1| STATE OF OKLAHOMA |
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2| 1st Session of the 59th Legislature (2023) |
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3|SENATE BILL 81 By: Dahm |
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4| |
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5| |
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6| AS INTRODUCED |
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7| An Act relating to income tax; amending 68 O.S. 2021, |
| Section 2358, as amended by Section 1, Chapter 377, |
8| O.S.L. 2022 (68 O.S. Supp. 2022, Section 2358), which |
| relates to adjustments to arrive at Oklahoma taxable |
9| income and Oklahoma adjusted gross income; deleting |
| limitations on exemption for certain income and |
10| withdrawals for certain tax years; providing |
| exemption for certain withdrawals when withdrawn in |
11| certain manner for certain tax years; updating |
| statutory language; and providing an effective date. |
12| |
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13| |
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14| |
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15|BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA: |
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16| SECTION 1. AMENDATORY 68 O.S. 2021, Section 2358, as |
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17|amended by Section 1, Chapter 377, O.S.L. 2022 (68 O.S. Supp. 2022, |
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18|Section 2358), is amended to read as follows: |
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19| Section 2358. For all tax years beginning after December 31, |
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20|1981, taxable income and adjusted gross income shall be adjusted to |
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21|arrive at Oklahoma taxable income and Oklahoma adjusted gross income |
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22|as required by this section. |
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23| |
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24| |
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Req. No. 993 Page 1
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1| A. The taxable income of any taxpayer shall be adjusted to |
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2|arrive at Oklahoma taxable income for corporations and Oklahoma |
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3|adjusted gross income for individuals, as follows: |
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4| 1. There shall be added interest income on obligations of any |
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5|state or political subdivision thereto which is not otherwise |
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6|exempted pursuant to other laws of this state, to the extent that |
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7|such interest is not included in taxable income and adjusted gross |
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8|income. |
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9| 2. There shall be deducted amounts included in such income that |
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10|the state is prohibited from taxing because of the provisions of the |
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11|Federal Constitution, the State Constitution, federal laws, or laws |
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12|of Oklahoma. |
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13| 3. The amount of any federal net operating loss deduction shall |
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14|be adjusted as follows: |
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15| a. For carryovers and carrybacks to taxable years |
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16| beginning before January 1, 1981, the amount of any |
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17| net operating loss deduction allowed to a taxpayer for |
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18| federal income tax purposes shall be reduced to an |
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19| amount which is the same portion thereof as the loss |
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20| from sources within this state, as determined pursuant |
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21| to this section and Section 2362 of this title, for |
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22| the taxable year in which such loss is sustained is of |
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23| the total loss for such year; and |
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Req. No. 993 Page 2
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1| b. For carryovers and carrybacks to taxable years |
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2| beginning after December 31, 1980, the amount of any |
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3| net operating loss deduction allowed for the taxable |
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4| year shall be an amount equal to the aggregate of the |
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5| Oklahoma net operating loss carryovers and carrybacks |
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6| to such year. Oklahoma net operating losses shall be |
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7| separately determined by reference to Section 172 of |
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8| the Internal Revenue Code, 26 U.S.C., Section 172, as |
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9| modified by the Oklahoma Income Tax Act, Section 2351 |
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10| et seq. of this title, and shall be allowed without |
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11| regard to the existence of a federal net operating |
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12| loss. For tax years beginning after December 31, |
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13| 2000, and ending before January 1, 2008, the years to |
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14| which such losses may be carried shall be determined |
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15| solely by reference to Section 172 of the Internal |
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16| Revenue Code, 26 U.S.C., Section 172, with the |
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17| exception that the terms "net operating loss" and |
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18| "taxable income" shall be replaced with "Oklahoma net |
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19| operating loss" and "Oklahoma taxable income". For |
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20| tax years beginning after December 31, 2007, and |
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21| ending before January 1, 2009, years to which such |
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22| losses may be carried back shall be limited to two (2) |
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23| years. For tax years beginning after December 31, |
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24| 2008, the years to which such losses may be carried |
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Req. No. 993 Page 3
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1| back shall be determined solely by reference to |
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2| Section 172 of the Internal Revenue Code, 26 U.S.C., |
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3| Section 172, with the exception that the terms "net |
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4| operating loss" and "taxable income" shall be replaced |
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5| with "Oklahoma net operating loss" and "Oklahoma |
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6| taxable income". |
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7| 4. Items of the following nature shall be allocated as |
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8|indicated. Allowable deductions attributable to items separately |
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9|allocable in subparagraphs a, b, and c of this paragraph, whether or |
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10|not such items of income were actually received, shall be allocated |
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11|on the same basis as those items: |
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12| a. Income from real and tangible personal property, such |
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13| as rents, oil and mining production or royalties, and |
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14| gains or losses from sales of such property, shall be |
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15| allocated in accordance with the situs of such |
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16| property; |
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17| b. Income from intangible personal property, such as |
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18| interest, dividends, patent or copyright royalties, |
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19| and gains or losses from sales of such property, shall |
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20| be allocated in accordance with the domiciliary situs |
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21| of the taxpayer, except that: |
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22| (1) where such property has acquired a nonunitary |
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23| business or commercial situs apart from the |
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24| domicile of the taxpayer such income shall be |
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Req. No. 993 Page 4
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1| allocated in accordance with such business or |
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2| commercial situs; interest income from |
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3| investments held to generate working capital for |
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4| a unitary business enterprise shall be included |
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5| in apportionable income; a resident trust or |
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6| resident estate shall be treated as having a |
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7| separate commercial or business situs insofar as |
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8| undistributed income is concerned, but shall not |
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9| be treated as having a separate commercial or |
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10| business situs insofar as distributed income is |
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11| concerned, |
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12| (2) for taxable years beginning after December 31, |
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13| 2003, capital or ordinary gains or losses from |
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14| the sale of an ownership interest in a publicly |
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15| traded partnership, as defined by Section 7704(b) |
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16| of the Internal Revenue Code, shall be allocated |
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17| to this state in the ratio of the original cost |
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18| of such partnership's tangible property in this |
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19| state to the original cost of such partnership's |
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20| tangible property everywhere, as determined at |
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21| the time of the sale; if more than fifty percent |
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22| (50%) of the value of the partnership's assets |
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23| consists of intangible assets, capital or |
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24| ordinary gains or losses from the sale of an |
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Req. No. 993 Page 5
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1| ownership interest in the partnership shall be |
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2| allocated to this state in accordance with the |
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3| sales factor of the partnership for its first |
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4| full tax period immediately preceding its tax |
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5| period during which the ownership interest in the |
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6| partnership was sold; the provisions of this |
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7| division shall only apply if the capital or |
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8| ordinary gains or losses from the sale of an |
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9| ownership interest in a partnership do not |
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10| constitute qualifying gain receiving capital |
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11| treatment as defined in subparagraph a of |
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12| paragraph 2 of subsection F of this section, |
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13| (3) income from such property which is required to be |
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14| allocated pursuant to the provisions of paragraph |
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15| 5 of this subsection shall be allocated as herein |
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16| provided; |
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17| c. Net income or loss from a business activity which is |
