OK
Oklahoma Senate Bill SB43

Oklahoma 2025 Regular Session

Oklahoma Senate Bill SB43 Compare Versions

Only one version of the bill is available at this time.
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5353 STATE OF OKLAHOMA
5454
5555 1st Session of the 60th Legislature (2025)
5656
5757 SENATE BILL 43 By: Daniels
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6565 AS INTRODUCED
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6767 An Act relating to income tax; amending 68 O.S. 2021,
6868 Section 2358, as last amended by Section 155, Chapter
6969 452, O.S.L. 2024 (68 O.S. S upp. 2024, Section 2358),
7070 which relates to adjustments; eliminating limitation
7171 on itemization of wagering losses for certain tax
7272 years; updating statutory language; updating
7373 statutory references; and providing an effective
7474 date.
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8181 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
8282 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2358, as
8383 last amended by Section 155, Chapter 452, O.S.L. 2024 (68 O.S. Supp.
8484 2024, Section 2358), is amended to read as follows:
8585 Section 2358. For all tax years beginning after December 31,
8686 1981, taxable income and adjusted gross income shall be adjusted to
8787 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
8888 as required by this section.
8989
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140140 A. The taxable income of any taxpayer shal l be adjusted to
141141 arrive at Oklahoma taxable income for corporations and Oklah oma
142142 adjusted gross income for individuals, as follows:
143143 1. There shall be added interest income on obligations of any
144144 state or political subdivision thereto which is not otherwise
145145 exempted pursuant to other laws of this state, to the extent that
146146 such interest is not included in taxable income and adjusted gross
147147 income.
148148 2. There shall be deducted amounts included in such income that
149149 the state is prohibited from taxing because of th e provisions of the
150150 Federal United States Constitution, the State Oklahoma Constitution,
151151 federal laws or laws of Oklahoma.
152152 3. The amount of any federal net operating loss deduction shall
153153 be adjusted as follows:
154154 a. For carryovers and carrybacks to taxable years
155155 beginning before January 1, 1981, the amount of any
156156 net operating loss deduction allowed to a taxpayer for
157157 federal income tax purposes shall be reduced to an
158158 amount which is the same portion thereof as the loss
159159 from sources within this state, as dete rmined pursuant
160160 to this section and Section 2362 of this title, for
161161 the taxable year in which such loss is sustained is of
162162 the total loss for such year;
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214214 b. For carryovers and carrybacks to taxable years
215215 beginning after December 31, 1980, the amount of any
216216 net operating loss deduction allowed for the taxable
217217 year shall be an amount equal to the aggregate of the
218218 Oklahoma net operating loss carryovers and carrybacks
219219 to such year. Oklahoma net operating losses shall be
220220 separately determined by reference to Sec tion 172 of
221221 the Internal Revenue Code of 1986, as amended, 26
222222 U.S.C., Section 172, as modified by the Oklahoma
223223 Income Tax Act, Section 2351 et seq. of this title,
224224 and shall be allowed without regard to the existence
225225 of a federal net operating loss. For ta x years
226226 beginning after December 31, 2000, and ending before
227227 January 1, 2008, the years to which such losses may be
228228 carried shall be determined solely by reference to
229229 Section 172 of the Internal Revenue Code of 1986, as
230230 amended, 26 U.S.C., Section 172, wit h the exception
231231 that the terms “net operating loss” and “taxable
232232 income” shall be replaced with “Oklahoma net operating
233233 loss” and “Oklahoma taxable income ”. For tax years
234234 beginning after December 31, 2007, and ending before
235235 January 1, 2009, years to which such losses may be
236236 carried back shall be limited to two (2) years. For
237237 tax years beginning after December 31, 2008, the years
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289289 to which such losses may be carried back shall be
290290 determined solely by reference to Section 172 of the
291291 Internal Revenue Code of 1986, as amended, 26 U.S.C.,
292292 Section 172, with the exception that the terms “net
293293 operating loss” and “taxable income” shall be replaced
294294 with “Oklahoma net operating loss ” and “Oklahoma
295295 taxable income”.
296296 4. Items of the following nature shall be allocated a s
297297 indicated. Allowable deductions attributable to items separately
298298 allocable in subparagraphs a, b and c of this paragraph, whether or
299299 not such items of income were actually received, shall be allocated
300300 on the same basis as those items:
301301 a. Income from real and tangible personal property, such
302302 as rents, oil and mining production or royalties, and
303303 gains or losses from sales of such property, shall be
304304 allocated in accordance with the situs of such
305305 property;
306306 b. Income from intangible personal property, such as
307307 interest, dividends, patent or copyright royalties,
308308 and gains or losses from sales of such property, shall
309309 be allocated in accordance with the domiciliary situs
310310 of the taxpayer, except that:
311311 (1) where such property has acquired a nonunitary
312312 business or commercial situs apart from the
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364364 domicile of the taxpayer such income shall be
365365 allocated in accordance with such business or
366366 commercial situs; interest income from
367367 investments held to generate working capital for
368368 a unitary business enterprise shall be include d
369369 in apportionable income; a resident trust or
370370 resident estate shall be treated as having a
371371 separate commercial or business situs insofar as
372372 undistributed income is concerned, but shall not
373373 be treated as having a separate commercial or
374374 business situs insof ar as distributed income is
375375 concerned,
376376 (2) for taxable years beginning after December 31,
377377 2003, capital or ordinary gains or losses from
378378 the sale of an ownership interest in a publicly
379379 traded partnership, as defined by Section 7704(b)
380380 of the Internal Reven ue Code of 1986, as amended,
381381 shall be allocated to this state in the ratio of
382382 the original cost of such partnership ’s tangible
383383 property in this state to the original cost of
384384 such partnership’s tangible property everywhere,
385385 as determined at the time of the sale; if more
386386 than fifty percent (50%) of the value of the
387387 partnership’s assets consists of intangible
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439439 assets, capital or ordinary gains or losses from
440440 the sale of an ownership interest in the
441441 partnership shall be allocated to this state in
442442 accordance with the sales factor of the
443443 partnership for its first full tax period
444444 immediately preceding its tax period during which
445445 the ownership interest in the partnership was
446446 sold; the provisions of this division shall only
447447 apply if the capital or ordinary gains or lo sses
448448 from the sale of an ownership interest in a
449449 partnership do not constitut e qualifying gain
450450 receiving capital treatment as defined in
451451 subparagraph a of paragraph 2 of subsection F of
452452 this section,
453453 (3) income from such property which is required to be
454454 allocated pursuant to the provisions of paragraph
455455 5 of this subsection shall be allocated as herein
456456 provided;
457457 c. Net income or loss from a business activity which is
458458 not a part of business carried on within or without
459459 the state of a unitary character shall b e separately
460460 allocated to the state in which such activity is
461461 conducted;
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513513 d. In the case of a manufacturing or processing
514514 enterprise the business of which in Oklahoma this
515515 state consists solely of marketing its products by:
516516 (1) sales having a situs without this state, shipped
517517 directly to a point from without the state to a
518518 purchaser within the state, commonly known as
519519 interstate sales,
520520 (2) sales of the product stored in public warehouses
521521 within the state pursuant to “in transit”
522522 tariffs, as prescribed and al lowed by the
523523 Interstate Commerce Commission, to a purchaser
524524 within the state,
525525 (3) sales of the product stored in public warehouses
526526 within the state where the shipment to such
527527 warehouses is not covered by “in transit”
528528 tariffs, as prescribed and allowed by t he
529529 Interstate Commerce Commission, to a purchaser
530530 within or without the state,
531531 the Oklahoma net income shall, at the option of the
532532 taxpayer, be that portion of the total net income of
533533 the taxpayer for federal income tax purposes derived
534534 from the manufacture and/or processing and sales
535535 everywhere as determined by the ratio of the sa les
536536 defined in this section made to the purchaser within
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588588 the state to the total sales everywhere. The term
589589 “public warehouse” as used in this subparagraph means
590590 a licensed public warehouse, the principal business of
591591 which is warehousing merchandise for the public;
592592 e. In the case of insurance companies, Oklahoma taxable
593593 income shall be taxable income of the taxpayer for
594594 federal tax purposes, as adjusted for the adjustments
595595 provided pursuant to the provisions of paragraphs 1
596596 and 2 of this subsection, apporti oned as follows:
597597 (1) except as otherwise provided by division (2) of
598598 this subparagraph, taxable income of an insurance
599599 company for a taxable year shall be apportioned
600600 to this state by multiplying such income by a
601601 fraction, the numerator of which is the direct
602602 premiums written for insurance on property or
603603 risks in this state, and the denominator of which
604604 is the direct premiums written for insurance on
605605 property or risks everywhere. For purposes of
606606 this subsection, the term “direct premiums
607607 written” means the total amount of direct
608608 premiums written, assessments and annuity
609609 considerations as reported for the taxable year
610610 on the annual statement filed by the company with
611611 the Insurance Commissioner in the form approved
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663663 by the National Association of Insurance
664664 Commissioners, or such other form as may be
665665 prescribed in lieu thereof,
666666 (2) if the principal source of premiums written by an
667667 insurance company consists of premiums for
668668 reinsurance accepted by it, the taxable income of
669669 such company shall be apportioned to thi s state
670670 by multiplying such income by a fraction, the
671671 numerator of which is the sum of (a) direct
672672 premiums written for insurance on property or
673673 risks in this state, plus (b) premi ums written
674674 for reinsurance accepted in respect of property
675675 or risks in this state, and the denominator of
676676 which is the sum of (c) direct premiums written
677677 for insurance on property or risks everywhere,
678678 plus (d) premiums written for reinsurance
679679 accepted in respect of property or risks
680680 everywhere. For purposes of this paragraph,
681681 premiums written for reinsurance accepted in
682682 respect of property or risks in this state,
683683 whether or not otherwise determinable, may at the
684684 election of the company be determined on th e
685685 basis of the proportion which premiums written
686686 for insurance accepted from companies
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738738 commercially domiciled in Oklahoma this state
739739 bears to premiums written for reinsurance
740740 accepted from all sources, or alternatively in
741741 the proportion which the sum of th e direct
742742 premiums written for insurance on property or
743743 risks in this state by each ceding company from
744744 which reinsurance is accepted bears to the sum of
745745 the total direct premiums written by each such
746746 ceding company for the taxable year.
