Oklahoma taxable income for transfers of technology to
11461146 qualified small businesses located in this state. Such transferor
11471147 corporation shall be allowed an exemption from taxable income of an
11481148 amount equal to the amount of royalty payment received as a result
11491149 of such transfer; provided, however, such amount shall not exceed
11501150 ten percent (10%) of the amount of gross proceeds received by such
11511151 transferor corporation as a result of the technology transfer. Suc h
11521152 exemption shall be allowed for a period not to exceed ten (10) years
11531153 from the date of receipt of the first royalty payment accruing from
11541154 such transfer. No exemption may be claimed for transfers of
11551155 technology to qualified small businesses made prior to J anuary 1,
11561156 1988.
11571157 2. For purposes of this subsection:
11581158 a. "Qualified small business " means an entity, whether
11591159 organized as a corporation, partnership, or
11601160 proprietorship, organized for profit with its
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11871187 principal place of business located within this state
11881188 and which meets the following criteria:
11891189 (1) Capitalization of not more than Two Hu ndred Fifty
11901190 Thousand Dollars ($250,000.00),
11911191 (2) Having at least fifty percent (50%) of its
11921192 employees and assets located in this state at the
11931193 time of the transfer, and
11941194 (3) Not a subsidiary or affiliate of the transferor
11951195 corporation;
11961196 b. "Technology" means a proprietary process, formula,
11971197 pattern, device or compilation of scientific or
11981198 technical information which is not in the public
11991199 domain;
12001200 c. "Transferor corporation " means a corporation which is
12011201 the exclusive and undisputed owner of the technology
12021202 at the time the transfer is made; and
12031203 d. "Gross proceeds" means the total amount of
12041204 consideration for the transfer of technology, whether
12051205 the consideration is in money or otherwise.
12061206 D. 1. For taxable years beginning after December 31, 2005, the
12071207 taxable income of any corporation, estate or trust, shall be further
12081208 adjusted for qualifying gains receiving capital treatment. Such
12091209 corporations, estates or trusts shall be allowed a deduction fro m
12101210 Oklahoma taxable income for the amount of qualifying gains receiving
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12371237 capital treatment earned by the corporation, estate or trust during
12381238 the taxable year and included in the federal taxable income of such
12391239 corporation, estate or trust.
12401240 2. As used in this subsection:
12411241 a. "qualifying gains receiving capital treatment " means
12421242 the amount of net capital gains, as defined in Section
12431243 1222(11) of the Internal Revenue Code, included in the
12441244 federal income tax return of the corporation, estate
12451245 or trust that result fro m:
12461246 (1) the sale of real property or tangible personal
12471247 property located within this state that has been
12481248 directly or indirectly owned by the corporation,
12491249 estate or trust for a holding period of at least
12501250 five (5) years prior to the date of the
12511251 transaction from which such net capital gains
12521252 arise,
12531253 (2) the sale of stock or on the sale of an ownership
12541254 interest in an Oklahoma company, limited
12551255 liability company, or partnership where such
12561256 stock or ownership interest has been directly or
12571257 indirectly owned by the corpor ation, estate or
12581258 trust for a holding period of at least three (3)
12591259 years prior to the date of the transaction from
12601260 which the net capital gains arise, or
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12871287 (3) the sale of real property, tangible personal
12881288 property or intangible personal property located
12891289 within this state as part of the sale of all or
12901290 substantially all of the assets of an Oklahoma
12911291 company, limited liability company, or
12921292 partnership where such property has been directly
12931293 or indirectly owned by such entity owned by the
12941294 owners of such entity, and use d in or derived
12951295 from such entity for a period of at least three
12961296 (3) years prior to the date of the transaction
12971297 from which the net capital gains arise,
12981298 b. "holding period" means an uninterrupted period of
12991299 time. The holding period shall include any addition al
13001300 period when the property was held by another
13011301 individual or entity, if such additional period is
13021302 included in the taxpayer 's holding period for the
13031303 asset pursuant to the Internal Revenue Code,
13041304 c. "Oklahoma company", "limited liability company ", or
13051305 "partnership" means an entity whose primary
13061306 headquarters have been located in this st ate for at
13071307 least three (3) uninterrupted years prior to the date
13081308 of the transaction from which the net capital gains
13091309 arise,
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13361336 d. "direct" means the taxpayer directly owns the asset ,
13371337 and
13381338 e. "indirect" means the taxpayer owns an interest in a
13391339 pass-through entity (or chain of pass -through
13401340 entities) that sells the asset that gives rise to the
13411341 qualifying gains receiving capital treatment.
13421342 (1) With respect to sales of real property or
13431343 tangible personal property located within this
13441344 state, the deduction described in this subsection
13451345 shall not apply unless the pass -through entity
13461346 that makes the sale has held the property for not
13471347 less than five (5) uninterrupted years prior to
13481348 the date of the transaction that created the
13491349 capital gain, and each pass -through entity
13501350 included in the chain of ownership has been a
13511351 member, partner, or shareholder of the pass -
13521352 through entity in the tier immediately below it
13531353 for an uninterrupted period of not less than fi ve
13541354 (5) years.
13551355 (2) With respect to sales of stock or ownership
13561356 interest in or sales of all or substantially all
13571357 of the assets of an Oklahoma company, limited
13581358 liability company, or partnership, the deduction
13591359 described in this subsection shall not apply
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13861386 unless the pass-through entity that makes the
13871387 sale has held the stock or ownership interest or
13881388 the assets for not less than three (3)
13891389 uninterrupted years prior to the date of the
13901390 transaction that created the capital gain, and
13911391 each pass-through entity included i n the chain of
13921392 ownership has been a member, partner or
13931393 shareholder of the pass -through entity in the
13941394 tier immediately below it for an uninterrupted
13951395 period of not less than three (3) years.
13961396 E. The Oklahoma adjusted gross income of any individual
13971397 taxpayer shall be further adjusted as follows to arrive at Oklahoma
13981398 taxable income:
13991399 1. a. In the case of individuals, there shall be added or
14001400 deducted, as the case may be, the difference necessary
14011401 to allow personal exemptions of One Thousand Dollars
14021402 ($1,000.00) in lieu of the personal exemptions allowed
14031403 by the Internal Revenue Code.