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18| not a part of business carried on within or without |
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19| the state of a unitary character shall be separately |
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20| allocated to the state in which such activity is |
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21| conducted; |
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22| d. In the case of a manufacturing or processing |
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23| enterprise the business of which in Oklahoma consists |
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24| solely of marketing its products by: |
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Req. No. 993 Page 6
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1| (1) sales having a situs without this state, shipped |
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2| directly to a point from without the state to a |
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3| purchaser within the state, commonly known as |
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4| interstate sales, |
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5| (2) sales of the product stored in public warehouses |
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6| within the state pursuant to "in transit" |
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7| tariffs, as prescribed and allowed by the |
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8| Interstate Commerce Commission, to a purchaser |
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9| within the state, or |
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10| (3) sales of the product stored in public warehouses |
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11| within the state where the shipment to such |
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12| warehouses is not covered by "in transit" |
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13| tariffs, as prescribed and allowed by the |
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14| Interstate Commerce Commission, to a purchaser |
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15| within or without the state, |
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16| the Oklahoma net income shall, at the option of the |
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17| taxpayer, be that portion of the total net income of |
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18| the taxpayer for federal income tax purposes derived |
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19| from the manufacture and/or processing and sales |
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20| everywhere as determined by the ratio of the sales |
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21| defined in this section made to the purchaser within |
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22| the state to the total sales everywhere. The term |
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23| "public warehouse" as used in this subparagraph means |
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24| |
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Req. No. 993 Page 7
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1| a licensed public warehouse, the principal business of |
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2| which is warehousing merchandise for the public; |
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3| e. In the case of insurance companies, Oklahoma taxable |
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4| income shall be taxable income of the taxpayer for |
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5| federal tax purposes, as adjusted for the adjustments |
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6| provided pursuant to the provisions of paragraphs 1 |
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7| and 2 of this subsection, apportioned as follows: |
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8| (1) except as otherwise provided by division (2) of |
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9| this subparagraph, taxable income of an insurance |
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10| company for a taxable year shall be apportioned |
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11| to this state by multiplying such income by a |
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12| fraction, the numerator of which is the direct |
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13| premiums written for insurance on property or |
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14| risks in this state, and the denominator of which |
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15| is the direct premiums written for insurance on |
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16| property or risks everywhere. For purposes of |
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17| this subsection, the term "direct premiums |
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18| written" means the total amount of direct |
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19| premiums written, assessments, and annuity |
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20| considerations as reported for the taxable year |
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21| on the annual statement filed by the company with |
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22| the Insurance Commissioner in the form approved |
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23| by the National Association of Insurance |
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Req. No. 993 Page 8
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1| Commissioners, or such other form as may be |
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2| prescribed in lieu thereof, |
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3| (2) if the principal source of premiums written by an |
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4| insurance company consists of premiums for |
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5| reinsurance accepted by it, the taxable income of |
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6| such company shall be apportioned to this state |
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7| by multiplying such income by a fraction, the |
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8| numerator of which is the sum of (a) direct |
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9| premiums written for insurance on property or |
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10| risks in this state, plus (b) premiums written |
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11| for reinsurance accepted in respect of property |
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12| or risks in this state, and the denominator of |
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13| which is the sum of (c) direct premiums written |
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14| for insurance on property or risks everywhere, |
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15| plus (d) premiums written for reinsurance |
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16| accepted in respect of property or risks |
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17| everywhere. For purposes of this paragraph, |
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18| premiums written for reinsurance accepted in |
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19| respect of property or risks in this state, |
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20| whether or not otherwise determinable, may at the |
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21| election of the company be determined on the |
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22| basis of the proportion which premiums written |
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23| for insurance accepted from companies |
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24| commercially domiciled in Oklahoma bears to |
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Req. No. 993 Page 9
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1| premiums written for reinsurance accepted from |
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2| all sources, or alternatively in the proportion |
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3| which the sum of the direct premiums written for |
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4| insurance on property or risks in this state by |
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5| each ceding company from which reinsurance is |
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6| accepted bears to the sum of the total direct |
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7| premiums written by each such ceding company for |
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8| the taxable year. |
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9| 5. The net income or loss remaining after the separate |
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10|allocation in paragraph 4 of this subsection, being that which is |
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11|derived from a unitary business enterprise, shall be apportioned to |
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12|this state on the basis of the arithmetical average of three factors |
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13|consisting of property, payroll, and sales or gross revenue |
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14|enumerated as subparagraphs a, b, and c of this paragraph. Net |
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15|income or loss as used in this paragraph includes that derived from |
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16|patent or copyright royalties, purchase discounts, and interest on |
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17|accounts receivable relating to or arising from a business activity, |
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18|the income from which is apportioned pursuant to this subsection, |
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19|including the sale or other disposition of such property and any |
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20|other property used in the unitary enterprise. Deductions used in |
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21|computing such net income or loss shall not include taxes based on |
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22|or measured by income. Provided, for corporations whose property |
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23|for purposes of the tax imposed by Section 2355 of this title has an |
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24|initial investment cost equaling or exceeding Two Hundred Million |
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Req. No. 993 Page 10
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1|Dollars ($200,000,000.00) and such investment is made on or after |
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2|July 1, 1997, or for corporations which expand their property or |
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3|facilities in this state and such expansion has an investment cost |
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4|equaling or exceeding Two Hundred Million Dollars ($200,000,000.00) |
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5|over a period not to exceed three (3) years, and such expansion is |
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6|commenced on or after January 1, 2000, the three factors shall be |
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7|apportioned with property and payroll, each comprising twenty-five |
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8|percent (25%) of the apportionment factor and sales comprising fifty |
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9|percent (50%) of the apportionment factor. The apportionment |
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10|factors shall be computed as follows: |
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11| a. The property factor is a fraction, the numerator of |
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12| which is the average value of the taxpayer's real and |
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13| tangible personal property owned or rented and used in |
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14| this state during the tax period and the denominator |
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15| of which is the average value of all the taxpayer's |
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16| real and tangible personal property everywhere owned |
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17| or rented and used during the tax period. |
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18| (1) Property, the income from which is separately |
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19| allocated in paragraph 4 of this subsection, |
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20| shall not be included in determining this |
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21| fraction. The numerator of the fraction shall |
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22| include a portion of the investment in |
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23| transportation and other equipment having no |
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24| fixed situs, such as rolling stock, buses, trucks |
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Req. No. 993 Page 11
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1| and trailers, including machinery and equipment |
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2| carried thereon, airplanes, salespersons' |
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3| automobiles, and other similar equipment, in the |
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4| proportion that miles traveled in Oklahoma by |