747747 5. The net income or loss remaining after the separate
748748 allocation in paragraph 4 of this subsection, being that which is
749749 derived from a unitary business enterprise, shall be apportioned to
750750 this state on the basis of the arithmetical average of three factors
751751 consisting of property, payroll and sales or gross revenue
752752 enumerated as subparagraphs a, b a nd c of this paragraph. Net
753753 income or loss as used in this paragraph includes that derived from
754754 patent or copyright royalties, purchase discounts, and interest on
755755 accounts receivable relating to or arising from a business activity,
756756 the income from which is apportioned pursuant to this subsection,
757757 including the sale or other disposition of such property and any
758758 other property used in the unitary enterprise. Deductions used in
759759 computing such net income or loss shall not include taxes based on
760760 or measured by income. Provided, for corporations whose property
761761 for purposes of the tax imposed by Section 2355 of this title has an
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813813 initial investment cost equaling or exceeding Two Hundred Million
814814 Dollars ($200,000,000.00) and such investment is made on or after
815815 July 1, 1997, or for corporations which expand their property or
816816 facilities in this state and such expansion has an investment cost
817817 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
818818 over a period not to exceed three (3) years, and such expan sion is
819819 commenced on or after January 1, 2000, the three factors shall be
820820 apportioned with property and payroll, each comprising twenty -five
821821 percent (25%) of the apportionment fac tor and sales comprising fifty
822822 percent (50%) of the apportionment factor. The apportionment
823823 factors shall be computed as follows:
824824 a. The property factor is a fraction, the numerator of
825825 which is the average value of the taxpayer ’s real and
826826 tangible personal property owned or rented and used in
827827 this state during the tax period and t he denominator
828828 of which is the average value of all the taxpayer ’s
829829 real and tangible personal property everywhere owned
830830 or rented and used during the tax period.
831831 (1) Property, the income from which is separately
832832 allocated in paragraph 4 of this subsection,
833833 shall not be included in determining this
834834 fraction. The numerator of the fraction shall
835835 include a portion of the investment in
836836 transportation and other equipment having no
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888888 fixed situs, such as rolling stock, buses, trucks
889889 and trailers, including machiner y and equipment
890890 carried thereon, airplanes, salespersons ’
891891 automobiles and other similar equipment, in the
892892 proportion that miles traveled in Oklahoma this
893893 state by such equipment bears to total miles
894894 traveled,
895895 (2) Property owned by the taxpayer is valued at its
896896 original cost. Property rented by the taxpayer
897897 is valued at eight times the net annual rental
898898 rate. Net annual rental rate is the annual
899899 rental rate paid by the taxpayer, l ess any annual
900900 rental rate received by the taxpayer from
901901 subrentals,
902902 (3) The average value of property shall be determined
903903 by averaging the values at the beginning and
904904 ending of the tax period but the Oklahoma Tax
905905 Commission may require the averaging of mo nthly
906906 values during the tax period if reasonably
907907 required to reflect properly the average value of
908908 the taxpayer’s property;
909909 b. The payroll factor is a fraction, the numerator of
910910 which is the total compensation for services rendered
911911 in the state during the tax period, and the
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963963 denominator of which is the total compensation for
964964 services rendered everywhere during the tax period.
965965 “Compensation”, as used in this subsection , means
966966 those paid-for services to the extent related to the
967967 unitary business but does not include officers’
968968 salaries, wages and other compensation.
969969 (1) In the case of a transportation enterprise, the
970970 numerator of the fraction shall include a portion
971971 of such expenditure in connection with employees
972972 operating equipment over a fixed route, such a s
973973 railroad employees, airline pilots, or bus
974974 drivers, in this state only a pa rt of the time,
975975 in the proportion that mileage traveled in
976976 Oklahoma this state bears to total mileage
977977 traveled by such employees,
978978 (2) In any case the numerator of the fraction sha ll
979979 include a portion of such expenditures in
980980 connection with itinerant employees, such as
981981 traveling salespersons, in this state only a part
982982 of the time, in the proportion that time spent in
983983 Oklahoma this state bears to total time spent in
984984 furtherance of the enterprise by such employees;
985985 c. The sales factor is a fraction, the numera tor of which
986986 is the total sales or gross revenue of the taxpayer in
987987
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10381038 this state during the tax period, and the denominator
10391039 of which is the total sales or gross revenue of the
10401040 taxpayer everywhere during the tax period. “Sales”,
10411041 as used in this subsection , does not include sales or
10421042 gross revenue which are separately allocated in
10431043 paragraph 4 of this subsection.
10441044 (1) Sales of tangible personal property have a situs
10451045 in this state if the property is delivered or
10461046 shipped to a purchaser other than the United
10471047 States government, within this state regardless
10481048 of the FOB Freight on Board (FOB) point or other
10491049 conditions of the sale; or the property is
10501050 shipped from an office, store, warehouse, fact ory
10511051 or other place of storage in this state and (a)
10521052 the purchaser is the United States government or
10531053 (b) the taxpayer is not doing business in the
10541054 state of the destination of the shipment.
10551055 (2) In the case of a railroad or interurban railway
10561056 enterprise, the numerator of the fraction shall
10571057 not be less than the allocation of revenues to
10581058 this state as shown in its annual report to the
10591059 Corporation Commission.
10601060 (3) In the case of an airline, truck or bus
10611061 enterprise or freight car, tank car, refrigerator
10621062
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11131113 car or other railroad equipment enterprise, the
11141114 numerator of the fraction shall include a portion
11151115 of revenue from interstate transportation in the
11161116 proportion that interstate mileage traveled in
11171117 Oklahoma this state bears to total interstate
11181118 mileage traveled.
11191119 (4) In the case of an oil, gasoline or gas pipeline
11201120 enterprise, the numerator of the fraction shall
11211121 be either the total of traffic units of the
11221122 enterprise within Oklahoma this state or the
11231123 revenue allocated to Oklahoma this state based
11241124 upon miles moved, at the opt ion of the taxpayer,
11251125 and the denominator of which shall be the total
11261126 of traffic units of the enterprise or the revenue
11271127 of the enterprise everywhere as appropriate to
11281128 the numerator. A “traffic unit” is hereby
11291129 defined as the transportation for a distance of
11301130 one (1) mile of one (1) barrel of oil, one (1)
11311131 gallon of gasoline or one tho usand (1,000) cubic
11321132 feet of natural or casinghead gas, as the case
11331133 may be.
11341134 (5) In the case of a telephone or telegraph or other
11351135 communication enterprise, the numerator of the
11361136 fraction shall include that portion of the
11371137
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11881188 interstate revenue as is allocated pursuant to
11891189 the accounting procedures prescribed by the
11901190 Federal Communications Commission; provided that
11911191 in respect to each corporation or business entity
11921192 required by the Federal Com munications Commission
11931193 to keep its books and records in accordance with
11941194 a uniform system of accounts prescribed by such
11951195 Commission, the intrastate net income shall be
11961196 determined separately in the manner provided by
11971197 such uniform system of accounts and only the
11981198 interstate income shall be subject to allocation
11991199 pursuant to the provisions of this subsection.
12001200 Provided further, that the gross revenue factors
12011201 shall be those as are determined pursuant to the
12021202 accounting procedures prescribed by the Federal
12031203 Communications Commission.
12041204 In any case where the apportionment of the three factors
12051205 prescribed in this paragraph attributes to Oklahoma this state a
12061206 portion of net income of the enterprise out of all appropriate
12071207 proportion to the property owned and/or business tran sacted within
12081208 this state, because of the fact that one or more of the factors so
12091209 prescribed are not employed to any appreciable extent in furtherance
12101210 of the enterprise; or because one or more factors not so prescribed
12111211 are employed to a considerable extent in furtherance of the
12121212
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12631263 enterprise; or because of other reasons, the Tax Commis sion is
12641264 empowered to permit, after a showing by taxpayer that an excessive
12651265 portion of net income has been attributed to Oklahoma this state, or
12661266 require, when in its judgment an in sufficient portion of net income
12671267 has been attributed to Oklahoma this state, the elimination,
12681268 substitution, or use of additional factors, or reduction or increase
12691269 in the weight of such prescribed factors. Provided, however, that
12701270 any such variance from suc h prescribed factors which has the effect
12711271 of increasing the portion of net in come attributable to Oklahoma
12721272 this state must not be inherently arbitrary, and application of the
12731273 recomputed final apportionment to the net income of the enterprise
12741274 must attribute to Oklahoma this state only a reasonable portion
12751275 thereof.