14041404 b. There shall be allowed an additional exemption of One
14051405 Thousand Dollars ($1,000.00) for each taxpayer or
14061406 spouse who is blind at the close of the tax year. For
14071407 purposes of this subparag raph, an individual is blind
14081408 only if the central visual acuity of the individual
14091409 does not exceed 20/200 in the better eye with
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14361436 correcting lenses, or if the visual acuity of the
14371437 individual is greater than 20/200, but is accompanied
14381438 by a limitation in the fi elds of vision such that the
14391439 widest diameter of the visual field subtends an a ngle
14401440 no greater than twenty (20) degrees.
14411441 c. There shall be allowed an additional exemption of One
14421442 Thousand Dollars ($1,000.00) for each taxpayer or
14431443 spouse who is sixty-five (65) years of age or older at
14441444 the close of the tax year based upon the filing status
14451445 and federal adjusted gross income of the taxpayer.
14461446 Taxpayers with the following filing status may claim
14471447 this exemption if the federal adjusted gross income
14481448 does not exceed:
14491449 (1) Twenty-five Thousand Dollars ($25,000.00) if
14501450 married and filing jointly;
14511451 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
14521452 if married and filing separately;
14531453 (3) Fifteen Thousand Dollars ($15,000.00) if single;
14541454 and
14551455 (4) Nineteen Thousand Dollars ($19, 000.00) if a
14561456 qualifying head of household.
14571457 Provided, for taxable years beginning after December
14581458 31, 1999, amounts included in the calculation of
14591459 federal adjusted gross income pursuant to the
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14861486 conversion of a traditional individual retirement
14871487 account to a Roth individual retirement account shall
14881488 be excluded from federal adjusted gross income for
14891489 purposes of the income thresholds provided in this
14901490 subparagraph.
14911491 2. a. For taxable years beginning on or before December 31,
14921492 2005, in the case of individuals who use the standard
14931493 deduction in determining taxable income, there shall
14941494 be added or deducted, as the case may be, the
14951495 difference necessary to allow a standard deduction in
14961496 lieu of the standard deduction allowed by the Internal
14971497 Revenue Code, in an amount equal to the larger of
14981498 fifteen percent (15%) of the Oklahoma adjusted gross
14991499 income or One Thousand Dollars ($1,000.00), but not to
15001500 exceed Two Thousand Dollars ($2,000.00), except that
15011501 in the case of a married individual filing a separate
15021502 return such deduction shal l be the larger of fifteen
15031503 percent (15%) of such Oklahoma adjusted gross income
15041504 or Five Hundred Dollars ($500.00), but not to exceed
15051505 the maximum amount of One Thousand Dollars
15061506 ($1,000.00).
15071507 b. For taxable years beginning on or after January 1,
15081508 2006, and before January 1, 2007, in the case of
15091509 individuals who use the standard deduction in
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15361536 determining taxable income, there shall be added or
15371537 deducted, as the case may be, the difference necessary
15381538 to allow a standard deduction in lieu of the standard
15391539 deduction allowed by the Internal Revenue Code, in an
15401540 amount equal to:
15411541 (1) Three Thousand Dollars ($3,000.00), if the filing
15421542 status is married filing joint, head of household
15431543 or qualifying widow; or
15441544 (2) Two Thousand Dollars ($2,000.00), if the filing
15451545 status is single or married filing separate.
15461546 c. For the taxable year beginning on January 1, 200 7, and
15471547 ending December 31, 2007, in the case of individuals
15481548 who use the standard deduction in determining taxable
15491549 income, there shall be added or deducted, as the case
15501550 may be, the difference necessary to allow a standard
15511551 deduction in lieu of the standard deduction allowed by
15521552 the Internal Revenue Code, in an amount equal to:
15531553 (1) Five Thousand Five Hundred Dollars ($5,500.00),
15541554 if the filing status is married filing joint or
15551555 qualifying widow; or
15561556 (2) Four Thousand One Hundred Twenty -five Dollars
15571557 ($4,125.00) for a head of household; or
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15841584 (3) Two Thousand Seven Hundred Fifty Dollars
15851585 ($2,750.00), if the filing status is single or
15861586 married filing separate.
15871587 d. For the taxable year beginning on January 1, 2008, and
15881588 ending December 31, 2008, in the case of individuals
15891589 who use the standard deduction in determining taxable
15901590 income, there shall be added or deducted, as the case
15911591 may be, the difference necessary to allow a standard
15921592 deduction in lieu of the standard deduction allowed by
15931593 the Internal Revenue Code, in an amount equ al to:
15941594 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
15951595 the filing status is married filing joint or
15961596 qualifying widow, or
15971597 (2) Four Thousand Eight Hundred Seventy -five Dollars
15981598 ($4,875.00) for a head of household, or
15991599 (3) Three Thousand Two Hundred Fifty Dollars
16001600 ($3,250.00), if the filing status is single or
16011601 married filing separate.
16021602 e. For the taxable year beginning on January 1, 2009, and
16031603 ending December 31, 2009, in the case o f individuals
16041604 who use the standard deduction in determining taxable
16051605 income, there shall be added or deducted, as the case
16061606 may be, the difference necessary to allow a standard
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16331633 deduction in lieu of the standard deduction allowed by
16341634 the Internal Revenue Code, in an amount equal to:
16351635 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
16361636 if the filing status is married filing joint or
16371637 qualifying widow, or
16381638 (2) Six Thousand Three Hundred Seventy -five Dollars
16391639 ($6,375.00) for a head of household, or
16401640 (3) Four Thousand Two Hundred Fifty Dollars
16411641 ($4,250.00), if the filing status is single or
16421642 married filing separate.
16431643 Oklahoma adjusted gross income shall be increased by
16441644 any amounts paid for motor vehicle excise taxes which
16451645 were deducted as allowed by the Internal Revenue Co de.
16461646 f. For taxable years beginning on or after January 1,
16471647 2010, and ending on December 31, 2016, in the case of
16481648 individuals who use the standard deduction in
16491649 determining taxable income, there shall be added or
16501650 deducted, as the case may be, the difference n ecessary
16511651 to allow a standard deduction equal to the standard
16521652 deduction allowed by the Internal Revenue Code, based
16531653 upon the amount and filing status prescribed by such
16541654 Code for purposes of filing federal individual income
16551655 tax returns.