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5| such equipment bears to total miles traveled, |
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6| (2) Property owned by the taxpayer is valued at its |
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7| original cost. Property rented by the taxpayer |
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8| is valued at eight times the net annual rental |
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9| rate. Net annual rental rate is the annual |
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10| rental rate paid by the taxpayer, less any annual |
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11| rental rate received by the taxpayer from |
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12| subrentals, |
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13| (3) The average value of property shall be determined |
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14| by averaging the values at the beginning and |
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15| ending of the tax period, but the Oklahoma Tax |
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16| Commission may require the averaging of monthly |
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17| values during the tax period if reasonably |
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18| required to reflect properly the average value of |
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19| the taxpayer's property; |
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20| b. The payroll factor is a fraction, the numerator of |
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21| which is the total compensation for services rendered |
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22| in the state during the tax period, and the |
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23| denominator of which is the total compensation for |
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24| services rendered everywhere during the tax period. |
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Req. No. 993 Page 12
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1| "Compensation", as used in this subsection means those |
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2| paid-for services to the extent related to the unitary |
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3| business but does not include officers' salaries, |
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4| wages, and other compensation. |
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5| (1) In the case of a transportation enterprise, the |
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6| numerator of the fraction shall include a portion |
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7| of such expenditure in connection with employees |
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8| operating equipment over a fixed route, such as |
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9| railroad employees, airline pilots, or bus |
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10| drivers, in this state only a part of the time, |
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11| in the proportion that mileage traveled in |
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12| Oklahoma bears to total mileage traveled by such |
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13| employees, |
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14| (2) In any case the numerator of the fraction shall |
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15| include a portion of such expenditures in |
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16| connection with itinerant employees, such as |
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17| traveling salespersons, in this state only a part |
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18| of the time, in the proportion that time spent in |
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19| Oklahoma bears to total time spent in furtherance |
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20| of the enterprise by such employees; |
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21| c. The sales factor is a fraction, the numerator of |
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22| which is the total sales or gross revenue of the |
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23| taxpayer in this state during the tax period, and the |
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24| denominator of which is the total sales or gross |
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Req. No. 993 Page 13
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1| revenue of the taxpayer everywhere during the tax |
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2| period. "Sales", as used in this subsection does not |
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3| include sales or gross revenue which are separately |
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4| allocated in paragraph 4 of this subsection. |
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5| (1) Sales of tangible personal property have a situs |
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6| in this state if the property is delivered or |
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7| shipped to a purchaser other than the United |
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8| States government, within this state regardless |
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9| of the FOB point or other conditions of the sale; |
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10| or the property is shipped from an office, store, |
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11| warehouse, factory, or other place of storage in |
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12| this state and (a) the purchaser is the United |
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13| States government or (b) the taxpayer is not |
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14| doing business in the state of the destination of |
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15| the shipment. |
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16| (2) In the case of a railroad or interurban railway |
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17| enterprise, the numerator of the fraction shall |
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18| not be less than the allocation of revenues to |
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19| this state as shown in its annual report to the |
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20| Corporation Commission. |
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21| (3) In the case of an airline, truck, or bus |
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22| enterprise or freight car, tank car, refrigerator |
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23| car, or other railroad equipment enterprise, the |
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24| numerator of the fraction shall include a portion |
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Req. No. 993 Page 14
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1| of revenue from interstate transportation in the |
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2| proportion that interstate mileage traveled in |
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3| Oklahoma bears to total interstate mileage |
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4| traveled. |
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5| (4) In the case of an oil, gasoline or gas pipeline |
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6| enterprise, the numerator of the fraction shall |
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7| be either the total of traffic units of the |
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8| enterprise within Oklahoma or the revenue |
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9| allocated to Oklahoma based upon miles moved, at |
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10| the option of the taxpayer, and the denominator |
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11| of which shall be the total of traffic units of |
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12| the enterprise or the revenue of the enterprise |
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13| everywhere as appropriate to the numerator. A |
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14| "traffic unit" is hereby defined as the |
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15| transportation for a distance of one (1) mile of |
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16| one (1) barrel of oil, one (1) gallon of |
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17| gasoline, or one thousand (1,000) cubic feet of |
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18| natural or casinghead gas, as the case may be. |
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19| (5) In the case of a telephone or telegraph or other |
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20| communication enterprise, the numerator of the |
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21| fraction shall include that portion of the |
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22| interstate revenue as is allocated pursuant to |
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23| the accounting procedures prescribed by the |
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24| Federal Communications Commission; provided that |
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Req. No. 993 Page 15
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1| in respect to each corporation or business entity |
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2| required by the Federal Communications Commission |
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3| to keep its books and records in accordance with |
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4| a uniform system of accounts prescribed by such |
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5| Commission, the intrastate net income shall be |
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6| determined separately in the manner provided by |
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7| such uniform system of accounts and only the |
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8| interstate income shall be subject to allocation |
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9| pursuant to the provisions of this subsection. |
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10| Provided further, that the gross revenue factors |
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11| shall be those as are determined pursuant to the |
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12| accounting procedures prescribed by the Federal |
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13| Communications Commission. |
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14| In any case where the apportionment of the three factors |
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15|prescribed in this paragraph attributes to Oklahoma a portion of net |
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16|income of the enterprise out of all appropriate proportion to the |
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17|property owned and/or business transacted within this state, because |
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18|of the fact that one or more of the factors so prescribed are not |
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19|employed to any appreciable extent in furtherance of the enterprise; |
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20|or because one or more factors not so prescribed are employed to a |
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21|considerable extent in furtherance of the enterprise; or because of |
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22|other reasons, the Tax Commission is empowered to permit, after a |
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23|showing by a taxpayer that an excessive portion of net income has |
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24|been attributed to Oklahoma, or require, when in its judgment an |
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Req. No. 993 Page 16
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1|insufficient portion of net income has been attributed to Oklahoma, |
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2|the elimination, substitution, or use of additional factors, or |
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3|reduction or increase in the weight of such prescribed factors. |
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4|Provided, however, that any such variance from such prescribed |
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5|factors which has the effect of increasing the portion of net income |
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6|attributable to Oklahoma must not be inherently arbitrary, and |
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7|application of the recomputed final apportionment to the net income |
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8|of the enterprise must attribute to Oklahoma only a reasonable |
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9|portion thereof. |
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10| 6. For calendar years 1997 and 1998, the owner of a new or |
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11|expanded agricultural commodity processing facility in this state |
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12|may exclude from Oklahoma taxable income, or in the case of an |
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13|individual, the Oklahoma adjusted gross income, fifteen percent |
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14|(15%) of the investment by the owner in the new or expanded |
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15|agricultural commodity processing facility. For calendar year 1999, |