12761276 6. For calendar years 1997 and 1998, the owner of a new or
12771277 expanded agricultural commodity processing facility in this state
12781278 may exclude from Oklahoma taxable income, or in the case of an
12791279 individual, the Oklahoma adjusted gross income, fifteen percent
12801280 (15%) of the investme nt by the owner in the new or expanded
12811281 agricultural commodity processing facility. For calendar year 1999,
12821282 and all subsequent years, the percentage, not to exceed fifteen
12831283 percent (15%), available to the owner of a new or expanded
12841284 agricultural commodity processing facility in this state claiming
12851285 the exemption shall be adjusted annually so that the total estimated
12861286 reduction in tax liability does not exceed One Million Dollars
12871287
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13381338 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
13391339 for determining the percentage of the investment which each eligible
13401340 taxpayer may exclude. The exclusion provided by this paragraph
13411341 shall be taken in the taxable year when the investment is ma de. In
13421342 the event the total reduction in tax liability authorized by this
13431343 paragraph exceeds One Million Dollars ($1,000,000.00) in any
13441344 calendar year, the Tax Commission shall permit any excess over One
13451345 Million Dollars ($1,000,000.00) and shall factor such excess into
13461346 the percentage for subsequent years. Any amount of the exemption
13471347 permitted to be excluded pursuant to the provisions of this
13481348 paragraph but not used in any year may be carried forward as an
13491349 exemption from income pursuant to the provisions of th is paragraph
13501350 for a period not exceeding six (6) years following the year in which
13511351 the investment was originally made.
13521352 For purposes of this paragraph:
13531353 a. “Agricultural commodity processing facility ” means
13541354 building buildings, structures, fixtures and
13551355 improvements used or operated primarily for the
13561356 processing or production of marketab le products from
13571357 agricultural commodities. The term shall also mean a
13581358 dairy operation that requires a depreciable investment
13591359 of at least Two Hundred Fifty Thousand Dollars
13601360 ($250,000.00) and which produces milk from dairy cows.
13611361 The term does not include a facility that provides
13621362
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14131413 only, and nothing more than, storage, cleaning, drying
14141414 or transportation of agricultural commodities, and
14151415 b. “Facility” means each part of the facility whi ch is
14161416 used in a process primarily for:
14171417 (1) the processing of agricultural com modities,
14181418 including receiving or storing agricultural
14191419 commodities, or the production of milk at a dairy
14201420 operation,
14211421 (2) transporting the agricultural commodities or
14221422 product before, during or after the processing,
14231423 or
14241424 (3) packaging or otherwise preparing the product for
14251425 sale or shipment.
14261426 7. Despite any provision to the contrary in paragraph 3 of this
14271427 subsection, for taxable years beginning after December 31, 1999, in
14281428 the case of a taxpayer which has a farming loss, such farming loss
14291429 shall be considered a net operating loss carryback in accordance
14301430 with and to the extent of the Internal Revenue Code of 1986, as
14311431 amended, 26 U.S.C., Section 172(b)(G) 172(b)(1)(B). However, the
14321432 amount of the net operating loss carryback shall not exceed the
14331433 lesser of:
14341434 a. Sixty Thousand Dollars ($60,000.00), or
14351435 b. the loss properly shown on Schedule F of the Internal
14361436 Revenue Service Form 1040 reduced by one -half (1/2) of
14371437
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14881488 the income from all other sources ot her than reflected
14891489 on Schedule F.
14901490 8. In taxable years beginning after Decemb er 31, 1995, all
14911491 qualified wages equal to the federal income tax credit set forth in
14921492 26 U.S.C.A., Section 45A, shall be deducted from taxable income.
14931493 The deduction allowed pursua nt to this paragraph shall only be
14941494 permitted for the tax years in which the federal tax credit pursuant
14951495 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
14961496 paragraph, “qualified wages” means those wages used to calculate the
14971497 federal credit pursu ant to 26 U.S.C.A., Section 45A.
14981498 9. In taxable years beginning after Decembe r 31, 2005, an
14991499 employer that is eligible for and utilizes the Safety Pays OSHA
15001500 Consultation Service provided by the Oklahoma Department of Labor
15011501 shall receive an exemption from ta xable income in the amount of One
15021502 Thousand Dollars ($1,000.00) for the tax year that the service is
15031503 utilized.
15041504 10. For taxable years beginning on or after January 1, 2010,
15051505 there shall be added to Oklahoma taxable income an amount equal to
15061506 the amount of deferred income not included in such taxable income
15071507 pursuant to Section 108(i)(1 ) of the Internal Revenue Code of 1986
15081508 as amended by Section 1231 of the American Recovery and Reinvestment
15091509 Act of 2009 (P.L. No. 111 -5). There shall be subtracted from
15101510 Oklahoma taxable income an amount equal to the amount of deferred
15111511 income included in such taxable income pursuant to Section 108(i)(1)
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15631563 of the Internal Revenue Code of 1986 as amended by Section 1231 of
15641564 the American Recovery and Reinvestment Act of 2009 (P.L. No. 11 1-5).
15651565 11. For taxable years beginning on or after January 1, 2019,
15661566 there shall be subtracted from Oklahoma taxable income or adjusted
15671567 gross income any item of income or gain, and there shall be added to
15681568 Oklahoma taxable income or adjusted gross income any item of loss or
15691569 deduction that in the absence of an election pursuant to the
15701570 provisions of the Pass -Through Entity Tax Equity Act of 2019 would
15711571 be allocated to a member or to an indirect member of an electing
15721572 pass-through entity pursuant to Section 2351 e t seq. of this title,
15731573 if (i) the electing pass -through entity has accounted f or such item
15741574 in computing its Oklahoma net entity income or loss pursuant to the
15751575 provisions of the Pass -Through Entity Tax Equity Act of 2019, and
15761576 (ii) the total amount of tax att ributable to any resulting Oklahoma
15771577 net entity income has been paid. The Oklahoma Tax Commission shall
15781578 promulgate rules for the reporting of such exclusion to direct and
15791579 indirect members of the electing pass -through entity. As used in
15801580 this paragraph, “electing pass-through entity”, “indirect member”,
15811581 and “member” shall be defined in the same manner as prescribed by
15821582 Section 2355.1P-2 of this title. Notwithstanding the application of
15831583 this paragraph, the adjusted tax basis of any ownership interest in
15841584 a pass-through entity for purposes of Section 2351 et seq. of this
15851585 title shall be equal to its adjusted tax basis for federal income
15861586 tax purposes.
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16381638 B. 1. The taxable income of any corporation shall be further
16391639 adjusted to arrive at Oklahoma taxable income, exce pt those
16401640 corporations electing treatment as provided in subchapter S of the
16411641 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1361
16421642 et seq., and Section 2365 of this title, deductions pursuant to the
16431643 provisions of the Accelerated Cost Recovery S ystem as defined
16441644 provided and allowed in the Economic Recovery Tax Act of 1981,
16451645 Public Law 97-34, 26 U.S.C., Section 168, for depreciation of assets
16461646 placed into service after December 31, 1981, shall not be allowed in
16471647 calculating Oklahoma taxable income. Such corporations shall be
16481648 allowed a deduction for depreciation of assets pla ced into service
16491649 after December 31, 1981, in accordance with provisions of the
16501650 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1 et
16511651 seq., in effect immediately prior to the enactment of the
16521652 Accelerated Cost Recovery System. The Oklahoma tax basis for all
16531653 such assets placed into service after December 31, 1981, calculated
16541654 in this section shall be retained and utilized for all Oklahoma
16551655 income tax purposes through the f inal disposition of such assets.
16561656 Notwithstanding any other provisions of the Oklahoma Income Tax
16571657 Act, Section 2351 et seq. of this title, or of the Internal Revenue
16581658 Code of 1986, as amended, to the contrary, this subsection shall
16591659 control calculation of dep reciation of assets placed into service
16601660 after December 31, 1981, and before January 1, 1983.
16611661
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17121712 For assets placed in service and held by a corporation in which
17131713 accelerated cost recovery system the Accelerated Cost Recovery
17141714 System was previously disallowed, an adjustment to taxable income is
17151715 required in the first taxable year beginning after December 31,
17161716 1982, to reconcile the basis of such assets to the basis allowed in
17171717 the Internal Revenue Code of 1986, as amended. The purpose of this
17181718 adjustment is to equali ze the basis and allowance for depreciation
17191719 accounts between that reported to the Internal Revenue Service and
17201720 that reported to Oklahoma this state.
17211721 2. For tax years beginning on or after January 1, 2009, and
17221722 ending on or before December 31, 2009, there s hall be added to
17231723 Oklahoma taxable income any amount in excess of One Hundred Seventy-
17241724 five Thousand Dollars ($175,000.00) which has been deducted as a
17251725 small business expense under Internal Revenue Code of 1986, as
17261726 amended, Section 179 as provided in the Ame rican Recovery and
17271727 Reinvestment Act of 2009.
17281728 C. 1. For taxable years beginning after December 31, 1987, the
17291729 taxable income of any corporation shall be further adjusted to
17301730 arrive at Oklahoma taxable income for transfers of technology to
17311731 qualified small businesses located in Oklahoma this state. Such
17321732 transferor corporation shall b e allowed an exemption from taxable
17331733 income of an amount equal to the amount of royalty payment received
17341734 as a result of such transfer; provided, however, such amount shall
17351735 not exceed ten percent (10%) of the amount of gross proceeds
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17871787 received by such transferor corporation as a result of the
17881788 technology transfer. Such exemption shall be allowed for a period
17891789 not to exceed ten (10) years from the date of receipt of the first
17901790 royalty payment accruing from such transfer. No exemption may be
17911791 claimed for transfers of technology to qualified small businesses
17921792 made prior to January 1, 1988.
17931793 2. For purposes of this subsection:
17941794 a. “Qualified small business ” means an entity, whether
17951795 organized as a corporation, partnership, or
17961796 proprietorship, organized for profit with its
17971797 principal place of business located within this state
17981798 and which meets the following criteria:
17991799 (1) Capitalization of not more than Two Hundred Fifty
18001800 Thousand Dollars ($250,000.00 ),
18011801 (2) Having at least fifty percent (50%) of its
18021802 employees and assets locate d in Oklahoma this
18031803 state at the time of the transfer, and
18041804 (3) Not a subsidiary or affiliate of the transferor
18051805 corporation;
18061806 b. “Technology” means a proprietary process, formula,
18071807 pattern, device or compilation of scientific or
18081808 technical information which is not in the public
18091809 domain;
18101810
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18611861 c. “Transferor corporation ” means a corporation which is
18621862 the exclusive and undisputed owner of the technology
18631863 at the time the transfer is made; and
18641864 d. “Gross proceeds” means the total amount of
18651865 consideration for the transfer of te chnology, whether
18661866 the consideration is in money or otherwise.