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16821682 g. For taxable years beginning on or after January 1,
16831683 2017, in the case of individuals who use the standard
16841684 deduction in determining taxable income, there shall
16851685 be added or deducted, as the case may be, the
16861686 difference necessary to allow a standard deduction in
16871687 lieu of the standard deduction allowed by the Internal
16881688 Revenue Code, as follows:
16891689 (1) Six Thousand Three Hundred Fifty Dollars
16901690 ($6,350.00) for single or married filing
16911691 separately,
16921692 (2) Twelve Thousand Seven Hundred Dollars
16931693 ($12,700.00) for married filing jointly or
16941694 qualifying widower with dependent child, and
16951695 (3) Nine Thousand Three Hundred Fifty Dollars
16961696 ($9,350.00) for head of household.
16971697 3. a. In the case of resident and part -year resident
16981698 individuals having adjusted gross income from sources
16991699 both within and without the sta te, the itemized or
17001700 standard deductions and personal exemptions shall be
17011701 reduced to an amount which is the same portion of the
17021702 total thereof as Oklahoma adjusted gross income is of
17031703 adjusted gross income. To the extent itemized
17041704 deductions include allowable moving expense, proration
17051705 of moving expense shall not be required or permitted
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17321732 but allowable moving expense shall be fully deductible
17331733 for those taxpayers moving within or into this state
17341734 and no part of moving expense shall be deductible for
17351735 those taxpayers moving without or out of this state.
17361736 All other itemized or standard deducti ons and personal
17371737 exemptions shall be subject to proration as provided
17381738 by law.
17391739 b. For taxable years beginning on or after January 1,
17401740 2018, the net amount of itemized deductions al lowable
17411741 on an Oklahoma income tax return, subject to the
17421742 provisions of paragraph 24 of this subsection, shall
17431743 not exceed Seventeen Thousand Dollars ($17,000.00).
17441744 For purposes of this subparagraph, charitable
17451745 contributions and medical expenses deductible f or
17461746 federal income tax purposes shall be excluded from the
17471747 amount of Seventeen Thousand Dollars ($17,000.00) as
17481748 specified by this subparagraph.
17491749 4. A resident individual with a physical disability
17501750 constituting a substantial handicap to employment may deduct from
17511751 Oklahoma adjusted gross income such expenditures to modify a motor
17521752 vehicle, home or workplace as are necessary to compensate for his or
17531753 her handicap. A veteran certified by the Department of Veterans
17541754 Affairs of the federal government as having a ser vice-connected
17551755 disability shall be conclusively presumed to be an individual w ith a
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17821782 physical disability constituting a substantial handicap to
17831783 employment. The Tax Commission shall promulgate rules containing a
17841784 list of combinations of common disabilities a nd modifications which
17851785 may be presumed to qualify for this deduction. The Tax Commission
17861786 shall prescribe necessary requirements for verification.
17871787 5. a. Before July 1, 2010, the first One Thousand Five
17881788 Hundred Dollars ($1,500.00) received by any person
17891789 from the United States as salary or compensation in
17901790 any form, other than retireme nt benefits, as a member
17911791 of any component of the Armed Forces of the United
17921792 States shall be deducted from taxable income.
17931793 b. On or after July 1, 2010, one hundred percent (100%)
17941794 of the income received by any person from the United
17951795 States as salary or compensation in any form, other
17961796 than retirement benefits, as a member of any component
17971797 of the Armed Forces of the United States shall be
17981798 deducted from taxable income.
17991799 c. Whenever the filing of a timely income tax return by a
18001800 member of the Armed Forces of the Un ited States is
18011801 made impracticable or impossible of accomplishment by
18021802 reason of:
18031803 (1) absence from the United States, which term
18041804 includes only the states and the District of
18051805 Columbia;
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18321832 (2) absence from this state while on active duty; or
18331833 (3) confinement in a hospital within the United
18341834 States for treatment of wounds, injuries or
18351835 disease,
18361836 the time for filing a return and paying an income tax
18371837 shall be and is hereby extended without incu rring
18381838 liability for interest or penalties, to the fifteenth
18391839 day of the third month following the month in which:
18401840 (a) Such individual shall return to the United
18411841 States if the extension is granted pursuant
18421842 to subparagraph a of this paragraph, return
18431843 to this state if the extension is granted
18441844 pursuant to subparagraph b of this paragraph
18451845 or be discharged from such hospital if the
18461846 extension is granted pursuant to
18471847 subparagraph c of this paragraph; or
18481848 (b) An executor, administrator, or conservator
18491849 of the estate of the taxpayer is appointed,
18501850 whichever event occurs the earliest.
18511851 Provided, that the Tax Commission may, in its discretion, grant
18521852 any member of the Armed Forces of the United States an extension of
18531853 time for filing of income tax returns and payment of income tax
18541854 without incurring liabilities for interest or penalties. Such
18551855 extension may be granted only when in the judgment of the Tax
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18821882 Commission a good cause exists therefor and may be for a period in
18831883 excess of six (6) months. A record of every such extension granted,
18841884 and the reason therefor, shall be kept.
18851885 6. Before July 1, 2010, the salary or any other form of
18861886 compensation, received from the United States by a member of any
18871887 component of the Armed Forces of the United States, shall be
18881888 deducted from taxable in come during the time in which the person is
18891889 detained by the enemy in a conflict, is a prisoner of war or is
18901890 missing in action and not deceased; provided, after July 1, 2010,
18911891 all such salary or compensation shall be subject to the deduction as
18921892 provided pursuant to paragraph 5 of this subsection.
18931893 7. a. An individual taxpayer, whether resident or
18941894 nonresident, may deduct an amount equal to the federal
18951895 income taxes paid by the taxpayer during the taxable
18961896 year.
18971897 b. Federal taxes as described in subparagraph a of t his
18981898 paragraph shall be deductible by any individual
18991899 taxpayer, whether resident or nonresident, only to the
19001900 extent they relate to income subject to taxation
19011901 pursuant to the provisions of the Oklahoma Income Tax
19021902 Act. The maximum amount allowable in the prec eding
19031903 paragraph shall be prorated on the ratio of the
19041904 Oklahoma adjusted gross income to federal adjusted
19051905 gross income.
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19321932 c. For the purpose of this paragraph, "federal income
19331933 taxes paid" shall mean federal income taxes, surtaxes
19341934 imposed on incomes or excess profits taxes, as though
19351935 the taxpayer was on the accrual basis. In determining
19361936 the amount of deduction for federal income taxes for
19371937 tax year 2001, the amount of the deduction shall not
19381938 be adjusted by the amount of any accelerated ten
19391939 percent (10%) tax rat e bracket credit or advanced
19401940 refund of the credit received during the tax year
19411941 provided pursuant to the federal Economic Growth and
19421942 Tax Relief Reconciliation Act of 2001, P.L. No. 107 -
19431943 16, and the advanced refund of such credit shall not
19441944 be subject to taxation.