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16|and all subsequent years, the percentage, not to exceed fifteen |
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17|percent (15%), available to the owner of a new or expanded |
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18|agricultural commodity processing facility in this state claiming |
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19|the exemption shall be adjusted annually so that the total estimated |
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20|reduction in tax liability does not exceed One Million Dollars |
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21|($1,000,000.00) annually. The Tax Commission shall promulgate rules |
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22|for determining the percentage of the investment which each eligible |
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23|taxpayer may exclude. The exclusion provided by this paragraph |
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24|shall be taken in the taxable year when the investment is made. In |
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Req. No. 993 Page 17
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1|the event the total reduction in tax liability authorized by this |
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2|paragraph exceeds One Million Dollars ($1,000,000.00) in any |
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3|calendar year, the Tax Commission shall permit any excess over One |
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4|Million Dollars ($1,000,000.00) and shall factor such excess into |
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5|the percentage for subsequent years. Any amount of the exemption |
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6|permitted to be excluded pursuant to the provisions of this |
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7|paragraph but not used in any year may be carried forward as an |
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8|exemption from income pursuant to the provisions of this paragraph |
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9|for a period not exceeding six (6) years following the year in which |
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10|the investment was originally made. |
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11| For purposes of this paragraph: |
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12| a. "Agricultural commodity processing facility" means |
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13| building buildings, structures, fixtures, and |
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14| improvements used or operated primarily for the |
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15| processing or production of marketable products from |
| |
16| agricultural commodities. The term shall also mean a |
| |
17| dairy operation that requires a depreciable investment |
| |
18| of at least Two Hundred Fifty Thousand Dollars |
| |
19| ($250,000.00) and which produces milk from dairy cows. |
| |
20| The term does not include a facility that provides |
| |
21| only, and nothing more than, storage, cleaning, |
| |
22| drying, or transportation of agricultural commodities, |
| |
23| and |
| |
24| |
| |
Req. No. 993 Page 18
___________________________________________________________________________
1| b. "Facility" means each part of the facility which is |
| |
2| used in a process primarily for: |
| |
3| (1) the processing of agricultural commodities, |
| |
4| including receiving or storing agricultural |
| |
5| commodities, or the production of milk at a dairy |
| |
6| operation, |
| |
7| (2) transporting the agricultural commodities or |
| |
8| product before, during, or after the processing, |
| |
9| or |
| |
10| (3) packaging or otherwise preparing the product for |
| |
11| sale or shipment. |
| |
12| 7. Despite any provision to the contrary in paragraph 3 of this |
| |
13|subsection, for taxable years beginning after December 31, 1999, in |
| |
14|the case of a taxpayer which has a farming loss, such farming loss |
| |
15|shall be considered a net operating loss carryback in accordance |
| |
16|with and to the extent of the Internal Revenue Code, 26 U.S.C., |
| |
17|Section 172(b)(G). However, the amount of the net operating loss |
| |
18|carryback shall not exceed the lesser of: |
| |
19| a. Sixty Thousand Dollars ($60,000.00), or |
| |
20| b. the loss properly shown on Schedule F of the Internal |
| |
21| Revenue Service Form 1040 reduced by one-half (1/2) of |
| |
22| the income from all other sources other than reflected |
| |
23| on Schedule F. |
| |
24| |
| |
Req. No. 993 Page 19
___________________________________________________________________________
1| 8. In taxable years beginning after December 31, 1995, all |
| |
2|qualified wages equal to the federal income tax credit set forth in |
| |
3|26 U.S.C.A., Section 45A, shall be deducted from taxable income. |
| |
4|The deduction allowed pursuant to this paragraph shall only be |
| |
5|permitted for the tax years in which the federal tax credit pursuant |
| |
6|to 26 U.S.C.A., Section 45A, is allowed. For purposes of this |
| |
7|paragraph, "qualified wages" means those wages used to calculate the |
| |
8|federal credit pursuant to 26 U.S.C.A., Section 45A. |
| |
9| 9. In taxable years beginning after December 31, 2005, an |
| |
10|employer that is eligible for and utilizes the Safety Pays OSHA |
| |
11|Consultation Service provided by the Oklahoma Department of Labor |
| |
12|shall receive an exemption from taxable income in the amount of One |
| |
13|Thousand Dollars ($1,000.00) for the tax year that the service is |
| |
14|utilized. |
| |
15| 10. For taxable years beginning on or after January 1, 2010, |
| |
16|there shall be added to Oklahoma taxable income an amount equal to |
| |
17|the amount of deferred income not included in such taxable income |
| |
18|pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986 |
| |
19|as amended by Section 1231 of the American Recovery and Reinvestment |
| |
20|Act of 2009 (P.L. No. 111-5). There shall be subtracted from |
| |
21|Oklahoma taxable income an amount equal to the amount of deferred |
| |
22|income included in such taxable income pursuant to Section 108(i)(1) |
| |
23|of the Internal Revenue Code by Section 1231 of the American |
| |
24|Recovery and Reinvestment Act of 2009 (P.L. No. 111-5). |
| |
Req. No. 993 Page 20
___________________________________________________________________________
1| 11. For taxable years beginning on or after January 1, 2019, |
| |
2|there shall be subtracted from Oklahoma taxable income or adjusted |
| |
3|gross income any item of income or gain, and there shall be added to |
| |
4|Oklahoma taxable income or adjusted gross income any item of loss or |
| |
5|deduction that in the absence of an election pursuant to the |
| |
6|provisions of the Pass-Through Entity Tax Equity Act of 2019 would |
| |
7|be allocated to a member or to an indirect member of an electing |
| |
8|pass-through entity pursuant to Section 2351 et seq. of this title, |
| |
9|if (i) the electing pass-through entity has accounted for such item |
| |
10|in computing its Oklahoma net entity income or loss pursuant to the |
| |
11|provisions of the Pass-Through Entity Tax Equity Act of 2019, and |
| |
12|(ii) the total amount of tax attributable to any resulting Oklahoma |
| |
13|net entity income has been paid. The Oklahoma Tax Commission shall |
| |
14|promulgate rules for the reporting of such exclusion to direct and |
| |
15|indirect members of the electing pass-through entity. As used in |
| |
16|this paragraph, "electing pass-through entity", "indirect member", |
| |
17|and "member" shall be defined in the same manner as prescribed by |
| |
18|Section 2355.1P-2 of this title. Notwithstanding the application of |
| |
19|this paragraph, the adjusted tax basis of any ownership interest in |
| |
20|a pass-through entity for purposes of Section 2351 et seq. of this |
| |
21|title shall be equal to its adjusted tax basis for federal income |
| |
22|tax purposes. |
| |
23| B. 1. The taxable income of any corporation shall be further |
| |
24|adjusted to arrive at Oklahoma taxable income, except those |
| |
Req. No. 993 Page 21
___________________________________________________________________________
1|corporations electing treatment as provided in subchapter S of the |
| |
2|Internal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section |
| |
3|2365 of this title, deductions pursuant to the provisions of the |
| |
4|Accelerated Cost Recovery System as defined and allowed in the |
| |
5|Economic Recovery Tax Act of 1981, Public Law 97-34, 26 U.S.C., |
| |
6|Section 168, for depreciation of assets placed into service after |
| |
7|December 31, 1981, shall not be allowed in calculating Oklahoma |
| |
8|taxable income. Such corporations shall be allowed a deduction for |
| |
9|depreciation of assets placed into service after December 31, 1981, |
| |
10|in accordance with provisions of the Internal Revenue Code, 26 |
| |
11|U.S.C., Section 1 et seq., in effect immediately prior to the |
| |
12|enactment of the Accelerated Cost Recovery System. The Oklahoma tax |
| |
13|basis for all such assets placed into service after December 31, |
| |
14|1981, calculated in this section shall be retained and utilized for |
| |
15|all Oklahoma income tax purposes through the final disposition of |
| |
16|such assets. |
| |
17| Notwithstanding any other provisions of the Oklahoma Income Tax |
| |
18|Act, Section 2351 et seq. of this title, or of the Internal Revenue |
| |
19|Code to the contrary, this subsection shall control calculation of |
| |
20|depreciation of assets placed into service after December 31, 1981, |
| |
21|and before January 1, 1983. |
| |
22| For assets placed in service and held by a corporation in which |
| |
23|accelerated cost recovery system was previously disallowed, an |
| |
24|adjustment to taxable income is required in the first taxable year |
| |
Req. No. 993 Page 22
___________________________________________________________________________
1|beginning after December 31, 1982, to reconcile the basis of such |
| |
2|assets to the basis allowed in the Internal Revenue Code. The |
| |
3|purpose of this adjustment is to equalize the basis and allowance |
| |
4|for depreciation accounts between that reported to the Internal |
| |
5|Revenue Service and that reported to Oklahoma. |
| |
6| 2. For tax years beginning on or after January 1, 2009, and |
| |
7|ending on or before December 31, 2009, there shall be added to |
| |
8|Oklahoma taxable income any amount in excess of One Hundred |
| |
9|Seventy-five Thousand Dollars ($175,000.00) which has been deducted |
| |
10|as a small business expense under Internal Revenue Code, Section 179 |
| |
11|as provided in the American Recovery and Reinvestment Act of 2009. |
| |
12| C. 1. For taxable years beginning after December 31, 1987, the |
| |
13|taxable income of any corporation shall be further adjusted to |
| |
14|arrive at Oklahoma taxable income for transfers of technology to |
| |
15|qualified small businesses located in Oklahoma. Such transferor |
| |
16|corporation shall be allowed an exemption from taxable income of an |
| |
17|amount equal to the amount of royalty payment received as a result |
| |
18|of such transfer; provided, however, such amount shall not exceed |
| |
19|ten percent (10%) of the amount of gross proceeds received by such |
| |
20|transferor corporation as a result of the technology transfer. Such |
| |
21|exemption shall be allowed for a period not to exceed ten (10) years |
| |
22|from the date of receipt of the first royalty payment accruing from |
| |
23|such transfer. No exemption may be claimed for transfers of |
| |
24| |
| |
Req. No. 993 Page 23
___________________________________________________________________________
1|technology to qualified small businesses made prior to January 1, |
| |
2|1988. |
| |
3| 2. For purposes of this subsection: |
| |
4| a. "Qualified small business" means an entity, whether |
| |
5| organized as a corporation, partnership, or |
| |
6| proprietorship, organized for profit with its |
| |
7| principal place of business located within this state |
| |
8| and which meets the following criteria: |
| |
9| (1) Capitalization capitalization of not more than |
| |
10| Two Hundred Fifty Thousand Dollars ($250,000.00), |
| |
11| (2) Having having at least fifty percent (50%) of its |
| |
12| employees and assets located in Oklahoma at the |
| |
13| time of the transfer, and |
| |
14| (3) Not not a subsidiary or affiliate of the |
| |
15| transferor corporation; |
| |
16| b. "Technology" means a proprietary process, formula, |
| |
17| pattern, device, or compilation of scientific or |
| |
18| technical information which is not in the public |
| |
19| domain; |
| |
20| c. "Transferor corporation" means a corporation which is |
| |
21| the exclusive and undisputed owner of the technology |
| |
22| at the time the transfer is made; and |
| |
23| |
| |
24| |
| |
Req. No. 993 Page 24
___________________________________________________________________________
1| d. "Gross proceeds" means the total amount of |
| |
2| consideration for the transfer of technology, whether |
| |
3| the consideration is in money or otherwise. |
| |
4| D. 1. For taxable years beginning after December 31, 2005, the |
| |
5|taxable income of any corporation, estate, or trust, shall be |
| |
6|further adjusted for qualifying gains receiving capital treatment. |
| |
7|Such corporations, estates, or trusts shall be allowed a deduction |
| |
8|from Oklahoma taxable income for the amount of qualifying gains |
| |
9|receiving capital treatment earned by the corporation, estate, or |
| |
10|trust during the taxable year and included in the federal taxable |
| |
11|income of such corporation, estate, or trust. |
| |
12| 2. As used in this subsection: |
| |
13| a. "qualifying gains receiving capital treatment" means |
| |
14| the amount of net capital gains, as defined in Section |
| |
15| 1222(11) of the Internal Revenue Code, included in the |
| |
16| federal income tax return of the corporation, estate, |
| |
17| or trust that result from: |
| |
18| (1) the sale of real property or tangible personal |
| |
19| property located within Oklahoma that has been |