18671867 D. 1. For taxable years beginning after December 31, 2005, the
18681868 taxable income of any corporation, estate or trust, shall be further
18691869 adjusted for qualifying gains receiving capital treatment. Such
18701870 corporations, estates or trusts shall be allowed a deduction from
18711871 Oklahoma taxable income for the amount of qualifying gains receiving
18721872 capital treatment earned by the corpora tion, estate or trust during
18731873 the taxable year and included in the federal tax able income of such
18741874 corporation, estate or trust.
18751875 2. As used in this subsection:
18761876 a. “qualifying gains receiving capital treatment ” means
18771877 the amount of net capital gains, as defin ed in Section
18781878 1222(11) of the Internal Revenue Code of 1986, as
18791879 amended, included in the federal income tax return of
18801880 the corporation, estate or trust that result from:
18811881 (1) the sale of real property or tangible personal
18821882 property located within Oklahoma this state that
18831883 has been directly or indirectly owned by the
18841884 corporation, estate or trust for a holding period
18851885
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19361936 of at least five (5) years prior to the date of
19371937 the transaction from which such net capital gains
19381938 arise,
19391939 (2) the sale of stock or on the sale of an ownership
19401940 interest in an Oklahoma company, limited
19411941 liability company, or partnership where such
19421942 stock or ownership interest has been directly or
19431943 indirectly owned by the corporation, estate or
19441944 trust for a holding period of at least three (3)
19451945 years prior to the date of the transaction from
19461946 which the net capital gains arise, or
19471947 (3) the sale of real property, tangible personal
19481948 property or intangible personal property located
19491949 within Oklahoma this state as part of the sale of
19501950 all or substantially all of the asset s of an
19511951 Oklahoma company, limited liability company, or
19521952 partnership where such property has been directly
19531953 or indirectly owned by such entity owned by the
19541954 owners of such entity, and used in or derived
19551955 from such entity for a period of at least three
19561956 (3) years prior to the date of the transaction
19571957 from which the net capital gains arise ,
19581958 b. “holding period” means an uninterrupted period of
19591959 time. The holding period shall include any additional
19601960
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20112011 period when the property was held by another
20122012 individual or entity, if such additional period is
20132013 included in the taxpayer ’s holding period for the
20142014 asset pursuant to the Internal Revenue Code of 1986,
20152015 as amended,
20162016 c. “Oklahoma company”, “limited liability company ”, or
20172017 “partnership” means an entity whose primary
20182018 headquarters have been located in Oklahoma this state
20192019 for at least three (3) uninterrupted y ears prior to
20202020 the date of the transaction from which the net capital
20212021 gains arise,
20222022 d. “direct” means the taxpayer directly owns the asset,
20232023 and
20242024 e. “indirect” means the taxpayer owns an interest in a
20252025 pass-through entity (or chain of pass -through
20262026 entities) that sells the asset that gives rise to the
20272027 qualifying gains receiving capital treatment.
20282028 (1) With respect to sales of real property or
20292029 tangible personal property located within
20302030 Oklahoma this state, the deduction described in
20312031 this subsection shall not apply u nless the pass-
20322032 through entity that makes the sale has held the
20332033 property for not less than five (5) uninterrupted
20342034 years prior to the date of the transaction that
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20862086 created the capital gain, and each pass -through
20872087 entity included in the chain of ownership has
20882088 been a member, partner, or shareholder of the
20892089 pass-through entity in the tier immediately below
20902090 it for an uninterrupted period of not less than
20912091 five (5) years.
20922092 (2) With respect to sales of stock or ownership
20932093 interest in or sales of all or substantially all
20942094 of the assets of an Oklahoma company, limited
20952095 liability company, or partnership, the deduction
20962096 described in this subsection shall not apply
20972097 unless the pass-through entity that mak es the
20982098 sale has held the stock or ownership interest or
20992099 the assets for not less than three (3)
21002100 uninterrupted years prior to the date of the
21012101 transaction that created the capital gain, and
21022102 each pass-through entity included in the chain of
21032103 ownership has been a member, partner or
21042104 shareholder of the pass -through entity in the
21052105 tier immediately below it for an uninterrupted
21062106 period of not less than three (3) years.
21072107 E. The Oklahoma adjusted gross income of any individual
21082108 taxpayer shall be further adjusted as follow s to arrive at Oklahoma
21092109 taxable income:
21102110
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21612161 1. a. In the case of individuals, there shall be added or
21622162 deducted, as the case may be, the difference necessary
21632163 to allow personal exemptions of One Thousand Dollars
21642164 ($1,000.00) in lieu of the personal exemptions all owed
21652165 by the Internal Revenue Code of 1986, as amended.
21662166 b. There shall be allowed an additional exemption of One
21672167 Thousand Dollars ($1,000.00) for each taxpayer or
21682168 spouse who is blind at the close of the tax year. For
21692169 purposes of this subparagraph, an indiv idual is blind
21702170 only if the central visual acuity of the individual
21712171 does not exceed 20/200 in the better eye with
21722172 correcting lenses, or if the visual acuity of the
21732173 individual is greater than 20/200, but is accompanied
21742174 by a limitation in the fields of vision such that the
21752175 widest diameter of the visual field subtends an angle
21762176 no greater than twenty (20) degrees.
21772177 c. There shall be allowed an additional exemption of One
21782178 Thousand Dollars ($1,000.00) for each taxpayer or
21792179 spouse who is sixty-five (65) years of age or older at
21802180 the close of the tax year based upon the filing status
21812181 and federal adjusted gross income of the taxpayer.
21822182 Taxpayers with the following filing status may claim
21832183 this exemption if the federal adjusted gross income
21842184 does not exceed:
21852185
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22362236 (1) Twenty-five Thousand Dollars ($25,000.00) if
22372237 married and filing jointly,
22382238 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
22392239 if married and filing separately,
22402240 (3) Fifteen Thousand Dollars ($15,000.00) if single,
22412241 and
22422242 (4) Nineteen Thousand Dollars ($19,000.00) if a
22432243 qualifying head of household.
22442244 Provided, for taxable years beginning after December
22452245 31, 1999, amounts included in the calculation of
22462246 federal adjusted gross income pursuant to the
22472247 conversion of a traditional individual retirement
22482248 account to a Roth individual retirement account shall
22492249 be excluded from federal adjusted gross income for
22502250 purposes of the income thresholds provided in this
22512251 subparagraph.
22522252 2. a. For taxable years beginning on or before December 31,
22532253 2005, in the case of individuals who use the standard
22542254 deduction in determining taxable income, there shall
22552255 be added or deducted, as the case may be, the
22562256 difference necessary to allow a standard deduction in
22572257 lieu of the standard deduction allowed by the Internal
22582258 Revenue Code of 1986, as amended, in an amount equal
22592259 to the larger of fifteen percent (15%) of the Oklahoma
22602260
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23112311 adjusted gross income or One Thousand Dollars
23122312 ($1,000.00), but not to exceed Two Thousand Dollars
23132313 ($2,000.00), except that in the case of a married
23142314 individual filing a separate return such deductio n
23152315 shall be the larger of fifteen percent (15%) of such
23162316 Oklahoma adjusted gross income or Five Hundred Dollars
23172317 ($500.00), but not to exceed the maximum amount of One
23182318 Thousand Dollars ($1,000.00).
23192319 b. For taxable years beginning on or after January 1,
23202320 2006, and before January 1, 2007, in the case of
23212321 individuals who use the standard de duction in
23222322 determining taxable income, there shall be added or
23232323 deducted, as the case may be, the difference necessary
23242324 to allow a standard deduction in lieu of the standard
23252325 deduction allowed by the Internal Revenue Code of
23262326 1986, as amended, in an amount equal to:
23272327 (1) Three Thousand Dollars ($3,000.00), if the filing
23282328 status is married filing joint, head of household
23292329 or qualifying widow, or
23302330 (2) Two Thousand Dollars ($2,000.00), if the filing
23312331 status is single or married filing separate.
23322332 c. For the taxable year beginning on January 1, 2007, and
23332333 ending December 31, 2007, in the case of individuals
23342334 who use the standard deduction in determining taxable
23352335
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23852385
23862386 income, there shall be added or deduct ed, as the case
23872387 may be, the difference necessary to allow a standard
23882388 deduction in lieu of the standard deduction allowed by
23892389 the Internal Revenue Code of 1986, as amended, in an
23902390 amount equal to:
23912391 (1) Five Thousand Five Hundred Dollars ($5,500.00),
23922392 if the filing status is married filing joint or
23932393 qualifying widow, or
23942394 (2) Four Thousand One Hundred Twenty-five Dollars
23952395 ($4,125.00) for a head of household, or
23962396 (3) Two Thousand Seven Hundred Fifty Dollars
23972397 ($2,750.00), if the filing status is single or
23982398 married filing separate.
23992399 d. For the taxable year beginning on January 1, 2008, and
24002400 ending December 31, 2008, in the case of individuals
24012401 who use the standard deduction in determining taxable
24022402 income, there shall be added or deducted, as the case
24032403 may be, the difference nece ssary to allow a standard
24042404 deduction in lieu of the standard deduction allowed by
24052405 the Internal Revenue Code of 1986, as amended, in an
24062406 amount equal to:
24072407 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
24082408 the filing status is married filing joint or
24092409 qualifying widow,
24102410
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24612461 (2) Four Thousand Eight Hundred Seventy -five Dollars
24622462 ($4,875.00) for a head of household, or
24632463 (3) Three Thousand Two Hundred Fifty Dollars
24642464 ($3,250.00), if the filing status is single or
24652465 married filing separate.