19451945 d. The provisions of this paragraph shall apply to all
19461946 taxable years ending after December 31, 1978, and
19471947 beginning before January 1, 2006.
19481948 8. a. Retirement benefits not to exceed Five Thousand Five
19491949 Hundred Dollars ($5,500.00) for the 2004 tax year,
19501950 Seven Thousand Five Hundred Dollars ($7,500.00) for
19511951 the 2005 tax year and, Ten Thousand Dollars
19521952 ($10,000.00) for the 2006 tax year , and Forty Thousand
19531953 Dollars ($40,000.00) for the 2026 tax year and all
19541954 subsequent tax years, which are received by an
19551955 individual from the civil service of the United
19561956
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19811981
19821982 States, the Oklahoma Public Employees Retirement
19831983 System, the Teachers ' Retirement System of Oklahoma,
19841984 the Oklahoma Law Enforcement Retirement System, the
19851985 Oklahoma Firefighters Pension and Retirement System,
19861986 the Oklahoma Police Pension and Retirement System, the
19871987 employee retirement systems creat ed by counties
19881988 pursuant to Section 951 et seq. of Title 19 of the
19891989 Oklahoma Statutes, the Uniform Retirement System for
19901990 Justices and Judges, the Oklahoma Wildlife
19911991 Conservation Department Retirement Fund, the Oklahoma
19921992 Employment Security Commission Retirement Plan, or the
19931993 employee retirement systems created by municipalities
19941994 pursuant to Section 48 -101 et seq. of Title 11 of the
19951995 Oklahoma Statutes shall be exempt from taxable income.
19961996 b. Ten Thousand Dollars ($10,000.00) for the 202 5 tax
19971997 year and all subsequent tax years which are received
19981998 by an individual from the civil service of the United
19991999 States.
20002000 9. In taxable years beginning after December 3l, 1984, Social
20012001 Security benefits receiv ed by an individual shall be exempt from
20022002 taxable income, to the extent such benefits are included in the
20032003 federal adjusted gross income pursuant to the provisions of Section
20042004 86 of the Internal Revenue Code, 26 U.S.C., Section 86.
20052005
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20312031 10. For taxable years begi nning after December 31, 1994, lump -
20322032 sum distributions from employer plans of d eferred compensation,
20332033 which are not qualified plans within the meaning of Section 401(a)
20342034 of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which
20352035 are deposited in and a ccounted for within a separate bank account or
20362036 brokerage account in a financial institution within this state,
20372037 shall be excluded from taxable income in the same manner as a
20382038 qualifying rollover contribution to an individual retirement account
20392039 within the meaning of Section 408 of the Internal Revenue Code, 26
20402040 U.S.C., Section 408. Amo unts withdrawn from such bank or brokerage
20412041 account, including any earnings thereon, shall be included in
20422042 taxable income when withdrawn in the same manner as withdrawals from
20432043 individual retirement accounts within the meaning of Section 408 of
20442044 the Internal Revenue Code.
20452045 11. In taxable years beginning after December 31, 1995,
20462046 contributions made to and interest received from a medical savings
20472047 account established pursuant to Sections 2621 through 2623 of Title
20482048 63 of the Oklahoma Statutes shall be exempt from ta xable income.
20492049 12. For taxable years beginning after December 31, 1996, the
20502050 Oklahoma adjusted gross income of any individual taxpayer who is a
20512051 swine or poultry producer may be fu rther adjusted for the deduction
20522052 for depreciation allowed for new construction or expansion costs
20532053 which may be computed using the same depreciation method elected for
20542054 federal income tax purposes except that the useful life shall be
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20812081 seven (7) years for purp oses of this paragraph. If depreciation is
20822082 allowed as a deduction in determin ing the adjusted gross income of
20832083 an individual, any depreciation calculated and claimed pursuant to
20842084 this section shall in no event be a duplication of any depreciation
20852085 allowed or permitted on the federal income tax return of the
20862086 individual.
20872087 13. a. In taxable years beginning after December 31, 2002,
20882088 nonrecurring adoption expenses paid by a resident
20892089 individual taxpayer in connection with:
20902090 (1) the adoption of a minor, or
20912091 (2) a proposed adoption of a minor which did not
20922092 result in a decreed adoption,
20932093 may be deducted from the Oklahoma adjusted gross
20942094 income.
20952095 b. The deductions for adoptions and proposed adoptions
20962096 authorized by this paragraph shall not exceed Twenty
20972097 Thousand Dollars ($20,00 0.00) per calendar year.
20982098 c. The Tax Commission shall promulgate rules to implement
20992099 the provisions of this paragraph which shall contain a
21002100 specific list of nonrecurring adoption expenses which
21012101 may be presumed to qualify for the deduction. The Tax
21022102 Commission shall prescribe necessary requirements for
21032103 verification.
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21302130 d. "Nonrecurring adoption expenses" means adoption fees,
21312131 court costs, medical expenses, attorney fees and
21322132 expenses which are directly related to the legal
21332133 process of adoption of a child including, but not
21342134 limited to, costs relating to the adoption study,
21352135 health and psychological examinations, transportation
21362136 and reasonable costs of lodging and food for the child
21372137 or adoptive parents which are incurred to complete the
21382138 adoption process and are not reimb ursed by other
21392139 sources. The term nonrecurring adoption expenses
21402140 shall not include attorney fees incurred for the
21412141 purpose of litigating a contested adoption, from and
21422142 after the point of the initiation of the contest,
21432143 costs associated with physical remodeli ng, renovation
21442144 and alteration of the adoptive parents ' home or
21452145 property, except for a special needs child as
21462146 authorized by the court.
21472147 14. a. In taxable years beginning before January 1, 2005,
21482148 retirement benefits not to exceed the amounts
21492149 specified in this paragraph, which are received by an
21502150 individual sixty-five (65) years of age or older and
21512151 whose Oklahoma adjusted gross income is Twenty -five
21522152 Thousand Dollars ($25,000.00) or less if the filing
21532153 status is single, head of household, or married filing
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21802180 separate, or Fifty Thousand Dollars ($50,000.00) or
21812181 less if the filing status is married filing joint or
21822182 qualifying widow, shall be exempt from taxable income.