| |
20| directly or indirectly owned by the corporation, |
| |
21| estate, or trust for a holding period of at least |
| |
22| five (5) years prior to the date of the |
| |
23| transaction from which such net capital gains |
| |
24| arise, |
| |
Req. No. 993 Page 25
___________________________________________________________________________
1| (2) the sale of stock or on the sale of an ownership |
| |
2| interest in an Oklahoma company, limited |
| |
3| liability company, or partnership where such |
| |
4| stock or ownership interest has been directly or |
| |
5| indirectly owned by the corporation, estate, or |
| |
6| trust for a holding period of at least three (3) |
| |
7| years prior to the date of the transaction from |
| |
8| which the net capital gains arise, or |
| |
9| (3) the sale of real property, tangible personal |
| |
10| property, or intangible personal property located |
| |
11| within Oklahoma as part of the sale of all or |
| |
12| substantially all of the assets of an Oklahoma |
| |
13| company, limited liability company, or |
| |
14| partnership where such property has been directly |
| |
15| or indirectly owned by such entity owned by the |
| |
16| owners of such entity, and used in or derived |
| |
17| from such entity for a period of at least three |
| |
18| (3) years prior to the date of the transaction |
| |
19| from which the net capital gains arise, |
| |
20| b. "holding period" means an uninterrupted period of |
| |
21| time. The holding period shall include any additional |
| |
22| period when the property was held by another |
| |
23| individual or entity, if such additional period is |
| |
24| |
| |
Req. No. 993 Page 26
___________________________________________________________________________
1| included in the taxpayer's holding period for the |
| |
2| asset pursuant to the Internal Revenue Code, |
| |
3| c. "Oklahoma company", "limited liability company", or |
| |
4| "partnership" means an entity whose primary |
| |
5| headquarters have been located in Oklahoma for at |
| |
6| least three (3) uninterrupted years prior to the date |
| |
7| of the transaction from which the net capital gains |
| |
8| arise, |
| |
9| d. "direct" means the taxpayer directly owns the asset, |
| |
10| and |
| |
11| e. "indirect" means the taxpayer owns an interest in a |
| |
12| pass-through entity (or chain of pass-through |
| |
13| entities) that sells the asset that gives rise to the |
| |
14| qualifying gains receiving capital treatment. |
| |
15| (1) With respect to sales of real property or |
| |
16| tangible personal property located within |
| |
17| Oklahoma, the deduction described in this |
| |
18| subsection shall not apply unless the |
| |
19| pass-through entity that makes the sale has held |
| |
20| the property for not less than five (5) |
| |
21| uninterrupted years prior to the date of the |
| |
22| transaction that created the capital gain, and |
| |
23| each pass-through entity included in the chain of |
| |
24| ownership has been a member, partner, or |
| |
Req. No. 993 Page 27
___________________________________________________________________________
1| shareholder of the pass-through entity in the |
| |
2| tier immediately below it for an uninterrupted |
| |
3| period of not less than five (5) years. |
| |
4| (2) With respect to sales of stock or ownership |
| |
5| interest in or sales of all or substantially all |
| |
6| of the assets of an Oklahoma company, limited |
| |
7| liability company, or partnership, the deduction |
| |
8| described in this subsection shall not apply |
| |
9| unless the pass-through entity that makes the |
| |
10| sale has held the stock or ownership interest or |
| |
11| the assets for not less than three (3) |
| |
12| uninterrupted years prior to the date of the |
| |
13| transaction that created the capital gain, and |
| |
14| each pass-through entity included in the chain of |
| |
15| ownership has been a member, partner or |
| |
16| shareholder of the pass-through entity in the |
| |
17| tier immediately below it for an uninterrupted |
| |
18| period of not less than three (3) years. |
| |
19| E. The Oklahoma adjusted gross income of any individual |
| |
20|taxpayer shall be further adjusted as follows to arrive at Oklahoma |
| |
21|taxable income: |
| |
22| 1. a. In the case of individuals, there shall be added or |
| |
23| deducted, as the case may be, the difference necessary |
| |
24| to allow personal exemptions of One Thousand Dollars |
| |
Req. No. 993 Page 28
___________________________________________________________________________
1| ($1,000.00) in lieu of the personal exemptions allowed |
| |
2| by the Internal Revenue Code. |
| |
3| b. There shall be allowed an additional exemption of One |
| |
4| Thousand Dollars ($1,000.00) for each taxpayer or |
| |
5| spouse who is blind at the close of the tax year. For |
| |
6| purposes of this subparagraph, an individual is blind |
| |
7| only if the central visual acuity of the individual |
| |
8| does not exceed 20/200 in the better eye with |
| |
9| correcting lenses, or if the visual acuity of the |
| |
10| individual is greater than 20/200, but is accompanied |
| |
11| by a limitation in the fields of vision such that the |
| |
12| widest diameter of the visual field subtends an angle |
| |
13| no greater than twenty (20) degrees. |
| |
14| c. There shall be allowed an additional exemption of One |
| |
15| Thousand Dollars ($1,000.00) for each taxpayer or |
| |
16| spouse who is sixty-five (65) years of age or older at |
| |
17| the close of the tax year based upon the filing status |
| |
18| and federal adjusted gross income of the taxpayer. |
| |
19| Taxpayers with the following filing status may claim |
| |
20| this exemption if the federal adjusted gross income |
| |
21| does not exceed: |
| |
22| (1) Twenty-five Thousand Dollars ($25,000.00) if |
| |
23| married and filing jointly;, |
| |
24| |
| |
Req. No. 993 Page 29
___________________________________________________________________________
1| (2) Twelve Thousand Five Hundred Dollars ($12,500.00) |
| |
2| if married and filing separately;, |
| |
3| (3) Fifteen Thousand Dollars ($15,000.00) if single;, |
| |
4| and |
| |
5| (4) Nineteen Thousand Dollars ($19,000.00) if a |
| |
6| qualifying head of household. |
| |
7| Provided, for taxable years beginning after December |
| |
8| 31, 1999, amounts included in the calculation of |
| |
9| federal adjusted gross income pursuant to the |
| |
10| conversion of a traditional individual retirement |
| |
11| account to a Roth individual retirement account shall |
| |
12| be excluded from federal adjusted gross income for |
| |
13| purposes of the income thresholds provided in this |
| |
14| subparagraph. |
| |
15| 2. a. For taxable years beginning on or before December 31, |
| |
16| 2005, in the case of individuals who use the standard |
| |
17| deduction in determining taxable income, there shall |
| |
18| be added or deducted, as the case may be, the |
| |
19| difference necessary to allow a standard deduction in |
| |
20| lieu of the standard deduction allowed by the Internal |
| |
21| Revenue Code, in an amount equal to the larger of |
| |
22| fifteen percent (15%) of the Oklahoma adjusted gross |
| |
23| income or One Thousand Dollars ($1,000.00), but not to |
| |
24| exceed Two Thousand Dollars ($2,000.00), except that |
| |
Req. No. 993 Page 30
___________________________________________________________________________
1| in the case of a married individual filing a separate |
| |
2| return such deduction shall be the larger of fifteen |
| |
3| percent (15%) of such Oklahoma adjusted gross income |
| |
4| or Five Hundred Dollars ($500.00), but not to exceed |
| |
5| the maximum amount of One Thousand Dollars |
| |
6| ($1,000.00). |
| |
7| b. For taxable years beginning on or after January 1, |
| |
8| 2006, and before January 1, 2007, in the case of |
| |
9| individuals who use the standard deduction in |
| |
10| determining taxable income, there shall be added or |
| |
11| deducted, as the case may be, the difference necessary |
| |
12| to allow a standard deduction in lieu of the standard |
| |
13| deduction allowed by the Internal Revenue Code, in an |
| |
14| amount equal to: |
| |
15| (1) Three Thousand Dollars ($3,000.00), if the |
| |
16| filing status is married filing joint, head of |
| |
17| household, or qualifying widow;, or |
| |
18| (2) Two Thousand Dollars ($2,000.00), if the filing |
| |
19| status is single or married filing separate. |
| |
20| c. For the taxable year beginning on January 1, 2007, |
| |
21| and ending December 31, 2007, in the case of |
| |
22| individuals who use the standard deduction in |
| |
23| determining taxable income, there shall be added or |
| |
24| deducted, as the case may be, the difference necessary |
| |
Req. No. 993 Page 31
___________________________________________________________________________
1| to allow a standard deduction in lieu of the standard |
| |
2| deduction allowed by the Internal Revenue Code, in an |
| |
3| amount equal to: |
| |
4| (1) Five Thousand Five Hundred Dollars ($5,500.00), |
| |
5| if the filing status is married filing joint or |
| |
6| qualifying widow; or, |
| |
7| (2) Four Thousand One Hundred Twenty-five Dollars |
| |
8| ($4,125.00) for a head of household;, or |
| |
9| (3) Two Thousand Seven Hundred Fifty Dollars |
| |
10| ($2,750.00), if the filing status is single or |
| |
11| married filing separate. |
| |
12| d. For the taxable year beginning on January 1, 2008, |
| |
13| and ending December 31, 2008, in the case of |
| |
14| individuals who use the standard deduction in |
| |
15| determining taxable income, there shall be added or |
| |
16| deducted, as the case may be, the difference necessary |
| |
17| to allow a standard deduction in lieu of the standard |
| |
18| deduction allowed by the Internal Revenue Code, in an |
| |
19| amount equal to: |
| |
20| (1) Six Thousand Five Hundred Dollars ($6,500.00), |
| |
21| if the filing status is married filing joint or |
| |
22| qualifying widow, or |
| |
23| (2) Four Thousand Eight Hundred Seventy-five Dollars |
| |
24| ($4,875.00) for a head of household, or |
| |
Req. No. 993 Page 32
___________________________________________________________________________
1| (3) Three Thousand Two Hundred Fifty Dollars |
| |
2| ($3,250.00), if the filing status is single or |
| |
3| married filing separate. |
| |
4| e. For the taxable year beginning on January 1, 2009, |
| |
5| and ending December 31, 2009, in the case of |
| |
6| individuals who use the standard deduction in |
| |
7| determining taxable income, there shall be added or |
| |
8| deducted, as the case may be, the difference necessary |
| |
9| to allow a standard deduction in lieu of the standard |
| |
10| deduction allowed by the Internal Revenue Code, in an |
| |
11| amount equal to: |
| |
12| (1) Eight Thousand Five Hundred Dollars ($8,500.00), |
| |
13| if the filing status is married filing joint or |
| |
14| qualifying widow, or |
| |
15| (2) Six Thousand Three Hundred Seventy-five Dollars |
| |
16| ($6,375.00) for a head of household, or |
| |
17| (3) Four Thousand Two Hundred Fifty Dollars |
| |
18| ($4,250.00), if the filing status is single or |
| |
19| married filing separate. |
| |
20| Oklahoma adjusted gross income shall be increased by |
| |
21| any amounts paid for motor vehicle excise taxes which |
| |
22| were deducted as allowed by the Internal Revenue Code. |
| |
23| f. For taxable years beginning on or after January 1, |
| |
24| 2010, and ending on December 31, 2016, in the case of |
| |
Req. No. 993 Page 33
___________________________________________________________________________
1| individuals who use the standard deduction in |
| |
2| determining taxable income, there shall be added or |
| |
3| deducted, as the case may be, the difference necessary |
| |
4| to allow a standard deduction equal to the standard |
| |
5| deduction allowed by the Internal Revenue Code, based |
| |
6| upon the amount and filing status prescribed by such |
| |
7| Code for purposes of filing federal individual income |
| |
8| tax returns. |
| |
9| g. For taxable years beginning on or after January 1, |
| |
10| 2017, in the case of individuals who use the standard |
| |
11| deduction in determining taxable income, there shall |
| |
12| be added or deducted, as the case may be, the |
| |
13| difference necessary to allow a standard deduction in |
| |
14| lieu of the standard deduction allowed by the Internal |
| |
15| Revenue Code, as follows: |
| |
16| (1) Six Thousand Three Hundred Fifty Dollars |
| |
17| ($6,350.00) for single or married filing |
| |
18| separately, |
| |
19| (2) Twelve Thousand Seven Hundred Dollars |
| |
20| ($12,700.00) for married filing jointly or |
| |
21| qualifying widower with dependent child, and |
| |
22| (3) Nine Thousand Three Hundred Fifty Dollars |
| |
23| ($9,350.00) for head of household. |
| |
24| |
| |
Req. No. 993 Page 34
___________________________________________________________________________
1| 3. a. In the case of resident and part-year resident |
| |
2| individuals having adjusted gross income from sources |
| |
3| both within and without the state, the itemized or |
| |
4| standard deductions and personal exemptions shall be |
| |
5| reduced to an amount which is the same portion of the |
| |
6| total thereof as Oklahoma adjusted gross income is of |
| |
7| adjusted gross income. To the extent itemized |
| |
8| deductions include allowable moving expense, proration |
| |
9| of moving expense shall not be required or permitted |
| |
10| but allowable moving expense shall be fully deductible |
| |
11| for those taxpayers moving within or into Oklahoma and |
| |
12| no part of moving expense shall be deductible for |
| |
13| those taxpayers moving without or out of Oklahoma. |
| |
14| All other itemized or standard deductions and personal |
| |
15| exemptions shall be subject to proration as provided |
| |
16| by law. |
| |
17| b. For taxable years beginning on or after January 1, |
| |
18| 2018, the net amount of itemized deductions allowable |
| |
19| on an Oklahoma income tax return, subject to the |
| |
20| provisions of paragraph 24 of this subsection, shall |
| |
21| not exceed Seventeen Thousand Dollars ($17,000.00). |
| |
22| For purposes of this subparagraph, charitable |
| |
23| contributions and medical expenses deductible for |
| |