24662466 e. For the taxable year beginning on January 1, 2009, and
24672467 ending December 31, 2009, in the case of individuals
24682468 who use the standard deduction in determining taxable
24692469 income, there shall be added or deducted, as the case
24702470 may be, the difference necessary to allow a standard
24712471 deduction in lieu of the standard deduction allowed by
24722472 the Internal Revenue Code of 1986, as amended, in an
24732473 amount equal to:
24742474 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
24752475 if the filing status is married filing joint or
24762476 qualifying widow,
24772477 (2) Six Thousand Three Hundred Seventy-five Dollars
24782478 ($6,375.00) for a head of household, or
24792479 (3) Four Thousand Two Hundred Fifty Dollars
24802480 ($4,250.00), if the filing status is single or
24812481 married filing separate.
24822482 Oklahoma adjusted gross income shall be increased by
24832483 any amounts paid for moto r vehicle excise taxes which
24842484
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25352535 were deducted as allowed by the Internal Revenue Code
25362536 of 1986, as amended.
25372537 f. For taxable years beginning on or after January 1,
25382538 2010, and ending on December 31, 2016, in the case of
25392539 individuals who use the standard deduction i n
25402540 determining taxable income, there shall be added or
25412541 deducted, as the case m ay be, the difference necessary
25422542 to allow a standard deduction equal to the standard
25432543 deduction allowed by the Internal Revenue Code of
25442544 1986, as amended, based upon the amount and f iling
25452545 status prescribed by such Code for purposes of filing
25462546 federal individual income tax returns.
25472547 g. For taxable years beginning on or after January 1,
25482548 2017, in the case of individuals who use the standard
25492549 deduction in determining taxable income, there sh all
25502550 be added or deducted, as the case may be, the
25512551 difference necessary to all ow a standard deduction in
25522552 lieu of the standard deduction allowed by the Internal
25532553 Revenue Code of 1986, as amended, as follows:
25542554 (1) Six Thousand Three Hundred Fifty Dollars
25552555 ($6,350.00) for single or married filing
25562556 separately,
25572557
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26082608 (2) Twelve Thousand Seven Hundred Dollars
26092609 ($12,700.00) for married filing jointly or
26102610 qualifying widower with dependent child, and
26112611 (3) Nine Thousand Three Hundred Fifty Dollars
26122612 ($9,350.00) for head of household .
26132613 3. a. In the case of resident and part -year resident
26142614 individuals having adj usted gross income from sources
26152615 both within and without the state, the itemized or
26162616 standard deductions and personal exemptions shall be
26172617 reduced to an amount which is the same port ion of the
26182618 total thereof as Oklahoma adjusted gross income is of
26192619 adjusted gross income. To the extent itemized
26202620 deductions include allowable moving expense, proration
26212621 of moving expense shall not be required or permitted
26222622 but allowable moving expense shall b e fully deductible
26232623 for those taxpayers moving within or into Oklahoma
26242624 this state and no part of moving expense shall be
26252625 deductible for those taxpayers moving without or out
26262626 of Oklahoma this state. All other itemized or
26272627 standard deductions and personal exe mptions shall be
26282628 subject to proration as provided by law.
26292629 b. For taxable years beginning on or after January 1,
26302630 2018, the net amount of itemized deductions allowable
26312631 on an Oklahoma income tax return, subject to the
26322632
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26832683 provisions of paragraph 24 of this subsec tion, shall
26842684 not exceed Seventeen Thousand Dollars ($17,000.00).
26852685 For purposes of this subparagraph, charitable
26862686 contributions and medical expenses deductible for
26872687 federal income tax purposes shall be excluded from the
26882688 amount of Seventeen Thousand Dollars ($1 7,000.00) as
26892689 specified by this subparagraph. Provided further, for
26902690 tax year 2020 and subsequent tax years, wagering
26912691 losses which are deductible pursuant to the provisions
26922692 of 26 U.S.C., Section 165(d) shall be excluded from
26932693 the amount of Seventeen Thousand Dollars ($17,000.00)
26942694 as specified by this subparagraph.
26952695 4. A resident indiv idual with a physical disability
26962696 constituting a substantial handicap to employment may deduct from
26972697 Oklahoma adjusted gross income such expenditures to modify a motor
26982698 vehicle, home or workplace as are necessary to compensate for his or
26992699 her handicap. A veteran certified by the United States Department
27002700 of Veterans Affairs of the federal government as having a service -
27012701 connected disability shall be conclusively presumed to be an
27022702 individual with a physical disability constituting a substantial
27032703 handicap to employment. The Tax Commission shall promulgate rules
27042704 containing a list of combinations of common disabilities and
27052705 modifications which may be presumed to qualify for this deduction.
27062706
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27572757 The Tax Commission shall prescribe necessary requirements for
27582758 verification.
27592759 5. a. Before July 1, 2010, the first One Thousand Five
27602760 Hundred Dollars ($1,500.00) received by any person
27612761 from the United States as salary or compensation in
27622762 any form, other than re tirement benefits, as a member
27632763 of any component of the Armed Forces of the Un ited
27642764 States shall be deducted from taxable income.
27652765 b. On or after July 1, 2010, one hundred percent (100%)
27662766 of the income received by any person from the United
27672767 States as salary or compensation in any form, other
27682768 than retirement benefits, as a member of any component
27692769 of the Armed Forces of the United States shall be
27702770 deducted from taxable income.
27712771 c. Whenever the filing of a timely income tax return by a
27722772 member of the Armed Forces of the United States is
27732773 made impracticable or impossible of accomplishment by
27742774 reason of:
27752775 (1) absence from the United States, which term
27762776 includes only the states and the District of
27772777 Columbia,
27782778 (2) absence from the State of Oklahoma this state
27792779 while on active duty, or
27802780
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28312831 (3) confinement in a hospital within the United
28322832 States for treatment of wounds, injuries or
28332833 disease,
28342834 the time for filing a return and paying an income tax
28352835 shall be and is hereby extended without incurring
28362836 liability for interest or penalties, to the fifteenth
28372837 day of the third month following the month in which:
28382838 (a) Such individual shall return to the United
28392839 States if the extension is granted pursuant
28402840 to subparagraph a division 1 of this
28412841 paragraph subparagraph, return to the State
28422842 of Oklahoma this state if the extension is
28432843 granted pursuant to subparagraph b division
28442844 2 of this paragraph subparagraph or be
28452845 discharged from such hospital if the
28462846 extension is granted pursuant to
28472847 subparagraph c division 3 of this paragraph
28482848 subparagraph, or
28492849 (b) An executor, administrator, or conservator
28502850 of the estate of the taxpayer is appointed,
28512851 whichever event occurs the earliest.
28522852 Provided, that the Tax Commission may, in its discretion, grant
28532853 any member of the Armed Forces of the United States an extension of
28542854 time for filing of income tax returns and payment of income tax
28552855
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29062906 without incurring liabilities for interest or penalties. Such
29072907 extension may be granted only when in the judgment of the Tax
29082908 Commission a good cause exists therefor and may be for a period in
29092909 excess of six (6) months. A record of every such extension granted,
29102910 and the reason therefor, shall be kept.
29112911 6. Before July 1, 2010, the salary or any other form of
29122912 compensation, received from the United States by a member of any
29132913 component of the Armed Forces of the Unit ed States, shall be
29142914 deducted from taxable income during the time in which the person is
29152915 detained by the enemy in a conflict, is a prisoner of war or is
29162916 missing in action and not deceased; provided, after July 1, 2010,
29172917 all such salary or compensation shall be subject to the deduction as
29182918 provided pursuant to paragraph 5 of this subse ction.
29192919 7. a. An individual taxpayer, whether resident or
29202920 nonresident, may deduct an amount equal to the federal
29212921 income taxes paid by the taxpayer during the taxable
29222922 year.
29232923 b. Federal taxes as described in subparagraph a of this
29242924 paragraph shall be deductible by any individual
29252925 taxpayer, whether resident or nonresident, only to the
29262926 extent they relate to income subject to taxation
29272927 pursuant to the provisions of the Oklahoma Income Tax
29282928 Act. The maximum amount allowable in the preceding
29292929 paragraph 5 of this subsection shall be prorated on
29302930
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29812981 the ratio of the Oklahoma adjusted gross income to
29822982 federal adjusted gross income.
29832983 c. For the purpose of this paragraph, “federal income
29842984 taxes paid” shall mean federal income taxes, surtaxes
29852985 imposed on incomes or excess profits taxes, as though
29862986 the taxpayer was on the accrual basis. In determining
29872987 the amount of deduction for federal income taxes for
29882988 tax year 2001, the amount of the deduction shall not
29892989 be adjusted by the amount of any accelerated ten
29902990 percent (10%) tax rate bracket cr edit or advanced
29912991 refund of the credit received during the tax year
29922992 provided pursuant to the federal Economic Growth and
29932993 Tax Relief Reconciliation Act of 2001, P.L. No. 107 -
29942994 16, and the advanced refund of such credit shall not
29952995 be subject to taxation.
29962996 d. The provisions of this paragraph shall apply to all
29972997 taxable years ending after December 31, 1978, and
29982998 beginning before January 1, 2006.