21832183 In taxable years beginning after December 31, 2004,
21842184 retirement benefits not to exceed the amounts
21852185 specified in this paragraph, which are received by an
21862186 individual whose Oklahoma adj usted gross income is
21872187 less than the qualifying amount specified in this
21882188 paragraph, shall be exempt from taxable income.
21892189 b. For purposes of this paragraph, the qualifying amount
21902190 shall be as follows:
21912191 (1) in taxable years beginning after December 31,
21922192 2004, and prior to January 1, 2007, the
21932193 qualifying amount shall be Thirty -seven Thousand
21942194 Five Hundred Dollars ($37,500.00) or less if the
21952195 filing status is single, head of household, or
21962196 married filing separate, or Seventy -five Thousand
21972197 Dollars ($75,000.00) or less if the filing status
21982198 is married filing jointly or qualifying widow,
21992199 (2) in the taxable year beginning January 1, 2007,
22002200 the qualifying amount shall be Fifty Thousand
22012201 Dollars ($50,000.00) or less if the filing status
22022202 is single, head of household, or married filing
22032203 separate, or One Hundred Thousand Dollars
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22302230 ($100,000.00) or less if the filing status is
22312231 married filing jointly or qualifying widow,
22322232 (3) in the taxable year beginning Janua ry 1, 2008,
22332233 the qualifying amount shall be Sixty -two Thousand
22342234 Five Hundred Dollars ($62,500.00) or less if the
22352235 filing status is single, head of household, or
22362236 married filing separate, or One Hundred Twenty -
22372237 five Thousand Dollars ($125,000.00) or less if
22382238 the filing status is married filing jointly or
22392239 qualifying widow,
22402240 (4) in the taxable year beginning January 1, 2009,
22412241 the qualifying amount shall be One Hundred
22422242 Thousand Dollars ($100,000.00) or less if the
22432243 filing status is single, head of household, or
22442244 married filing separate, or Two Hundred Thousand
22452245 Dollars ($200,000.00) or less if the filing
22462246 status is married filing jointly or qualifying
22472247 widow, and
22482248 (5) in the taxable year beginning January 1, 2010,
22492249 and subsequent taxable years, there shall be no
22502250 limitation upon the qualifying amount.
22512251 c. For purposes of this paragraph, "retirement benefits"
22522252 means the total distributions or withdrawals from the
22532253 following:
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22802280 (1) an employee pension benefit plan which satisfies
22812281 the requirements of Section 401 of the Internal
22822282 Revenue Code, 26 U.S.C., Section 401,
22832283 (2) an eligible deferred compensation plan that
22842284 satisfies the requirements of Section 457 of the
22852285 Internal Revenue Code, 26 U.S.C., Section 457,
22862286 (3) an individual retirement account, annuity or
22872287 trust or simplified employee pens ion that
22882288 satisfies the requirements of Section 408 of the
22892289 Internal Revenue Code, 26 U.S.C., Section 408,
22902290 (4) an employee annuity subject to the provisions of
22912291 Section 403(a) or (b) of the Internal Revenue
22922292 Code, 26 U.S.C., Section 403(a) or (b),
22932293 (5) United States Retirement Bonds which satisfy the
22942294 requirements of Section 86 of the Int ernal
22952295 Revenue Code, 26 U.S.C., Section 86, or
22962296 (6) lump-sum distributions from a retirement plan
22972297 which satisfies the requirements of Section
22982298 402(e) of the Internal Revenue Code, 2 6 U.S.C.,
22992299 Section 402(e).
23002300 d. The amount of the exemption provided by this paragraph
23012301 shall be limited to Five Thousand Five Hundred Dollars
23022302 ($5,500.00) for the 2004 tax year, Seven Thousand Five
23032303 Hundred Dollars ($7,500.00) for the 2005 tax year and,
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23302330 Ten Thousand Dollars ($10,000.00) for the tax year
23312331 2006, and Forty Thousand Dollars ( $40,000.00) for the
23322332 2026 tax year and for all subsequent tax years. Any
23332333 individual who claims the exemption provided for in
23342334 paragraph 8 of this subsection shall not be permitted
23352335 to claim a combined total exemption pursuant to this
23362336 paragraph and paragraph 8 of this subsection in an
23372337 amount exceeding Five Thousand Five Hundred Dollars
23382338 ($5,500.00) for the 2004 tax year, Seven Thousand Five
23392339 Hundred Dollars ($7,500.00) for the 2005 tax year and,
23402340 Ten Thousand Dollars ($10,000.00) for the 2006 tax
23412341 year and Forty Thousand Dollars ($40,000.00) for the
23422342 2026 tax year and all subsequent tax years.
23432343 15. In taxable years beginning after December 31, 1999, for an
23442344 individual engaged in production agriculture who has filed a
23452345 Schedule F form with the taxpayer 's federal income tax return for
23462346 such taxable year, there shall be excluded from taxable income any
23472347 amount which was included as federal taxable income or federal
23482348 adjusted gross income and which consists of the discharge of an
23492349 obligation by a creditor of the taxpayer incur red to finance the
23502350 production of agricultural products.
23512351 16. In taxable years beginning December 31, 2000, an amount
23522352 equal to one hundred percent (100%) of the amount of any scho larship
23532353 or stipend received from participation in the Oklahoma Police Corps
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23802380 Program, as established in Section 2 -140.3 of Title 47 of the
23812381 Oklahoma Statutes shall be exempt from taxable income.
23822382 17. a. In taxable years beginning after December 31, 2001,
23832383 and before January 1, 2005, there shall be allowed a
23842384 deduction in the amount of co ntributions to accounts
23852385 established pursuant to the Oklahoma College Savings
23862386 Plan Act. The deduction shall equal the amount of
23872387 contributions to accounts, but in no event shall t he
23882388 deduction for each contributor exceed Two Thousand
23892389 Five Hundred Dollars ($2,500.00) each taxable year for
23902390 each account.