24| federal income tax purposes shall be excluded from the |
| |
Req. No. 993 Page 35
___________________________________________________________________________
1| amount of Seventeen Thousand Dollars ($17,000.00) as |
| |
2| specified by this subparagraph. |
| |
3| 4. A resident individual with a physical disability |
| |
4|constituting a substantial handicap to employment may deduct from |
| |
5|Oklahoma adjusted gross income such expenditures to modify a motor |
| |
6|vehicle, home, or workplace as are necessary to compensate for his |
| |
7|or her handicap. A veteran certified by the Department of Veterans |
| |
8|Affairs of the federal government as having a service-connected |
| |
9|disability shall be conclusively presumed to be an individual with a |
| |
10|physical disability constituting a substantial handicap to |
| |
11|employment. The Tax Commission shall promulgate rules containing a |
| |
12|list of combinations of common disabilities and modifications which |
| |
13|may be presumed to qualify for this deduction. The Tax Commission |
| |
14|shall prescribe necessary requirements for verification. |
| |
15| 5. a. Before July 1, 2010, the first One Thousand Five |
| |
16| Hundred Dollars ($1,500.00) received by any person |
| |
17| from the United States as salary or compensation in |
| |
18| any form, other than retirement benefits, as a member |
| |
19| of any component of the Armed Forces of the United |
| |
20| States shall be deducted from taxable income. |
| |
21| b. On or after July 1, 2010, one hundred percent (100%) |
| |
22| of the income received by any person from the United |
| |
23| States as salary or compensation in any form, other |
| |
24| than retirement benefits, as a member of any component |
| |
Req. No. 993 Page 36
___________________________________________________________________________
1| of the Armed Forces of the United States shall be |
| |
2| deducted from taxable income. |
| |
3| c. Whenever the filing of a timely income tax return by a |
| |
4| member of the Armed Forces of the United States is |
| |
5| made impracticable or impossible of accomplishment by |
| |
6| reason of: |
| |
7| (1) absence from the United States, which term |
| |
8| includes only the states and the District of |
| |
9| Columbia;, |
| |
10| (2) absence from the State of Oklahoma this state |
| |
11| while on active duty;, or |
| |
12| (3) confinement in a hospital within the United |
| |
13| States for treatment of wounds, injuries, or |
| |
14| disease, |
| |
15| the time for filing a return and paying an income tax |
| |
16| shall be and is hereby extended without incurring |
| |
17| liability for interest or penalties, to the fifteenth |
| |
18| day of the third month following the month in which: |
| |
19| (a) Such such individual shall return to the |
| |
20| United States if the extension is granted |
| |
21| pursuant to subparagraph a of this |
| |
22| paragraph, return to the State of Oklahoma |
| |
23| this state if the extension is granted |
| |
24| pursuant to subparagraph b of this paragraph |
| |
Req. No. 993 Page 37
___________________________________________________________________________
1| or be discharged from such hospital if the |
| |
2| extension is granted pursuant to |
| |
3| subparagraph c of this paragraph;, or |
| |
4| (b) An an executor, administrator, or |
| |
5| conservator of the estate of the taxpayer is |
| |
6| appointed, whichever event occurs the |
| |
7| earliest. |
| |
8| Provided, that the Tax Commission may, in its discretion, grant |
| |
9|any member of the Armed Forces of the United States an extension of |
| |
10|time for filing of income tax returns and payment of income tax |
| |
11|without incurring liabilities for interest or penalties. Such |
| |
12|extension may be granted only when in the judgment of the Tax |
| |
13|Commission a good cause exists therefor and may be for a period in |
| |
14|excess of six (6) months. A record of every such extension granted, |
| |
15|and the reason therefor, shall be kept. |
| |
16| 6. Before July 1, 2010, the salary or any other form of |
| |
17|compensation, received from the United States by a member of any |
| |
18|component of the Armed Forces of the United States, shall be |
| |
19|deducted from taxable income during the time in which the person is |
| |
20|detained by the enemy in a conflict, is a prisoner of war or is |
| |
21|missing in action and not deceased; provided, after July 1, 2010, |
| |
22|all such salary or compensation shall be subject to the deduction as |
| |
23|provided pursuant to paragraph 5 of this subsection. |
| |
24| |
| |
Req. No. 993 Page 38
___________________________________________________________________________
1| 7. a. An individual taxpayer, whether resident or |
| |
2| nonresident, may deduct an amount equal to the federal |
| |
3| income taxes paid by the taxpayer during the taxable |
| |
4| year. |
| |
5| b. Federal taxes as described in subparagraph a of this |
| |
6| paragraph shall be deductible by any individual |
| |
7| taxpayer, whether resident or nonresident, only to the |
| |
8| extent they relate to income subject to taxation |
| |
9| pursuant to the provisions of the Oklahoma Income Tax |
| |
10| Act. The maximum amount allowable in the preceding |
| |
11| paragraph shall be prorated on the ratio of the |
| |
12| Oklahoma adjusted gross income to federal adjusted |
| |
13| gross income. |
| |
14| c. For the purpose of this paragraph, "federal income |
| |
15| taxes paid" shall mean federal income taxes, surtaxes |
| |
16| imposed on incomes or excess profits taxes, as though |
| |
17| the taxpayer was on the accrual basis. In determining |
| |
18| the amount of deduction for federal income taxes for |
| |
19| tax year 2001, the amount of the deduction shall not |
| |
20| be adjusted by the amount of any accelerated ten |
| |
21| percent (10%) tax rate bracket credit or advanced |
| |
22| refund of the credit received during the tax year |
| |
23| provided pursuant to the federal Economic Growth and |
| |
24| Tax Relief Reconciliation Act of 2001, P.L. No. |
| |
Req. No. 993 Page 39
___________________________________________________________________________
1| 107-16, and the advanced refund of such credit shall |
| |
2| not be subject to taxation. |
| |
3| d. The provisions of this paragraph shall apply to all |
| |
4| taxable years ending after December 31, 1978, and |
| |
5| beginning before January 1, 2006. |
| |
6| 8. Retirement benefits not to exceed Five Thousand Five Hundred |
| |
7|Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five |
| |
8|Hundred Dollars ($7,500.00) for the 2005 tax year, and Ten Thousand |
| |
9|Dollars ($10,000.00) for the 2006 tax year and all subsequent tax |
| |
10|years tax years 2006 through 2023, and all retirement benefits for |
| |
11|tax year 2024 and subsequent tax years, which are received by an |
| |
12|individual from the civil service of the United States, the Oklahoma |
| |
13|Public Employees Retirement System, the Teachers' Retirement System |
| |
14|of Oklahoma, the Oklahoma Law Enforcement Retirement System, the |
| |
15|Oklahoma Firefighters Pension and Retirement System, the Oklahoma |
| |
16|Police Pension and Retirement System, the employee retirement |
| |
17|systems created by counties pursuant to Section 951 et seq. of Title |
| |
18|19 of the Oklahoma Statutes, the Uniform Retirement System for |
| |
19|Justices and Judges, the Oklahoma Wildlife Conservation Department |
| |
20|Retirement Fund, the Oklahoma Employment Security Commission |
| |
21|Retirement Plan, or the employee retirement systems created by |
| |
22|municipalities pursuant to Section 48-101 et seq. of Title 11 of the |
| |
23|Oklahoma Statutes shall be exempt from taxable income. |
| |
24| |
| |
Req. No. 993 Page 40
___________________________________________________________________________
1| 9. In taxable years beginning after December 3l, 1984, Social |
| |
2|Security benefits received by an individual shall be exempt from |
| |
3|taxable income, to the extent such benefits are included in the |
| |
4|federal adjusted gross income pursuant to the provisions of Section |
| |
5|86 of the Internal Revenue Code, 26 U.S.C., Section 86. |
| |
6| 10. For taxable years beginning after December 31, 1994, |
| |
7|lump-sum distributions from employer plans of deferred compensation, |
| |
8|which are not qualified plans within the meaning of Section 401(a) |
| |
9|of the Internal Revenue Code, 26 U.S.C., Section 401(a), and which |
| |
10|are deposited in and accounted for within a separate bank account or |
| |
11|brokerage account in a financial institution within this state, |
| |
12|shall be excluded from taxable income in the same manner as a |
| |
13|qualifying rollover contribution to an individual retirement account |
| |
14|within the meaning of Section 408 of the Internal Revenue Code, 26 |
| |
15|U.S.C., Section 408. Amounts withdrawn from such bank or brokerage |
| |
16|account, including any earnings thereon, shall be included in |
| |
17|taxable income for tax years 2023 and before and exempt from taxable |
| |
18|income for tax year 2024 and subsequent tax years when withdrawn in |
| |
19|the same manner as withdrawals from individual retirement accounts |
| |
20|within the meaning of Section 408 of the Internal Revenue Code. |
| |
21| 11. In taxable years beginning after December 31, 1995, |
| |
22|contributions made to and interest received from a medical savings |
| |
23|account established pursuant to Sections 2621 through 2623 of Title |
| |
24|63 of the Oklahoma Statutes shall be exempt from taxable income. |
| |
Req. No. 993 Page 41
___________________________________________________________________________
1| 12. For taxable years beginning after December 31, 1996, the |
| |
2|Oklahoma adjusted gross income of any individual taxpayer who is a |
| |
3|swine or poultry producer may be further adjusted for the deduction |
| |
4|for depreciation allowed for new construction or expansion costs |
| |
5|which may be computed using the same depreciation method elected for |
| |
6|federal income tax purposes except that the useful life shall be |
| |
7|seven (7) years for purposes of this paragraph. If depreciation is |
| |
8|allowed as a deduction in determining the adjusted gross income of |
| |
9|an individual, any depreciation calculated and claimed pursuant to |
| |
10|this section shall in no event be a duplication of any depreciation |
| |
11|allowed or permitted on the federal income tax return of the |
| |
12|individual. |
| |
13| 13. a. In taxable years beginning after December 31, 2002, |
| |
14| nonrecurring adoption expenses paid by a resident |
| |
15| individual taxpayer in connection with: |
| |
16| (1) the adoption of a minor, or |
| |
17| (2) a proposed adoption of a minor which did not |
| |
18| result in a decreed adoption, |
| |
19| may be deducted from the Oklahoma adjusted gross |
| |
20| income. |
| |
21| b. The deductions for adoptions and proposed adoptions |
| |
22| authorized by this paragraph shall not exceed Twenty |
| |
23| Thousand Dollars ($20,000.00) per calendar year. |
| |
24| |
| |
Req. No. 993 Page 42
___________________________________________________________________________
1| c. The Tax Commission shall promulgate rules to |
| |
2| implement the provisions of this paragraph which shall |
| |
3| contain a specific list of nonrecurring adoption |
| |
4| expenses which may be presumed to qualify for the |
| |
5| deduction. The Tax Commission shall prescribe |
| |
6| necessary requirements for verification. |
| |
7| d. "Nonrecurring adoption expenses" means adoption fees, |
| |
8| court costs, medical expenses, attorney fees, and |
| |
9| expenses which are directly related to the legal |
| |
10| process of adoption of a child including, but not |
| |
11| limited to, costs relating to the adoption study, |
| |
12| health and psychological examinations, transportation, |
| |
13| and reasonable costs of lodging and food for the child |
| |
14| or adoptive parents which are incurred to complete the |
| |
15| adoption process and are not reimbursed by other |
| |
16| sources. The term "nonrecurring adoption expenses" |
| |
17| shall not include attorney fees incurred for the |
| |
18| purpose of litigating a contested adoption, from and |
| |
19| after the point of the initiation of the contest, |
| |
20| costs associated with physical remodeling, renovation |
| |
21| and alteration of the adoptive parents' home or |
| |
22| property, except for a special needs child as |
| |
23| authorized by the court. |
| |
24| |
| |
Req. No. 993 Page 43
___________________________________________________________________________
1| 14. a. In taxable years beginning before January 1, 2005, |
| |
2| retirement benefits not to exceed the amounts |
| |
3| specified in this paragraph, which are received by an |
| |
4| individual sixty-five (65) years of age or older and |
| |
5| whose Oklahoma adjusted gross income is Twenty-five |
| |
6| Thousand Dollars ($25,000.00) or less if the filing |
| |
7| status is single, head of household, or married filing |
| |
8| separate, or Fifty Thousand Dollars ($50,000.00) or |
| |
9| less if the filing status is married filing joint or |
| |
10| qualifying widow, shall be exempt from taxable income. |
| |
11| In taxable years beginning after December 31, 2004, |
| |
12| retirement benefits not to exceed the amounts |
| |
13| specified in this paragraph, which are received by an |
| |
14| individual whose Oklahoma adjusted gross income is |
| |
15| less than the qualifying amount specified in this |
| |
16| paragraph, shall be exempt from taxable income. |
| |
17| b. For purposes of this paragraph, the qualifying amount |
| |
18| shall be as follows: |
| |
19| (1) in taxable years beginning after December 31, |
| |
20| 2004, and prior to January 1, 2007, the |
| |
21| qualifying amount shall be Thirty-seven Thousand |
| |
22| Five Hundred Dollars ($37,500.00) or less if the |
| |
23| filing status is single, head of household, or |
| |
24| married filing separate, or Seventy-five Thousand |
| |
Req. No. 993 Page 44
___________________________________________________________________________
1| Dollars ($75,000.00) or less if the filing status |
| |
2| is married filing jointly or qualifying widow, |
| |
3| (2) in the taxable year beginning January 1, 2007, |
| |
4| the qualifying amount shall be Fifty Thousand |