29992999 8. Retirement benefits not to exceed Five Thou sand Five Hundred
30003000 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand F ive
30013001 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
30023002 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
30033003 years, which are received by an individual from the civil service of
30043004 the United States, the Oklahoma Public Employees Retirement System,
30053005
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30563056 the Teachers’ Retirement System of Oklahoma, the Oklahoma Law
30573057 Enforcement Retirement System, the Oklahoma Firefighters Pension and
30583058 Retirement System, the Oklahom a Police Pension and Retirement
30593059 System, the employee retirement systems creat ed by counties pursuant
30603060 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the The
30613061 Uniform Retirement System for Justices and Judges, the Oklahoma
30623062 Wildlife Conservation Department Retirement Fund, the Oklahoma
30633063 Employment Security Commission Retirement Plan, or the employee
30643064 retirement systems created by municipalities pursuant to Section 48 -
30653065 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
30663066 from taxable income.
30673067 9. In taxable years beginning after December 3l, 1984, Social
30683068 Security benefits received by an individual shall be exempt from
30693069 taxable income, to the extent such benefits are included in the
30703070 federal adjusted gross income pursuant to the provisions of S ection
30713071 86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C.,
30723072 Section 86.
30733073 10. For taxable years beginning after December 31, 1994, lump -
30743074 sum distributions from employer plans of deferred compensation,
30753075 which are not qualified plans within the meani ng of Section 401(a)
30763076 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
30773077 401(a), and which are deposited in and accounted for within a
30783078 separate bank account or brokerage account in a financial
30793079 institution within this state, shall be exclud ed from taxable income
30803080
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31313131 in the same manner as a qualifying rollover contribution to an
31323132 individual retirement account within the meaning of Section 408 of
31333133 the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
31343134 408. Amounts withdrawn from such ban k or brokerage account,
31353135 including any earnings thereon, shall be included in taxable income
31363136 when withdrawn in the same manner as withdrawals from individual
31373137 retirement accounts within the meaning of Section 408 of the
31383138 Internal Revenue Code of 1986, as amended.
31393139 11. In taxable years beginning after December 31, 1995,
31403140 contributions made to and interest received from a medical savings
31413141 account established pursuant to Sections 2621 through 2623 of Title
31423142 63 of the Oklahoma Statutes shall be exempt from taxable in come.
31433143 12. For taxable years beginning after December 31, 1996, the
31443144 Oklahoma adjusted gross income of any individual taxpayer who is a
31453145 swine or poultry producer may be further adjusted for the deduction
31463146 for depreciation allowed for new construction or expa nsion costs
31473147 which may be computed using the same depreciation method elected for
31483148 federal income tax purposes except that the useful life shall be
31493149 seven (7) years for purposes of this paragraph. If depreciation is
31503150 allowed as a deduction in determining the adjusted gross income of
31513151 an individual, any depreciation calculated and claim ed pursuant to
31523152 this section shall in no event be a duplication of any depreciation
31533153 allowed or permitted on the federal income tax return of the
31543154 individual.
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32063206 13. a. In taxable years beginning before January 1, 2005,
32073207 retirement benefits not to exceed the amounts
32083208 specified in this paragraph, which are received by an
32093209 individual sixty-five (65) years of age or older and
32103210 whose Oklahoma adjusted gross income is Twenty -five
32113211 Thousand Dollars ($25,000.00) or less if the filing
32123212 status is single, head of household, or m arried filing
32133213 separate, or Fifty Thousand Dollars ($50,000.00) or
32143214 less if the filing status is married filing joint or
32153215 qualifying widow, shall be exempt from taxable income.
32163216 In taxable years beginning after December 31, 2004,
32173217 retirement benefits not to exceed the amounts
32183218 specified in this paragraph, which are received by an
32193219 individual whose Oklahoma adjusted gross income is
32203220 less than the qualifying amount specified in this
32213221 paragraph, shall be exempt from taxable income.
32223222 b. For purposes of this paragraph, t he qualifying amount
32233223 shall be as follows:
32243224 (1) in taxable years beginning after December 31,
32253225 2004, and prior to January 1, 2007, the
32263226 qualifying amount shall be Thirty -seven Thousand
32273227 Five Hundred Dollars ($37,500.00) or less if the
32283228 filing status is single, head of household, or
32293229 married filing separate, or Seventy -five Thousand
32303230
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32813281 Dollars ($75,000.00) or less if the filing status
32823282 is married filing jointly or qualifying widow,
32833283 (2) in the taxable year beginning January 1, 2007,
32843284 the qualifying amount shall be Fifty Thousand
32853285 Dollars ($50,000.00) or less if the filing status
32863286 is single, head of household, or married filing
32873287 separate, or One Hundred Thousand Dollars
32883288 ($100,000.00) or less if the f iling status is
32893289 married filing jointly or qualifying widow,
32903290 (3) in the taxable year beginning January 1, 2008,
32913291 the qualifying amount shall be Sixty -two Thousand
32923292 Five Hundred Dollars ($62,500.00) or less if the
32933293 filing status is single, head of household, or
32943294 married filing separate, or One Hundred Twenty -
32953295 five Thousand Dollars ($125,0 00.00) or less if
32963296 the filing status is married filing jointly or
32973297 qualifying widow,
32983298 (4) in the taxable year beginning January 1, 2009,
32993299 the qualifying amount shall be One Hundred
33003300 Thousand Dollars ($100,000.00) or less if the
33013301 filing status is single, head of household, or
33023302 married filing separate, or Two Hundred Thousand
33033303 Dollars ($200,000.00) or less if the filing
33043304
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33553355 status is married filing jointly or qualifying
33563356 widow, and
33573357 (5) in the taxable year beginning January 1, 2010,
33583358 and subsequent taxable years, there shal l be no
33593359 limitation upon the qualifying amount.
33603360 c. For purposes of this paragraph, “retirement benefits”
33613361 means the total distributions or withdrawals from the
33623362 following:
33633363 (1) an employee pension benefit plan which satisfies
33643364 the requirements of Section 401 of the Internal
33653365 Revenue Code of 1986, as amended, 26 U.S.C.,
33663366 Section 401,
33673367 (2) an eligible deferred compensation plan that
33683368 satisfies the requirements of Section 457 of the
33693369 Internal Revenue Code of 1986, as amended, 26
33703370 U.S.C., Section 457,
33713371 (3) an individual retirement account, annuity or
33723372 trust or simplified employee pension that
33733373 satisfies the requirements of Section 408 of the
33743374 Internal Revenue Code of 1986, as amended, 26
33753375 U.S.C., Section 408,
33763376 (4) an employee annuity subject to the provisions of
33773377 Section 403(a) or (b) of the Internal Revenue
33783378
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34293429 Code of 1986, as amended, 26 U.S.C., Section
34303430 403(a) or (b),
34313431 (5) United States Retirement Bonds which satisfy the
34323432 requirements of Section 86 of the In ternal
34333433 Revenue Code of 1986, as amended, 26 U.S.C.,
34343434 Section 86, or
34353435 (6) lump-sum distributions from a retirement plan
34363436 which satisfies the requirements of Section
34373437 402(e) of the Internal Revenue Code of 1986, as
34383438 amended, 26 U.S.C., Section 402(e).
34393439 d. The amount of the exemption provided by this paragraph
34403440 shall be limited to Five Thousand Five Hundred Dollars
34413441 ($5,500.00) for the 2004 tax year, Seven Thousand Five
34423442 Hundred Dollars ($7,500.00) for the 2005 tax year and
34433443 Ten Thousand Dollars ($10,000.00) for the tax year
34443444 2006 and for all subsequent tax years. Any individual
34453445 who claims the exemption provided for in paragraph 8
34463446 of this subsection shall not be permitted to claim a
34473447 combined total exemption pursuant to this paragraph
34483448 and paragraph 8 of this subsection in an amount
34493449 exceeding Five Thousand Five Hundred Dollars
34503450 ($5,500.00) for the 2004 tax year, Seven Thousand Five
34513451 Hundred Dollars ($7,500.00) for the 2005 tax year and
34523452
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35033503 Ten Thousand Dollars ($10,000.00) for the 2006 tax
35043504 year and all subsequent tax years.
35053505 14. In taxable years beginning after December 31, 1999, for an
35063506 individual engaged in production agriculture who has filed a
35073507 Schedule F form with the taxpayer ’s federal income tax return for
35083508 such taxable year, there shall be excluded from taxable income any
35093509 amount which was included as federal taxable income or federal
35103510 adjusted gross income and which consists of the discharge of an
35113511 obligation by a creditor of the taxpayer incurred to finance the
35123512 production of agricultural products.
35133513 15. In taxable years beginnin g December 31, 2000, an amount
35143514 equal to one hundred percent (100%) of the amo unt of any scholarship
35153515 or stipend received from participation in the Oklahoma Police Corps
35163516 Program, as established in Section 2 -140.3 of Title 47 of the
35173517 Oklahoma Statutes shall be exempt from taxable income.
35183518 16. a. In taxable years beginning after December 31, 2001,
35193519 and before January 1, 2005, there shall be allowed a
35203520 deduction in the amount of contributions to accounts
35213521 established pursuant to the Oklahoma College Savings
35223522 Plan Act. The deduction shall equal the amount of
35233523 contributions to accounts, but in n o event shall the
35243524 deduction for each contributor exceed Two Thousand
35253525 Five Hundred Dollars ($2,500.00) each taxable year for
35263526 each account.