23912391 b. In taxable years beginning after December 31, 2004,
23922392 each taxpayer shall be allowed a deduction for
23932393 contributions to accounts estab lished pursuant to the
23942394 Oklahoma College Savings Plan Act. The maximum annual
23952395 deduction shall equal the amount of contributions to
23962396 all such accounts plus any contributions to such
23972397 accounts by the taxpayer for prior taxable years after
23982398 December 31, 2004, wh ich were not deducted, but in no
23992399 event shall the deduction for each tax year exceed Ten
24002400 Thousand Dollars ($10,000.00) for each individual
24012401 taxpayer or Twenty Thousand Dollars ($20,000.00) for
24022402 taxpayers filing a joint return. Any amount of a
24032403 contribution that is not deducted by the taxpayer in
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24302430 the year for which the contribution is m ade may be
24312431 carried forward as a deduction from income for the
24322432 succeeding five (5) years. For taxable years
24332433 beginning after December 31, 2005, deductions may be
24342434 taken for contributions and rollovers made during a
24352435 taxable year and up to April 15 of the succeeding
24362436 year, or the due date of a taxpayer 's state income tax
24372437 return, excluding extensions, whichever is later.
24382438 Provided, a deduction for the same contribution may
24392439 not be taken for two (2) different taxable years.
24402440 c. In taxable years beginning after Decem ber 31, 2006,
24412441 deductions for contributions made pursuant to
24422442 subparagraph b of this paragraph shall be limited as
24432443 follows:
24442444 (1) for a taxpayer who qualified for the five -year
24452445 carryforward election and who takes a rollover or
24462446 nonqualified withdrawal during that period, the
24472447 tax deduction otherwise available pursuant to
24482448 subparagraph b of this paragraph shall be reduced
24492449 by the amount which is equal to the rollover or
24502450 nonqualified withdrawal, and
24512451 (2) for a taxpayer who elects to take a rollover or
24522452 nonqualified withdrawal within the same tax year
24532453 in which a contribution was made to the
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24802480 taxpayer's account, the tax deduction otherwise
24812481 available pursuant to subparagraph b of this
24822482 paragraph shall be reduced by the amount of the
24832483 contribution which is equal to the rollover or
24842484 nonqualified withdrawal.
24852485 d. If a taxpayer elects to take a rollover on a
24862486 contribution for which a deduction has been taken
24872487 pursuant to subparagraph b of this paragraph withi n
24882488 one (1) year of the date of contribution, the amount
24892489 of such rollover shall be included in the adjusted
24902490 gross income of the taxpayer in the taxable year of
24912491 the rollover.
24922492 e. If a taxpayer makes a nonqualified withdrawal of
24932493 contributions for which a deduct ion was taken pursuant
24942494 to subparagraph b of this paragraph, such nonqualified
24952495 withdrawal and any earnings thereon shall be included
24962496 in the adjusted gross income of the taxpayer in the
24972497 taxable year of the nonqualified withdrawal.
24982498 f. As used in this paragrap h:
24992499 (1) "non-qualified withdrawal " means a withdrawal
25002500 from an Oklahoma College Savings Plan account
25012501 other than one of the following:
25022502 (a) a qualified withdrawal,
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25292529 (b) a withdrawal made as a result of the death
25302530 or disability of the designated beneficiary
25312531 of an account,
25322532 (c) a withdrawal that is made on the account of
25332533 a scholarship or the allowance or payment
25342534 described in Section 135(d)(1)(B) or (C) or
25352535 by the Internal Revenue Code, received by
25362536 the designated beneficiary to the extent the
25372537 amount of the refund does not exceed the
25382538 amount of the scholarship, allowance, or
25392539 payment, or
25402540 (d) a rollover or change of designated
25412541 beneficiary as permitted by subsection F of
25422542 Section 3970.7 of Title 70 of the Oklahoma
25432543 Statutes, and
25442544 (2) "rollover" means the transfer of funds from the
25452545 Oklahoma College Savings Plan to any other plan
25462546 under Section 529 of the Internal Revenue Code.
25472547 18. For tax years 2006 through 2021, retirement benefits
25482548 received by an individual from any component of the Armed Forces of
25492549 the United States in an amoun t not to exceed the greater of seventy -
25502550 five percent (75%) of such benefits or Ten Thousand Dollars
25512551 ($10,000.00) shall be exempt from taxable income but in no case less
25522552 than the amount of the exemption provided by paragraph 14 of this
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25792579 subsection. For tax y ear 2022 and subsequent tax years, retirement
25802580 benefits received by an individual from any component of the Armed
25812581 Forces of the United States shall be exempt from taxable income.
25822582 19. For taxable years beginning after December 31, 2006,
25832583 retirement benefits received by federal civil service retirees,
25842584 including survivor annuities, paid in lieu of Social Security
25852585 benefits shall be exempt from taxable income to the extent such
25862586 benefits are included in the federal adjusted gross income pursuant
25872587 to the provisions of Section 86 of the Internal Revenue Code, 26
25882588 U.S.C., Section 86, according to the following schedule:
25892589 a. in the taxable year beginning January 1, 2007, twenty
25902590 percent (20%) of such benefits shall be exempt,
25912591 b. in the taxable year beginning January 1, 200 8, forty
25922592 percent (40%) of such benefits shall be exempt,
25932593 c. in the taxable year beginning January 1, 2009, sixty
25942594 percent (60%) of such benefits shall be exempt,
25952595 d. in the taxable year beginning January 1, 2010, eighty
25962596 percent (80%) of such benefits shall b e exempt, and
25972597 e. in the taxable year beginning January 1, 2011, and
25982598 subsequent taxable years, one hundred percent (100%)
25992599 of such benefits shall be exempt.
26002600 20. a. For taxable years beginning after December 31, 2007, a
26012601 resident individual may deduct up to Te n Thousand
26022602 Dollars ($10,000.00) from Oklahoma adjusted gross
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26292629 income if the individual, or the dependent of the
26302630 individual, while living, donates one or more human
26312631 organs of the individual to another human being for
26322632 human organ transplantation. As used in this
26332633 paragraph, "human organ" means all or part of a liver,
26342634 pancreas, kidney, intestine, lung, or bone marrow. A
26352635 deduction that is claimed under this paragraph may be
26362636 claimed in the taxable year in which the human organ
26372637 transplantation occurs.
26382638 b. An individual may claim this deduction only once, and
26392639 the deduction may be claimed onl y for unreimbursed
26402640 expenses that are incurred by the individual and
26412641 related to the organ donation of the individual.
26422642 c. The Oklahoma Tax Commission shall promulgate rules to
26432643 implement the provisions of this paragraph which shall
26442644 contain a specific list of expenses which may be
26452645 presumed to qualify for the deduction. The Tax
26462646 Commission shall prescribe necessary requirements for
26472647 verification.