| |
5| Dollars ($50,000.00) or less if the filing status |
| |
6| is single, head of household, or married filing |
| |
7| separate, or One Hundred Thousand Dollars |
| |
8| ($100,000.00) or less if the filing status is |
| |
9| married filing jointly or qualifying widow, |
| |
10| (3) in the taxable year beginning January 1, 2008, |
| |
11| the qualifying amount shall be Sixty-two Thousand |
| |
12| Five Hundred Dollars ($62,500.00) or less if the |
| |
13| filing status is single, head of household, or |
| |
14| married filing separate, or One Hundred |
| |
15| Twenty-five Thousand Dollars ($125,000.00) or |
| |
16| less if the filing status is married filing |
| |
17| jointly or qualifying widow, |
| |
18| (4) in the taxable year beginning January 1, 2009, |
| |
19| the qualifying amount shall be One Hundred |
| |
20| Thousand Dollars ($100,000.00) or less if the |
| |
21| filing status is single, head of household, or |
| |
22| married filing separate, or Two Hundred Thousand |
| |
23| Dollars ($200,000.00) or less if the filing |
| |
24| |
| |
Req. No. 993 Page 45
___________________________________________________________________________
1| status is married filing jointly or qualifying |
| |
2| widow, and |
| |
3| (5) in the taxable year beginning January 1, 2010, |
| |
4| and subsequent taxable years, there shall be no |
| |
5| limitation upon the qualifying amount. |
| |
6| c. For purposes of this paragraph, "retirement benefits" |
| |
7| means the total distributions or withdrawals from the |
| |
8| following: |
| |
9| (1) an employee pension benefit plan which satisfies |
| |
10| the requirements of Section 401 of the Internal |
| |
11| Revenue Code, 26 U.S.C., Section 401, |
| |
12| (2) an eligible deferred compensation plan that |
| |
13| satisfies the requirements of Section 457 of the |
| |
14| Internal Revenue Code, 26 U.S.C., Section 457, |
| |
15| (3) an individual retirement account, annuity or |
| |
16| trust, or simplified employee pension that |
| |
17| satisfies the requirements of Section 408 of the |
| |
18| Internal Revenue Code, 26 U.S.C., Section 408, |
| |
19| (4) an employee annuity subject to the provisions of |
| |
20| Section 403(a) or (b) of the Internal Revenue |
| |
21| Code, 26 U.S.C., Section 403(a) or (b), |
| |
22| (5) United States Retirement Bonds which satisfy the |
| |
23| requirements of Section 86 of the Internal |
| |
24| Revenue Code, 26 U.S.C., Section 86, or |
| |
Req. No. 993 Page 46
___________________________________________________________________________
1| (6) lump-sum distributions from a retirement plan |
| |
2| which satisfies the requirements of Section |
| |
3| 402(e) of the Internal Revenue Code, 26 U.S.C., |
| |
4| Section 402(e). |
| |
5| d. The amount of the exemption provided by this paragraph |
| |
6| shall be limited to Five Thousand Five Hundred Dollars |
| |
7| ($5,500.00) for the 2004 tax year, Seven Thousand Five |
| |
8| Hundred Dollars ($7,500.00) for the 2005 tax year, and |
| |
9| Ten Thousand Dollars ($10,000.00) for the tax year |
| |
10| 2006 and for all subsequent tax years 2006 through |
| |
11| 2023, and no limitation for tax year 2024 and |
| |
12| subsequent tax years. Any individual who claims the |
| |
13| exemption provided for in paragraph 8 of this |
| |
14| subsection shall not be permitted to claim a combined |
| |
15| total exemption pursuant to this paragraph and |
| |
16| paragraph 8 of this subsection in an amount exceeding |
| |
17| Five Thousand Five Hundred Dollars ($5,500.00) for the |
| |
18| 2004 tax year, Seven Thousand Five Hundred Dollars |
| |
19| ($7,500.00) for the 2005 tax year and Ten Thousand |
| |
20| Dollars ($10,000.00) for the 2006 tax year and all |
| |
21| subsequent tax years 2006 through 2023. |
| |
22| 15. In taxable years beginning after December 31, 1999, for an |
| |
23|individual engaged in production agriculture who has filed a |
| |
24|Schedule F form with the taxpayer's federal income tax return for |
| |
Req. No. 993 Page 47
___________________________________________________________________________
1|such taxable year, there shall be excluded from taxable income any |
| |
2|amount which was included as federal taxable income or federal |
| |
3|adjusted gross income and which consists of the discharge of an |
| |
4|obligation by a creditor of the taxpayer incurred to finance the |
| |
5|production of agricultural products. |
| |
6| 16. In taxable years beginning December 31, 2000, an amount |
| |
7|equal to one hundred percent (100%) of the amount of any scholarship |
| |
8|or stipend received from participation in the Oklahoma Police Corps |
| |
9|Program, as established in Section 2-140.3 of Title 47 of the |
| |
10|Oklahoma Statutes shall be exempt from taxable income. |
| |
11| 17. a. In taxable years beginning after December 31, 2001, |
| |
12| and before January 1, 2005, there shall be allowed a |
| |
13| deduction in the amount of contributions to accounts |
| |
14| established pursuant to the Oklahoma College Savings |
| |
15| Plan Act. The deduction shall equal the amount of |
| |
16| contributions to accounts, but in no event shall the |
| |
17| deduction for each contributor exceed Two Thousand |
| |
18| Five Hundred Dollars ($2,500.00) each taxable year for |
| |
19| each account. |
| |
20| b. In taxable years beginning after December 31, 2004, |
| |
21| each taxpayer shall be allowed a deduction for |
| |
22| contributions to accounts established pursuant to the |
| |
23| Oklahoma College Savings Plan Act. The maximum annual |
| |
24| deduction shall equal the amount of contributions to |
| |
Req. No. 993 Page 48
___________________________________________________________________________
1| all such accounts plus any contributions to such |
| |
2| accounts by the taxpayer for prior taxable years after |
| |
3| December 31, 2004, which were not deducted, but in no |
| |
4| event shall the deduction for each tax year exceed Ten |
| |
5| Thousand Dollars ($10,000.00) for each individual |
| |
6| taxpayer or Twenty Thousand Dollars ($20,000.00) for |
| |
7| taxpayers filing a joint return. Any amount of a |
| |
8| contribution that is not deducted by the taxpayer in |
| |
9| the year for which the contribution is made may be |
| |
10| carried forward as a deduction from income for the |
| |
11| succeeding five (5) years. For taxable years |
| |
12| beginning after December 31, 2005, deductions may be |
| |
13| taken for contributions and rollovers made during a |
| |
14| taxable year and up to April 15 of the succeeding |
| |
15| year, or the due date of a taxpayer's state income tax |
| |
16| return, excluding extensions, whichever is later. |
| |
17| Provided, a deduction for the same contribution may |
| |
18| not be taken for two (2) different taxable years. |
| |
19| c. In taxable years beginning after December 31, 2006, |
| |
20| deductions for contributions made pursuant to |
| |
21| subparagraph b of this paragraph shall be limited as |
| |
22| follows: |
| |
23| (1) for a taxpayer who qualified for the five-year |
| |
24| carryforward election and who takes a rollover or |
| |
Req. No. 993 Page 49
___________________________________________________________________________
1| nonqualified withdrawal during that period, the |
| |
2| tax deduction otherwise available pursuant to |
| |
3| subparagraph b of this paragraph shall be reduced |
| |
4| by the amount which is equal to the rollover or |
| |
5| nonqualified withdrawal, and |
| |
6| (2) for a taxpayer who elects to take a rollover or |
| |
7| nonqualified withdrawal within the same tax year |
| |
8| in which a contribution was made to the |
| |
9| taxpayer's account, the tax deduction otherwise |
| |
10| available pursuant to subparagraph b of this |
| |
11| paragraph shall be reduced by the amount of the |
| |
12| contribution which is equal to the rollover or |
| |
13| nonqualified withdrawal. |
| |
14| d. If a taxpayer elects to take a rollover on a |
| |
15| contribution for which a deduction has been taken |
| |
16| pursuant to subparagraph b of this paragraph within |
| |
17| one (1) year of the date of contribution, the amount |
| |
18| of such rollover shall be included in the adjusted |
| |
19| gross income of the taxpayer in the taxable year of |
| |
20| the rollover. |
| |
21| e. If a taxpayer makes a nonqualified withdrawal of |
| |
22| contributions for which a deduction was taken pursuant |
| |
23| to subparagraph b of this paragraph, such nonqualified |
| |
24| withdrawal and any earnings thereon shall be included |
| |
Req. No. 993 Page 50
___________________________________________________________________________
1| in the adjusted gross income of the taxpayer in the |
| |
2| taxable year of the nonqualified withdrawal. |
| |
3| f. As used in this paragraph: |
| |
4| (1) "non-qualified withdrawal" means a withdrawal |
| |
5| from an Oklahoma College Savings Plan account |
| |
6| other than one of the following: |
| |
7| (a) a qualified withdrawal, |
| |
8| (b) a withdrawal made as a result of the death |
| |
9| or disability of the designated beneficiary |
| |
10| of an account, |
| |
11| (c) a withdrawal that is made on the account of |
| |
12| a scholarship or the allowance or payment |
| |
13| described in Section 135(d)(1)(B) or (C) or |
| |
14| by the Internal Revenue Code, received by |
| |
15| the designated beneficiary to the extent the |
| |
16| amount of the refund does not exceed the |
| |
17| amount of the scholarship, allowance, or |
| |
18| payment, or |
| |
19| (d) a rollover or change of designated |
| |
20| beneficiary as permitted by subsection F of |
| |
21| Section 3970.7 of Title 70 of Oklahoma |
| |
22| Statutes, and |
| |
23| |
| |
24| |
| |
Req. No. 993 Page 51
___________________________________________________________________________
1| (2) "rollover" means the transfer of funds from the |
| |
2| Oklahoma College Savings Plan to any other plan |
| |
3| under Section 529 of the Internal Revenue Code. |
| |
4| 18. For tax years 2006 through 2021, retirement benefits |
| |
5|received by an individual from any component of the Armed Forces of |
| |
6|the United States in an amount not to exceed the greater of |
| |
7|seventy-five percent (75%) of such benefits or Ten Thousand Dollars |
| |
8|($10,000.00) shall be exempt from taxable income but in no case less |
| |
9|than the amount of the exemption provided by paragraph 14 of this |
| |
10|subsection. For tax year 2022 and subsequent tax years, retirement |
| |
11|benefits received by an individual from any component of the Armed |
| |
12|Forces of the United States shall be exempt from taxable income. |
| |
13| 19. For taxable years beginning after December 31, 2006, |
| |
14|retirement benefits received by federal civil service retirees, |
| |
15|including survivor annuities, paid in lieu of Social Security |
| |
16|benefits shall be exempt from taxable income to the extent such |
| |
17|benefits are included in the federal adjusted gross income pursuant |
| |
18|to the provisions of Section 86 of the Internal Revenue Code, 26 |
| |
19|U.S.C., Section 86, according to the following schedule: |
| |
20| a. in the taxable year beginning January 1, 2007, twenty |
| |
21| percent (20%) of such benefits shall be exempt, |
| |
22| b. in the taxable year beginning January 1, 2008, forty |
| |
23| percent (40%) of such benefits shall be exempt, |
| |
24| |
| |
Req. No. 993 Page 52
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1| c. in the taxable year beginning January 1, 2009, sixty |
| |
2| percent (60%) of such benefits shall be exempt, |
| |
3| d. in the taxable year beginning January 1, 2010, eighty |
| |
4| percent (80%) of such benefits shall be exempt, and |
| |
5| e. in the taxable year beginning January 1, 2011, and |
| |
6| subsequent taxable years, one hundred percent (100%) |
| |
7| of such benefits shall be exempt. |
| |
8| 20. a. For taxable years beginning after December 31, 2007, a |
| |
9| resident individual may deduct up to Ten Thousand |
| |
10| Dollars ($10,000.00) from Oklahoma adjusted gross |
| |
11| income if the individual, or the dependent of the |
| |
12| individual, while living, donates one or more human |
| |
13| organs of the individual to another human being for |
| |
14| human organ transplantation. As used in this |
| |
15| paragraph, "human organ" means all or part of a liver, |
| |
16| pancreas, kidney, intestine, lung, or bone marrow. A |
| |
17| deduction that is claimed under this paragraph may be |
| |
18| claimed in the taxable year in which the human organ |
| |
19| transplantation occurs. |
| |
20| b. An individual may claim this deduction only once, and |
| |
21| the deduction may be claimed only for unreimbursed |
| |
22| expenses that are incurred by the individual and |
| |
23| related to the organ donation of the individual. |
| |
24| |
| |
Req. No. 993 Page 53
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1| c. The Oklahoma Tax Commission shall promulgate rules to |
| |
2| implement the provisions of this paragraph which shall |
| |
3| contain a specific list of expenses which may be |
| |
4| presumed to qualify for the deduction. The Tax |
| |
5| Commission shall prescribe necessary requirements for |
| |
6| verification. |
| |
7| 21. For taxable years beginning after December 31, 2009, there |
| |
8|shall be exempt from taxable income any amount received by the |
| |
9|beneficiary of the death benefit for an emergency medical technician |
| |
10|or a registered emergency medical responder provided by Section |
| |
11|1-2505.1 of Title 63 of the Oklahoma Statutes. |
| |
12| 22. For taxable years beginning after December 31, 2008, |
| |
13|taxable income shall be increased by any unemployment compensation |
| |
14|exempted under Section 85(c) of the Internal Revenue Code, 26 |
| |
15|U.S.C., Section 85(c)(2009). |
| |
16| 23. For taxable years beginning after December 31, 2008, there |
| |
17|shall be exempt from taxable income any payment in an amount less |
| |
18|than Six Hundred Dollars ($600.00) received by a person as an award |
| |
19|for participation in a competitive livestock show event. For |
| |
20|purposes of this paragraph, the payment shall be treated as a |
| |
21|scholarship amount paid by the entity sponsoring the event and the |
| |
22|sponsoring entity shall cause the payment to be categorized as a |
| |
23|scholarship in its books and records. |
| |
24| |
| |