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35783578 b. In taxable years beginning after Decem ber 31, 2004,
35793579 each taxpayer shall be allowed a deduction for
35803580 contributions to accounts established pursuant to the
35813581 Oklahoma College Savings Plan Act. The maximum annual
35823582 deduction shall equal the amount of contributions to
35833583 all such accounts plus any contri butions to such
35843584 accounts by the taxpayer for prior taxable years after
35853585 December 31, 2004, which were not deducted, but in no
35863586 event shall the deduction for each tax year exceed Ten
35873587 Thousand Dollars ($10,000.00) for each individual
35883588 taxpayer or Twenty Thousan d Dollars ($20,000.00) for
35893589 taxpayers filing a joint return. Any amount of a
35903590 contribution that is not deducted by the taxpayer in
35913591 the year for which the contribution is made may be
35923592 carried forward as a deduction from income for the
35933593 succeeding five (5) year s. For taxable years
35943594 beginning after December 31, 2005, deductions may be
35953595 taken for contributions and rollovers made during a
35963596 taxable year and up to April 15 of the succeeding
35973597 year, or the due date of a taxpayer ’s state income tax
35983598 return, excluding extens ions, whichever is later.
35993599 Provided, a deduction for the same contribution may
36003600 not be taken for two (2) different taxable years.
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36523652 c. In taxable years beginning after December 31, 2006,
36533653 deductions for contributions made pursuant to
36543654 subparagraph b of this par agraph shall be limited as
36553655 follows:
36563656 (1) for a taxpayer who qualified for the five-year
36573657 carryforward election and who takes a rollover or
36583658 nonqualified withdrawal during that period, the
36593659 tax deduction otherwise available pursuant to
36603660 subparagraph b of this pa ragraph shall be reduced
36613661 by the amount which is equal to the rollover or
36623662 nonqualified withdrawal, and
36633663 (2) for a taxpayer who elects to take a rollover or
36643664 nonqualified withdrawal within the same tax year
36653665 in which a contribution was made to the
36663666 taxpayer’s account, the tax deduction otherwise
36673667 available pursuant to subparagraph b of th is
36683668 paragraph shall be reduced by the amount of the
36693669 contribution which is equal to the rollover or
36703670 nonqualified withdrawal.
36713671 d. If a taxpayer elects to take a rollover on a
36723672 contribution for which a deduction has been taken
36733673 pursuant to subparagraph b of this paragraph within
36743674 one (1) year of the date of contribution, the amount
36753675 of such rollover shall be included in the adjusted
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37273727 gross income of the taxpayer in the taxable year of
37283728 the rollover.
37293729 e. If a taxpayer makes a nonqualified withdrawal of
37303730 contributions for which a deduction was taken pursuant
37313731 to subparagraph b of this paragraph, such nonqualified
37323732 withdrawal and any earnings thereon shall be included
37333733 in the adjusted gross income of the taxpayer in the
37343734 taxable year of the nonqualified withdrawal.
37353735 f. As used in this paragraph:
37363736 (1) “non-qualified withdrawal ” means a withdrawal
37373737 from an Oklahoma College Savings Plan account
37383738 other than one of the following:
37393739 (a) a qualified withdrawal,
37403740 (b) a withdrawal made as a result of the death
37413741 or disability of the designated be neficiary
37423742 of an account,
37433743 (c) a withdrawal that is made on the account of
37443744 a scholarship or the allowance or payment
37453745 described in Section 135(d)(1)(B) or (C) or
37463746 by the Internal Reve nue Code of 1986, as
37473747 amended, received by the designated
37483748 beneficiary to the extent the amount of the
37493749 refund does not exceed the amount of the
37503750 scholarship, allowance, or payment, or
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38023802 (d) a rollover or change of designated
38033803 beneficiary as permitted by subsecti on F of
38043804 Section 3970.7 of Title 70 of the Oklahoma
38053805 Statutes, and
38063806 (2) “rollover” means the transfer of funds from the
38073807 Oklahoma College Savings Plan to any other plan
38083808 under Section 529 of the Internal Revenue Code of
38093809 1986, as amended.
38103810 17. For tax years 2006 through 2021, retirement benefits
38113811 received by an individual from any component of the Armed Forces of
38123812 the United States in an amount not to exceed the greater of seventy -
38133813 five percent (75%) of such benefits or Ten Thousand Dollars
38143814 ($10,000.00) shall be exe mpt from taxable income but in no case less
38153815 than the amount of the exemption provided by paragraph 13 of this
38163816 subsection. For tax year 2022 and subsequent tax years, retirement
38173817 benefits received by an individual from any component of the Armed
38183818 Forces of the United States shall be exempt from taxable income.
38193819 18. For taxable years beginning after December 31, 2006,
38203820 retirement benefits received by federal civil service retirees,
38213821 including survivor annuities, paid in lieu of Social Security
38223822 benefits shall be exempt from taxable income to the extent such
38233823 benefits are included in the fe deral adjusted gross income pursuant
38243824 to the provisions of Section 86 of the Internal Revenue Code of
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38763876 1986, as amended, 26 U.S.C., Section 86, according to the following
38773877 schedule:
38783878 a. in the taxable year beginning January 1, 2007, twenty
38793879 percent (20%) of such benefits shall be exempt,
38803880 b. in the taxable year beginning January 1, 2008, forty
38813881 percent (40%) of such benefits shall be exempt,
38823882 c. in the taxable year beginning January 1, 200 9, sixty
38833883 percent (60%) of such benefits shall be exempt,
38843884 d. in the taxable year beginning January 1, 2010, eighty
38853885 percent (80%) of such benefits shall be exempt, and
38863886 e. in the taxable year beginning January 1, 2011, and
38873887 subsequent taxable years, one hundre d percent (100%)
38883888 of such benefits shall be exempt.
38893889 19. a. For taxable years beginning after December 31, 2007, a
38903890 resident individual may deduct up to Ten Thousand
38913891 Dollars ($10,000.00) from Oklahoma adjusted gross
38923892 income if the individual, or the dependent of the
38933893 individual, while living, donates one or more human
38943894 organs of the individual to another human being for
38953895 human organ transplantation. As used in this
38963896 paragraph, “human organ” means all or part of a liver,
38973897 pancreas, kidney, intestine, lung, or bone m arrow. A
38983898 deduction that is claimed under this paragraph may be
38993899
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39503950 claimed in the taxable year in which the human organ
39513951 transplantation occurs.
39523952 b. An individual may claim this deduction only once, and
39533953 the deduction may be claimed only for unreimbursed
39543954 expenses that are incurred by the individual and
39553955 related to the organ donation of th e individual.
39563956 c. The Oklahoma Tax Commission shall promulgate rules to
39573957 implement the provisions of this paragraph which shall
39583958 contain a specific list of expenses which may be
39593959 presumed to qualify for the deduction. The Tax
39603960 Commission shall prescribe necessary requirements for
39613961 verification.
39623962 20. For taxable years beginning after December 31, 2009, there
39633963 shall be exempt from taxable income any amount received by the
39643964 beneficiary of the death benefit for an emergency medical technician
39653965 or a registered emergency medical responder provided by Section 1 -
39663966 2505.1 of Title 63 of the Oklahoma Statutes.
39673967 21. For taxable years beginning after December 31, 2008,
39683968 taxable income shall be increased b y any unemployment compensation
39693969 exempted under Section 85(c) of the Internal Revenue Code of 1986,
39703970 as amended, 26 U.S.C., Section 85(c) (2009).
39713971 22. For taxable years beginning after December 31, 2008, there
39723972 shall be exempt from taxable income any payment i n an amount less
39733973 than Six Hundred Dollars ($600.00) received by a person as a n award
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40254025 for participation in a competitive livestock show event. For
40264026 purposes of this paragraph, the payment shall be treated as a
40274027 scholarship amount paid by the entity sponsorin g the event and the
40284028 sponsoring entity shall cause the payment to be categorized as a
40294029 scholarship in its books and records.
40304030 23. For taxable years beginning on or after January 1, 2016,
40314031 taxable income shall be increased by any amount of state and local
40324032 sales or income taxes deducted under 26 U.S.C., Section 164 of the
40334033 Internal Revenue Code of 1986, as amended. If the amount of state
40344034 and local taxes deducted on the federal return is limited, taxable
40354035 income on the state return shall be increased only by the a mount
40364036 actually deducted after any such limitations are applied.
40374037 24. For taxable years beginning after December 31, 2020, each
40384038 taxpayer shall be allowed a deduction for contributions to accounts
40394039 established pursuant to the Achieving a Better Life Experienc e
40404040 (ABLE) Program program as established in Section 4001.1 et seq. of
40414041 Title 56 of the Oklahoma Statutes. For any tax year, the deduction
40424042 provided for in this paragraph shall not exceed Ten Thousand Dollars
40434043 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
40444044 ($20,000.00) for taxpayers filing a joint return. Any amount of
40454045 contribution not deducted by the taxpayer in the tax year for which
40464046 the contribution is made may be carried forward as a deduction from
40474047 income for up to five (5) tax years. Deductions may be taken for
40484048 contributions made during the tax year and throug h April 15 of the
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41004100 succeeding tax year, or through the due date of a taxpayer ’s state
41014101 income tax return excluding extensions, whichever is later.
41024102 Provided, a deduction for the sam e contribution may not be taken in
41034103 more than one (1) tax year.
41044104 F. 1. For taxable years beginning after December 31, 2004, a
41054105 deduction from the Oklahoma adjusted gross income of any individual
41064106 taxpayer shall be allowed for qualifying gains receiving capit al
41074107 treatment that are included in the federal adjusted gross income of
41084108 such individual taxpayer during the taxable year.