26482648 21. For taxable years beginning after D ecember 31, 2009, there
26492649 shall be exempt from taxable income any amount receive d by the
26502650 beneficiary of the death benefit for an emergency medical technician
26512651 or a registered emergency medical responder provided by Section 1 -
26522652 2505.1 of Title 63 of the Oklahoma Statutes.
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26792679 22. For taxable years beginning after December 31, 2008,
26802680 taxable income shall be increased by any unemployment compensation
26812681 exempted under Section 85(c) of the Internal Revenue Code, 26
26822682 U.S.C., Section 85(c)(2009).
26832683 23. For taxable years beginn ing after December 31, 2008, there
26842684 shall be exempt from taxable income any pay ment in an amount less
26852685 than Six Hundred Dollars ($600.00) received by a person as an award
26862686 for participation in a competitive livestock show event. For
26872687 purposes of this paragrap h, the payment shall be treated as a
26882688 scholarship amount paid by the entity sponsoring the event and the
26892689 sponsoring entity shall cause the payment to be categorized as a
26902690 scholarship in its books and records.
26912691 24. For taxable years beginning on or after Janu ary 1, 2016,
26922692 taxable income shall be increased by any amount of state and loca l
26932693 sales or income taxes deducted under 26 U.S.C., Section 164 of the
26942694 Internal Revenue Code. If the amount of state and local taxes
26952695 deducted on the federal return is limited, tax able income on the
26962696 state return shall be increased only by the amount actually deducted
26972697 after any such limitations are applied.
26982698 25. For taxable years beginning after December 31, 2020, each
26992699 taxpayer shall be allowed a deduction for contributions to accoun ts
27002700 established pursuant to the Achieving a Better Life Experience
27012701 (ABLE) Program as established in Section 4001.1 et seq. of Title 56
27022702 of the Oklahoma Statutes. For any tax year, the deduction provided
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27292729 for in this paragraph shall not exceed Ten Thousand Do llars
27302730 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
27312731 ($20,000.00) for taxpayers filing a joint return. Any amount of
27322732 contribution not deducted by the taxpayer in the tax year for which
27332733 the contribution is made may be carried forward as a deduction from
27342734 income for up to five (5) tax years. Deductions may be take n for
27352735 contributions made during the tax year and through April 15 of the
27362736 succeeding tax year, or through the due date of a taxpayer 's state
27372737 income tax return excluding extensions , whichever is later.
27382738 Provided, a deduction for the same contribution may not be taken in
27392739 more than one (1) tax year.
27402740 26. For tax year 2024 and subsequent tax years, tax credits
27412741 received pursuant to the Oklahoma Parental Choice Tax Credit Act in
27422742 Section 28-101 of Title 70 of the Oklahoma Statutes shall be exempt
27432743 from taxable income.
27442744 F. 1. For taxable years beginning after December 31, 2004, a
27452745 deduction from the Oklahoma adjusted gross income of any individual
27462746 taxpayer shall be allowed for qualifying gai ns receiving capital
27472747 treatment that are included in the federal adjusted gross income of
27482748 such individual taxpayer during the taxable year.
27492749 2. As used in this subsection:
27502750 a. "qualifying gains receiving capital treatment " means
27512751 the amount of net capital gai ns, as defined in Section
27522752 1222(11) of the Internal Revenue Code, included in a n
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27792779 individual taxpayer's federal income tax return that
27802780 result from:
27812781 (1) the sale of real property or tangible personal
27822782 property located within this state that has been
27832783 directly or indirectly owned by the individual
27842784 taxpayer for a holding period of at least five
27852785 (5) years prior to the date of the transaction
27862786 from which such net capital gains arise,
27872787 (2) the sale of stock or the sale of a direct or
27882788 indirect ownership interest in an O klahoma
27892789 company, limited liability company, or
27902790 partnership where such stock or ownership
27912791 interest has been directly or indirectly owned by
27922792 the individual taxpayer for a holding period of
27932793 at least two (2) years prior to the date of the
27942794 transaction from whic h the net capital gains
27952795 arise, or
27962796 (3) the sale of real property, tangible personal
27972797 property or intangible personal property located
27982798 within this state as part of the sale of all or
27992799 substantially all of the assets of an Oklahoma
28002800 company, limited liability co mpany, or
28012801 partnership or an Oklahoma proprietorship
28022802 business enterprise where such property has been
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28292829 directly or indirectly owned by such entity or
28302830 business enterprise or owned by the owners of
28312831 such entity or business enterprise for a period
28322832 of at least two (2) years prior to the date of
28332833 the transaction from which the net capital gains
28342834 arise,
28352835 b. "holding period" means an uninterrupted period of
28362836 time. The holding period shall include any additional
28372837 period when the property was held by another
28382838 individual or entity, if such additional period is
28392839 included in the taxpayer 's holding period for the
28402840 asset pursuant to the Internal Revenue Code,
28412841 c. "Oklahoma company," "limited liability company, " or
28422842 "partnership" means an entity whose primary
28432843 headquarters have been lo cated in this state for at
28442844 least three (3) uninterrupted years prior to the date
28452845 of the transaction from which the net capital gains
28462846 arise,
28472847 d. "direct" means the individual taxpayer directly owns
28482848 the asset,
28492849 e. "indirect" means the individual taxpayer owns an
28502850 interest in a pass-through entity (or chain of pass -
28512851 through entities) that sells the asset that gives rise
28522852 to the qualifying gains receiving capital treatment.
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28792879 (1) With respect to sales of real property or
28802880 tangible personal property located within this
28812881 state, the deduction described in this subsection
28822882 shall not apply unless the pass -through entity
28832883 that makes the sale has held the property for not
28842884 less than five (5) uninterrupted years prior to
28852885 the date of the transaction that created the
28862886 capital gain, and each pass-through entity
28872887 included in the chain of ownership has been a
28882888 member, partner, or shareholder of the pass -
28892889 through entity in the tier immediately below it
28902890 for an uninterrupted period of not less than five
28912891 (5) years.