Req. No. 993 Page 54
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1| 24. For taxable years beginning on or after January 1, 2016, |
| |
2|taxable income shall be increased by any amount of state and local |
| |
3|sales or income taxes deducted under 26 U.S.C., Section 164 of the |
| |
4|Internal Revenue Code. If the amount of state and local taxes |
| |
5|deducted on the federal return is limited, taxable income on the |
| |
6|state return shall be increased only by the amount actually deducted |
| |
7|after any such limitations are applied. |
| |
8| 25. For taxable years beginning after December 31, 2020, each |
| |
9|taxpayer shall be allowed a deduction for contributions to accounts |
| |
10|established pursuant to the Achieving a Better Life Experience |
| |
11|(ABLE) Program as established in Section 4001.1 et seq. of Title 56 |
| |
12|of the Oklahoma Statutes. For any tax year, the deduction provided |
| |
13|for in this paragraph shall not exceed Ten Thousand Dollars |
| |
14|($10,000.00) for an individual taxpayer or Twenty Thousand Dollars |
| |
15|($20,000.00) for taxpayers filing a joint return. Any amount of |
| |
16|contribution not deducted by the taxpayer in the tax year for which |
| |
17|the contribution is made may be carried forward as a deduction from |
| |
18|income for up to five (5) tax years. Deductions may be taken for |
| |
19|contributions made during the tax year and through April 15 of the |
| |
20|succeeding tax year, or through the due date of a taxpayer's state |
| |
21|income tax return excluding extensions, whichever is later. |
| |
22|Provided, a deduction for the same contribution may not be taken in |
| |
23|more than one (1) tax year. |
| |
24| |
| |
Req. No. 993 Page 55
___________________________________________________________________________
1| F. 1. For taxable years beginning after December 31, 2004, a |
| |
2|deduction from the Oklahoma adjusted gross income of any individual |
| |
3|taxpayer shall be allowed for qualifying gains receiving capital |
| |
4|treatment that are included in the federal adjusted gross income of |
| |
5|such individual taxpayer during the taxable year. |
| |
6| 2. As used in this subsection: |
| |
7| a. "qualifying gains receiving capital treatment" means |
| |
8| the amount of net capital gains, as defined in Section |
| |
9| 1222(11) of the Internal Revenue Code, included in an |
| |
10| individual taxpayer's federal income tax return that |
| |
11| result from: |
| |
12| (1) the sale of real property or tangible personal |
| |
13| property located within Oklahoma that has been |
| |
14| directly or indirectly owned by the individual |
| |
15| taxpayer for a holding period of at least five |
| |
16| (5) years prior to the date of the transaction |
| |
17| from which such net capital gains arise, |
| |
18| (2) the sale of stock or the sale of a direct or |
| |
19| indirect ownership interest in an Oklahoma |
| |
20| company, limited liability company, or |
| |
21| partnership where such stock or ownership |
| |
22| interest has been directly or indirectly owned by |
| |
23| the individual taxpayer for a holding period of |
| |
24| |
| |
Req. No. 993 Page 56
___________________________________________________________________________
1| at least two (2) years prior to the date of the |
| |
2| transaction from which the net capital gains |
| |
3| arise, or |
| |
4| (3) the sale of real property, tangible personal |
| |
5| property, or intangible personal property located |
| |
6| within Oklahoma as part of the sale of all or |
| |
7| substantially all of the assets of an Oklahoma |
| |
8| company, limited liability company, or |
| |
9| partnership, or an Oklahoma proprietorship |
| |
10| business enterprise where such property has been |
| |
11| directly or indirectly owned by such entity or |
| |
12| business enterprise or owned by the owners of |
| |
13| such entity or business enterprise for a period |
| |
14| of at least two (2) years prior to the date of |
| |
15| the transaction from which the net capital gains |
| |
16| arise, |
| |
17| b. "holding period" means an uninterrupted period of |
| |
18| time. The holding period shall include any additional |
| |
19| period when the property was held by another |
| |
20| individual or entity, if such additional period is |
| |
21| included in the taxpayer's holding period for the |
| |
22| asset pursuant to the Internal Revenue Code, |
| |
23| c. "Oklahoma company," company", "limited liability |
| |
24| company," company", or "partnership" means an entity |
| |
Req. No. 993 Page 57
___________________________________________________________________________
1| whose primary headquarters have been located in |
| |
2| Oklahoma for at least three (3) uninterrupted years |
| |
3| prior to the date of the transaction from which the |
| |
4| net capital gains arise, |
| |
5| d. "direct" means the individual taxpayer directly owns |
| |
6| the asset, |
| |
7| e. "indirect" means the individual taxpayer owns an |
| |
8| interest in a pass-through entity (or chain of |
| |
9| pass-through entities) that sells the asset that gives |
| |
10| rise to the qualifying gains receiving capital |
| |
11| treatment. |
| |
12| (1) With respect to sales of real property or |
| |
13| tangible personal property located within |
| |
14| Oklahoma, the deduction described in this |
| |
15| subsection shall not apply unless the |
| |
16| pass-through entity that makes the sale has held |
| |
17| the property for not less than five (5) |
| |
18| uninterrupted years prior to the date of the |
| |
19| transaction that created the capital gain, and |
| |
20| each pass-through entity included in the chain of |
| |
21| ownership has been a member, partner, or |
| |
22| shareholder of the pass-through entity in the |
| |
23| tier immediately below it for an uninterrupted |
| |
24| period of not less than five (5) years. |
| |
Req. No. 993 Page 58
___________________________________________________________________________
1| (2) With respect to sales of stock or ownership |
| |
2| interest in or sales of all or substantially all |
| |
3| of the assets of an Oklahoma company, limited |
| |
4| liability company, partnership, or Oklahoma |
| |
5| proprietorship business enterprise, the deduction |
| |
6| described in this subsection shall not apply |
| |
7| unless the pass-through entity that makes the |
| |
8| sale has held the stock or ownership interest for |
| |
9| not less than two (2) uninterrupted years prior |
| |
10| to the date of the transaction that created the |
| |
11| capital gain, and each pass-through entity |
| |
12| included in the chain of ownership has been a |
| |
13| member, partner, or shareholder of the |
| |
14| pass-through entity in the tier immediately below |
| |
15| it for an uninterrupted period of not less than |
| |
16| two (2) years. For purposes of this division, |
| |
17| uninterrupted ownership prior to July 1, 2007, |
| |
18| shall be included in the determination of the |
| |
19| required holding period prescribed by this |
| |
20| division, and |
| |
21| f. "Oklahoma proprietorship business enterprise" means a |
| |
22| business enterprise whose income and expenses have |
| |
23| been reported on Schedule C or F of an individual |
| |
24| taxpayer's federal income tax return, or any similar |
| |
Req. No. 993 Page 59
___________________________________________________________________________
1| successor schedule published by the Internal Revenue |
| |
2| Service and whose primary headquarters have been |
| |
3| located in Oklahoma for at least three (3) |
| |
4| uninterrupted years prior to the date of the |
| |
5| transaction from which the net capital gains arise. |
| |
6| G. 1. For purposes of computing its Oklahoma taxable income |
| |
7|under this section, the dividends-paid deduction otherwise allowed |
| |
8|by federal law in computing net income of a real estate investment |
| |
9|trust that is subject to federal income tax shall be added back in |
| |
10|computing the tax imposed by this state under this title if the real |
| |
11|estate investment trust is a captive real estate investment trust. |
| |
12| 2. For purposes of computing its Oklahoma taxable income under |
| |
13|this section, a taxpayer shall add back otherwise deductible rents |
| |
14|and interest expenses paid to a captive real estate investment trust |
| |
15|that is not subject to the provisions of paragraph 1 of this |
| |
16|subsection. As used in this subsection: |
| |
17| a. the term "real estate investment trust" or "REIT" |
| |
18| means the meaning ascribed to such term in Section 856 |
| |
19| of the Internal Revenue Code, |
| |
20| b. the term "captive real estate investment trust" means |
| |
21| a real estate investment trust, the shares or |
| |
22| beneficial interests of which are not regularly traded |
| |
23| on an established securities market and more than |
| |
24| fifty percent (50%) of the voting power or value of |
| |
Req. No. 993 Page 60
___________________________________________________________________________
1| the beneficial interests or shares of which are owned |
| |
2| or controlled, directly or indirectly, or |
| |
3| constructively, by a single entity that is: |
| |
4| (1) treated as an association taxable as a |
| |
5| corporation under the Internal Revenue Code, and |
| |
6| (2) not exempt from federal income tax pursuant to |
| |
7| the provisions of Section 501(a) of the Internal |
| |
8| Revenue Code. |
| |
9| The term shall not include a real estate investment |
| |
10| trust that is intended to be regularly traded on an |
| |
11| established securities market, and that satisfies the |
| |
12| requirements of Section 856(a)(5) and (6) of the U.S. |
| |
13| Internal Revenue Code by reason of Section 856(h)(2) |
| |
14| of the Internal Revenue Code, |
| |
15| c. the term "association taxable as a corporation" shall |
| |
16| not include the following entities: |
| |
17| (1) any real estate investment trust as defined in |
| |
18| paragraph a of this subsection other than a |
| |
19| "captive real estate investment trust", or |
| |
20| (2) any qualified real estate investment trust |
| |
21| subsidiary under Section 856(i) of the Internal |
| |
22| Revenue Code, other than a qualified REIT |
| |
23| subsidiary of a "captive captive real estate |
| |
24| investment trust", or trust, |
| |
Req. No. 993 Page 61
___________________________________________________________________________
1| (3) any Listed Australian Property Trust (meaning an |
| |
2| Australian unit trust registered as a "Managed |
| |
3| Investment Scheme" under the Australian |
| |
4| Corporations Act in which the principal class of |
| |
5| units is listed on a recognized stock exchange in |
| |
6| Australia and is regularly traded on an |
| |
7| established securities market), or an entity |
| |
8| organized as a trust, provided that a Listed |
| |
9| Australian Property Trust owns or controls, |
| |
10| directly or indirectly, seventy-five percent |
| |
11| (75%) or more of the voting power or value of the |
| |
12| beneficial interests or shares of such trust, or |
| |
13| (4) any Qualified Foreign Entity, meaning a |
| |
14| corporation, trust, association or partnership |
| |
15| organized outside the laws of the United States |
| |
16| and which satisfies the following criteria: |
| |
17| (a) at least seventy-five percent (75%) of the |
| |
18| entity's total asset value at the close of |
| |
19| its taxable year is represented by real |
| |
20| estate assets, as defined in Section |
| |
21| 856(c)(5)(B) of the Internal Revenue Code, |
| |
22| thereby including shares or certificates of |
| |
23| beneficial interest in any real estate |
| |
24| |
| |
Req. No. 993 Page 62
___________________________________________________________________________
1| investment trust, cash and cash equivalents, |
| |
2| and U.S. Government securities, |
| |
3| (b) the entity receives a dividend-paid |
| |
4| deduction comparable to Section 561 of the |
| |
5| Internal Revenue Code, or is exempt from |
| |
6| entity level tax, |
| |
7| (c) the entity is required to distribute at |
| |
8| least eighty-five percent (85%) of its |
| |
9| taxable income, as computed in the |
| |
10| jurisdiction in which it is organized, to |
| |
11| the holders of its shares or certificates of |
| |
12| beneficial interest on an annual basis, |
| |
13| (d) not more than ten percent (10%) of the |
| |
14| voting power or value in such entity is held |
| |
15| directly or indirectly or constructively by |
| |
16| a single entity or individual, or the shares |
| |
17| or beneficial interests of such entity are |
| |
18| regularly traded on an established |
| |
19| securities market, and |
| |
20| (e) the entity is organized in a country which |
| |
21| has a tax treaty with the United States. |
| |
22| 3. For purposes of this subsection, the constructive ownership |
| |
23|rules of Section 318(a) of the Internal Revenue Code, as modified by |
| |
24|Section 856(d)(5) of the Internal Revenue Code, shall apply in |
| |
Req. No. 993 Page 63
___________________________________________________________________________
1|determining the ownership of stock, assets, or net profits of any |
| |
2|person. |
| |
3| 4. A real estate investment trust that does not become |
| |
4|regularly traded on an established securities market within one (1) |
| |
5|year of the date on which it first becomes a real estate investment |
| |
6|trust shall be deemed not to have been regularly traded on an |
| |
7|established securities market, retroactive to the date it first |
| |
8|became a real estate investment trust, and shall file an amended |
| |
9|return reflecting such retroactive designation for any tax year or |
| |
10|part year occurring during its initial year of status as a real |
| |
11|estate investment trust. For purposes of this subsection, a real |
| |
12|estate investment trust becomes a real estate investment trust on |
| |
13|the first day it has both met the requirements of Section 856 of the |
| |
14|Internal Revenue Code and has elected to be treated as a real estate |
| |
15|investment trust pursuant to Section 856(c)(1) of the Internal |
| |
16|Revenue Code. |
| |
17| SECTION 2. This act shall become effective November 1, 2023. |
| |
18| |
| |
19| 59-1-993 QD 12/29/2022 11:04:59 AM |
| |
20| |
| |
21| |
| |
22| |
| |
23| |
| |
24| |
| |
Req. No. 993 Page 64