41094109 2. As used in this subsection:
41104110 a. “qualifying gains receiving capital treatment ” means
41114111 the amount of net capital gains, as defined in Section
41124112 1222(11) of the Internal Revenue Code of 1986, as
41134113 amended, included in an individual taxpayer ’s federal
41144114 income tax return that result from:
41154115 (1) the sale of real property or tangible personal
41164116 property located within Oklahoma this state that
41174117 has been directly or indirectly owned by the
41184118 individual taxpayer for a holding period of at
41194119 least five (5) years prior to the date of the
41204120 transaction from which such net capital gains
41214121 arise,
41224122 (2) the sale of stock or the sale of a direct or
41234123 indirect ownership inter est in an Oklahoma
41244124
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41754175 company, limited liability company, or
41764176 partnership where such stock or ownership
41774177 interest has been directly or indirectly owned by
41784178 the individual taxpayer for a holding period of
41794179 at least two (2) years prior to the date of the
41804180 transaction from which the net capital gains
41814181 arise, or
41824182 (3) the sale of real property, t angible personal
41834183 property or intangible personal property located
41844184 within Oklahoma this state as part of the sale of
41854185 all or substantially all of the assets of an
41864186 Oklahoma company, limited liability company, or
41874187 partnership or an Oklahoma proprietorship
41884188 business enterprise where such property has been
41894189 directly or indirectly owned by such entity or
41904190 business enterprise or owned by the owners of
41914191 such entity or business enterprise for a p eriod
41924192 of at least two (2) years prior to the date of
41934193 the transaction from whi ch the net capital gains
41944194 arise,
41954195 b. “holding period” means an uninterrupted period of
41964196 time. The holding period shall include any additional
41974197 period when the property was held by an other
41984198 individual or entity, if such additional period is
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42504250 included in the taxpayer ’s holding period for the
42514251 asset pursuant to the Internal Revenue Code of 1986,
42524252 as amended,
42534253 c. “Oklahoma company,” “limited liability company, ” or
42544254 “partnership” means an entity whose primary
42554255 headquarters have been located in Oklahoma this state
42564256 for at least three (3) uninterrupted years prior to
42574257 the date of the transaction from which the net capital
42584258 gains arise,
42594259 d. “direct” means the individual taxpayer directly owns
42604260 the asset,
42614261 e. “indirect” means the individual taxpayer owns an
42624262 interest in a pass-through entity (or chain of pass -
42634263 through entities) that sells the asset that gives rise
42644264 to the qualifying gains receiving capital treatment.
42654265 (1) With respect to sales of real property o r
42664266 tangible personal property located within
42674267 Oklahoma this state, the deduction described in
42684268 this subsection shall not apply unless the pass -
42694269 through entity that makes the sale has held the
42704270 property for not less than five (5) uninterrupted
42714271 years prior to the date of the transaction that
42724272 created the capital gain, and each pass -through
42734273 entity included in the chain of ownership has
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43254325 been a member, partner, or shareholder of the
43264326 pass-through entity in the tier immediately below
43274327 it for an uninterrupted period of no t less than
43284328 five (5) years.
43294329 (2) With respect to sales of stock or ownership
43304330 interest in or sales of all or substantially all
43314331 of the assets of an Oklahoma company, limited
43324332 liability company, partnership or Oklahoma
43334333 proprietorship business enterprise, the de duction
43344334 described in this subsection shall not apply
43354335 unless the pass-through entity that makes the
43364336 sale has held the stock or ownership interest for
43374337 not less than two (2) uninterrupted years prior
43384338 to the date of the transaction that created the
43394339 capital gain, and each pass-through entity
43404340 included in the chain of ownership has been a
43414341 member, partner or shareholder of the pass -
43424342 through entity in the tier immediately below it
43434343 for an uninterrupted period of not less than two
43444344 (2) years. For purposes of this divis ion,
43454345 uninterrupted ownership prior to July 1, 2007,
43464346 shall be included in the determination of the
43474347 required holding period prescribed by this
43484348 division, and
43494349
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44004400 f. “Oklahoma proprietorship business enterprise ” means a
44014401 business enterprise whose income and expense s have
44024402 been reported on Schedule C or F of an individual
44034403 taxpayer’s federal income tax return, or any similar
44044404 successor schedule published by the Internal Revenue
44054405 Service and whose primary headquarters have been
44064406 located in Oklahoma this state for at least three (3)
44074407 uninterrupted years prior to the date of the
44084408 transaction from which the net capital gains arise.
44094409 G. 1. For purposes of computing its Oklahoma taxable income
44104410 under this section, the dividends -paid deduction otherwise allowed
44114411 by federal law in co mputing net income of a real estate investment
44124412 trust that is subject to feder al income tax shall be added back in
44134413 computing the tax imposed by this state under this title if the real
44144414 estate investment trust is a captive real estate investment trust.
44154415 2. For purposes of computing its Oklahoma taxable income under
44164416 this section, a taxpayer shall add back otherwise deductible rents
44174417 and interest expenses paid to a captive real estate investment trust
44184418 that is not subject to the provisions of paragraph 1 of this
44194419 subsection. As used in this subsection:
44204420 a. the term “real estate investment t rust” or “REIT”
44214421 means the meaning ascribed to such term in Section 856
44224422 of the Internal Revenue Code of 1986, as amended,
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44744474 b. the term “captive real estate investment trust ” means
44754475 a real estate investment trust, the shares or
44764476 beneficial interests of which are not regularly traded
44774477 on an established securities market and more than
44784478 fifty percent (50%) of the voting power or value of
44794479 the beneficial interests or shares of which are owned
44804480 or controlled, directly or indirectly, or
44814481 constructively, by a single entity that is:
44824482 (1) treated as an association taxable as a
44834483 corporation under the Internal Revenue Code of
44844484 1986, as amended, and
44854485 (2) not exempt from federal income tax pursuant to
44864486 the provisions of Section 501(a) of the Internal
44874487 Revenue Code of 1986, as amended.
44884488 The term shall not include a real estate investment
44894489 trust that is intended to be regularly traded on an
44904490 established securities market, and that satisfies the
44914491 requirements of Sectio n 856(a)(5) and (6) of the U.S.
44924492 Internal Revenue Code of 1986, as amended, by reason
44934493 of Section 856(h)(2) of the Internal Revenue Code of
44944494 1986, as amended,
44954495 c. the term “association taxable as a corporation ” shall
44964496 not include the following entities:
44974497
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45484548 (1) any real estate investment trust as defined in
45494549 paragraph a of this subsection other than a
45504550 “captive real estate investment trust ” captive
45514551 real estate investment trust ,
45524552 (2) any qualified real estate investment trust
45534553 subsidiary under Section 856(i) of the Inter nal
45544554 Revenue Code of 1986, as amended, other than a
45554555 qualified REIT subsidiary of a “captive real
45564556 estate investment trust ” captive real estate
45574557 investment trust,
45584558 (3) any Listed Australian Property Trust listed
45594559 Australian property trust (meaning an Australian
45604560 unit trust registered as a “Managed Investment
45614561 Scheme” “managed investment scheme ” under the
45624562 Australian Corporations Act 2001 in which the
45634563 principal class of units is listed on a
45644564 recognized stock exchange in Australia and is
45654565 regularly traded on an establis hed securities
45664566 market), or an entity organized as a trust,
45674567 provided that a Listed Australian Property Trust
45684568 listed Australian property trust owns or
45694569 controls, directly or indirectly, seventy -five
45704570 percent (75%) or more of the voting power or
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46224622 value of the beneficial interests or shares of
46234623 such trust, or
46244624 (4) any Qualified Foreign Entity qualified foreign
46254625 entity, meaning a corporation, trust, association
46264626 or partnership organized outside the laws of the
46274627 United States and which satisfies the following
46284628 criteria:
46294629 (a) at least seventy-five percent (75%) of the
46304630 entity’s total asset value at t he close of
46314631 its taxable year is represented by real
46324632 estate assets, as defined in Section
46334633 856(c)(5)(B) of the Internal Revenue Code of
46344634 1986, as amended, thereby including shares
46354635 or certificates of beneficial interest in
46364636 any real estate investment trust, cash and
46374637 cash equivalents, and U.S. Government
46384638 securities,
46394639 (b) the entity receives a dividend -paid
46404640 deduction comparable to Section 561 of the
46414641 Internal Revenue Code of 1986, as amended,
46424642 or is exempt from entity level tax,
46434643 (c) the entity is required to distribu te at
46444644 least eighty-five percent (85%) of its
46454645 taxable income, as computed in the
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46974697 jurisdiction in which it is organized, to
46984698 the holders of its shares or certificates of
46994699 beneficial interest on an annual basis,
47004700 (d) not more than ten percent (10%) of the
47014701 voting power or value in such entity is held
47024702 directly or indirectly or constructively by
47034703 a single entity or individual, or the shares
47044704 or beneficial interests of such entity are
47054705 regularly traded on an established
47064706 securities market, and
47074707 (e) the entity is organized in a country which
47084708 has a tax treaty with the United States.
47094709 3. For purposes of this subsection, the constructive ownership
47104710 rules of Section 318(a) of the Internal Revenue Code, as modified by
47114711 Section 856(d)(5) of the Internal Revenue Code of 1986, as amended,
47124712 shall apply in determining the ownership of stock, assets, or net
47134713 profits of any person.
47144714 4. A real estate investment trust that does not become
47154715 regularly traded on an estab lished securities market within one (1)
47164716 year of the date on which it first be comes a real estate investment
47174717 trust shall be deemed not to have been regularly traded on an
47184718 established securities market, retroactive to the date it first
47194719 became a real estate i nvestment trust, and shall file an amended
47204720 return reflecting such retroactive designation for any tax year or
47214721
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47724772 part year occurring during its initial year of status as a real
47734773 estate investment trust. For purposes of this subsection, a real
47744774 estate investment trust becomes a real estate investment trust on
47754775 the first day it has both m et the requirements of Section 856 of the
47764776 Internal Revenue Code of 1986, as amended, and has elected to be
47774777 treated as a real estate investment trust pursuant to Section
47784778 856(c)(1) of the Internal Revenue Code of 1986, as amended.
47794779 SECTION 2. This act shall become effective November 1, 2025.
47804780
47814781 60-1-1076 QD 12/18/2024 10:46:55 AM