28922892 (2) With respect to sales of s tock or ownership
28932893 interest in or sales of all or substantially all
28942894 of the assets of an Oklahoma company, limited
28952895 liability company, partnership or Oklahoma
28962896 proprietorship business enterprise, the deduction
28972897 described in this subsection shall not apply
28982898 unless the pass-through entity that makes the
28992899 sale has held the stock or ownership interest for
29002900 not less than two (2) uninterrupted years prior
29012901 to the date of the transaction that created the
29022902 capital gain, and each pass -through entity
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29292929 included in the chain of o wnership has been a
29302930 member, partner or shareholder of the pass -
29312931 through entity in the tier immediately below it
29322932 for an uninterrupted period of not less than two
29332933 (2) years. For purposes of this division,
29342934 uninterrupted ownership prior to July 1, 2007,
29352935 shall be included in the determination of the
29362936 required holding period prescribed by this
29372937 division, and
29382938 f. "Oklahoma proprietorship business enterprise " means a
29392939 business enterprise whose income and expenses have
29402940 been reported on Schedule C or F of an individual
29412941 taxpayer's federal income tax return, or any similar
29422942 successor schedule published by the Internal Revenue
29432943 Service and whose primary headquarters have been
29442944 located in this state for at least three (3)
29452945 uninterrupted years prior to the date of the
29462946 transaction from which the net capital gains arise.
29472947 G. 1. For purposes of computing its Oklahoma taxable income
29482948 under this section, the dividends -paid deduction otherwise allowed
29492949 by federal law in computing net income of a real estate investment
29502950 trust that is subjec t to federal income tax shall be added back in
29512951 computing the tax imposed by this state under this title if the real
29522952 estate investment trust is a captive real estate investment trust.
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29792979 2. For purposes of computing its Oklahoma taxable income under
29802980 this section, a taxpayer shall add back otherwise deductible rents
29812981 and interest expense s paid to a captive real estate investment trust
29822982 that is not subject to the provisions of paragraph 1 of this
29832983 subsection. As used in this subsection:
29842984 a. the term "real estate investment trust" or "REIT"
29852985 means the meaning ascribed to such term in Section 856
29862986 of the Internal Revenue Code,
29872987 b. the term "captive real estate investment trust " means
29882988 a real estate investment trust, the shares or
29892989 beneficial interests of which are not regu larly traded
29902990 on an established securities market and more than
29912991 fifty percent (50%) of the voting power or value of
29922992 the beneficial interests or shares of which are owned
29932993 or controlled, directly or indirectly, or
29942994 constructively, by a single entity that is:
29952995 (1) treated as an association taxable as a
29962996 corporation under the Internal Revenue Code, and
29972997 (2) not exempt from federal income tax pursuant to
29982998 the provisions of Section 501(a) of the Internal
29992999 Revenue Code.
30003000 The term shall not include a real estate investment
30013001 trust that is intended to be regularly traded on an
30023002 established securities ma rket, and that satisfies the
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30293029 requirements of Section 856(a)(5) and (6) of the U.S.
30303030 Internal Revenue Code by reason of Section 856(h)(2)
30313031 of the Internal Revenue Code,
30323032 c. the term "association taxable as a corporation " shall
30333033 not include the following entities:
30343034 (1) any real estate investment trust as defined in
30353035 paragraph a of this subsection other than a
30363036 captive real estate investment trust, or
30373037 (2) any qualified real estate investmen t trust
30383038 subsidiary under Section 856(i) of the Internal
30393039 Revenue Code, other th an a qualified REIT
30403040 subsidiary of a captive real estate investment
30413041 trust, or
30423042 (3) any listed Australian property trust (meaning an
30433043 Australian unit trust registered as a "managed
30443044 investment scheme" under the Australian
30453045 Corporations Act 2001 in which the principal
30463046 class of units is listed on a recognized stock
30473047 exchange in Australia and is regularly traded on
30483048 an established securities market), or an entity
30493049 organized as a trust, provid ed that a listed
30503050 Australian property trust owns or controls,
30513051 directly or indirectly, seventy-five percent
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30783078 (75%) or more of the voting power or value of the
30793079 beneficial interests or shares of such trust, or
30803080 (4) any qualified foreign entity, meaning a
30813081 corporation, trust, association or partnership
30823082 organized outside the laws of the United States
30833083 and which satisfies the following criteria:
30843084 (a) at least seventy-five percent (75%) of the
30853085 entity's total asset value at the close of
30863086 its taxable year is represented by real
30873087 estate assets, as defined in Section
30883088 856(c)(5)(B) of the Internal Revenu e Code,
30893089 thereby including shares or certificates of
30903090 beneficial interest in any real estate
30913091 investment trust, cash and cash equivalents,
30923092 and U.S. Government securities,
30933093 (b) the entity receives a dividend -paid
30943094 deduction comparable to Section 561 of the
30953095 Internal Revenue Code, or is exempt from
30963096 entity level tax,
30973097 (c) the entity is required to distribute at
30983098 least eighty-five percent (85%) of its
30993099 taxable income, as computed in the
31003100 jurisdiction in which it is organized, to
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31273127 the holders of its shares or certificates of
31283128 beneficial interest on an annual basis,
31293129 (d) not more than ten percent (10%) of the
31303130 voting power or value in such entity is held
31313131 directly or indirectly or constructively by
31323132 a single entity or individual, or the shares
31333133 or beneficial interests of such entity are
31343134 regularly traded on an established
31353135 securities market, and
31363136 (e) the entity is organized in a country which
31373137 has a tax treaty with the United States.
31383138 3. For purposes of this subsection, the constructive ownership
31393139 rules of Section 318(a) of the Internal Revenue Code, as modified by
31403140 Section 856(d)(5) of the Internal Revenue Code, shall apply in
31413141 determining the ownership of stock, assets, or net profits of any
31423142 person.
31433143 4. A real estate investment trust that does not become
31443144 regularly traded on an established securities market within one (1)
31453145 year of the date on which it first becomes a real estate investment
31463146 trust shall be deemed not to have been regularly traded on an
31473147 established securities market, retroactive to the date it first
31483148 became a real estate invest ment trust, and shall file an amended
31493149 return reflecting such retroactive designation for any tax year or
31503150 part year occurring during its initial year of status as a real
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31773177 estate investment trust. For purposes of this subsection, a real
31783178 estate investment trust becomes a real estate investment trust on
31793179 the first day it has both met the requirements of Section 856 of the
31803180 Internal Revenue Code and has elected to be treated as a real es tate
31813181 investment trust pursuant to Section 856(c)(1) of the Internal
31823182 Revenue Code.
31833183 SECTION 2. This act shall become effective January 1, 2026.
31843184
31853185 60-1-11073 MAH 01/16/25