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1 STATE OF OKLAHOMA
1
2 2nd Session of the 60th Legislature (2026)
2
3 SENATE BILL 1838 By: Jett
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4
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5
5
6 AS INTRODUCED
6
7 An Act relating to specie; amending 62 O.S. 2021,
7 Section 4500, which relates to gold and silver coins
8 as legal tender; defining terms; authorizing the
8 payment of certain public and private debts;
9 restricting the requirement of payment in specie;
9 prohibiting the levy of tax upon sale or exchange of
10 specie; excluding specie from assessment of personal
10 property; requiring the State Treasurer to develop
11 certain plan; amending 68 O.S. 2021, Section 2358, as
11 last amended by Section 155, Chapter 452, O.S.L. 2024
12 (68 O.S. Supp. 2025, Section 2358), which relates to
12 adjustments to arrive at taxable income; authorizing
13 deduction for gains derived from the sale of specie;
13 updating statutory language; updating references; and
14 providing an effective date.
14
15
15
16
16
17 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
17
18 SECTION 1. AMENDATORY 62 O.S. 2021, Section 4500, is
18
19 amended to read as follows:
19
20 Section 4500. Gold and silver coins issued by the United States
20
21 government are legal tender in the State of Oklahoma. No person may
21
22 compel another person to tender or accept gold or silver coins that
22
23 are issued by the United States government, except as agreed upon by
23
24 contract A. As used in this section:
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Req. No. 3530 Page 1
1 1. "Legal tender" means a recognized medium of exchange for the
1
2 payment of public and private debts and taxes; and
2
3 2. "Specie" means gold or silver bullion in the form of coins,
3
4 bars, or rounds that are coined, stamped, or imprinted with its
4
5 weight and purity with value based on metal content and not on its
5
6 form. Silver bullion bars and rounds are stamped with "purity of
6
7 .999 fine silver".
7
8 B. Gold and silver bullion in the form of coins issued by the
8
9 United States government shall be considered legal tender in this
9
10 state.
10
11 C. Legal tender, as defined in this section, may be used to pay
11
12 public debt in this state.
12
13 D. Silver specie, in the form of bars and rounds, may be used
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14 for the payment of private debts in this state.
14
15 E. No person shall compel another person or entity to tender or
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16 accept specie for the payment of any debt except as agreed to by
16
17 agreement or contract.
17
18 F. The purchase, sale, or exchange of any type or form of
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19 specie, including legal tender, shall not give rise to any tax
19
20 liability in this state.
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21 G. Specie or legal tender shall not be characterized as
21
22 personal property for taxation or regulatory purposes.
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23 H. The State Treasurer, in consultation with state agencies the
23
24 Treasurer deems applicable, shall develop a plan to store a minimum
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Req. No. 3530 Page 2
1 of ten percent (10%) of this state's fund balances in the form of
1
2 gold and silver legal tender and for taxpayers to pay ad valorem
2
3 taxes in the form of gold and silver legal tender.
3
4 SECTION 2. AMENDATORY 68 O.S. 2021, Section 2358, as
4
5 last amended by Section 155, Chapter 452, O.S.L. 2024 (68 O.S. Supp.
5
6 2025, Section 2358), is amended to read as follows:
6
7 Section 2358. For all tax years beginning after December 31,
7
8 1981, taxable income and adjusted gross income shall be adjusted to
8
9 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
9
10 as required by this section.
10
11 A. The taxable income of any taxpayer shall be adjusted to
11
12 arrive at Oklahoma taxable income for corporations and Oklahoma
12
13 adjusted gross income for individuals, as follows:
13
14 1. There shall be added interest income on obligations of any
14
15 state or political subdivision thereto which is not otherwise
15
16 exempted pursuant to other laws of this state, to the extent that
16
17 such interest is not included in taxable income and adjusted gross
17
18 income.
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19 2. There shall be deducted amounts included in such income that
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20 the state is prohibited from taxing because of the provisions of the
20
21 Federal United States Constitution, the State Oklahoma Constitution,
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22 federal laws or laws of Oklahoma.
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23 3. The amount of any federal net operating loss deduction shall
23
24 be adjusted as follows:
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Req. No. 3530 Page 3
1 a. For carryovers and carrybacks to taxable years
1
2 beginning before January 1, 1981, the amount of any
2
3 net operating loss deduction allowed to a taxpayer for
3
4 federal income tax purposes shall be reduced to an
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5 amount which is the same portion thereof as the loss
5
6 from sources within this state, as determined pursuant
6
7 to this section and Section 2362 of this title, for
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8 the taxable year in which such loss is sustained is of
8
9 the total loss for such year;
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10 b. For carryovers and carrybacks to taxable years
10
11 beginning after December 31, 1980, the amount of any
11
12 net operating loss deduction allowed for the taxable
12
13 year shall be an amount equal to the aggregate of the
13
14 Oklahoma net operating loss carryovers and carrybacks
14
15 to such year. Oklahoma net operating losses shall be
15
16 separately determined by reference to Section 172 of
16
17 the Internal Revenue Code of 1986, as amended, 26
17
18 U.S.C., Section 172, as modified by the Oklahoma
18
19 Income Tax Act, Section 2351 et seq. of this title,
19
20 and shall be allowed without regard to the existence
20
21 of a federal net operating loss. For tax years
21
22 beginning after December 31, 2000, and ending before
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23 January 1, 2008, the years to which such losses may be
23
24 carried shall be determined solely by reference to
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Req. No. 3530 Page 4
1 Section 172 of the Internal Revenue Code of 1986, as
1
2 amended, 26 U.S.C., Section 172, with the exception
2
3 that the terms "net operating loss" and "taxable
3
4 income" shall be replaced with "Oklahoma net operating
4
5 loss" and "Oklahoma taxable income". For tax years
5
6 beginning after December 31, 2007, and ending before
6
7 January 1, 2009, years to which such losses may be
7
8 carried back shall be limited to two (2) years. For
8
9 tax years beginning after December 31, 2008, the years
9
10 to which such losses may be carried back shall be
10
11 determined solely by reference to Section 172 of the
11
12 Internal Revenue Code of 1986, as amended, 26 U.S.C.,
12
13 Section 172, with the exception that the terms "net
13
14 operating loss" and "taxable income" shall be replaced
14
15 with "Oklahoma net operating loss" and "Oklahoma
15
16 taxable income".
16
17 4. Items of the following nature shall be allocated as
17
18 indicated. Allowable deductions attributable to items separately
18
19 allocable in subparagraphs a, b and c of this paragraph, whether or
19
20 not such items of income were actually received, shall be allocated
20
21 on the same basis as those items:
21
22 a. Income from real and tangible personal property, such
22
23 as rents, oil and mining production or royalties, and
23
24 gains or losses from sales of such property, shall be
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Req. No. 3530 Page 5
1 allocated in accordance with the situs of such
1
2 property;
2
3 b. Income from intangible personal property, such as
3
4 interest, dividends, patent or copyright royalties,
4
5 and gains or losses from sales of such property, shall
5
6 be allocated in accordance with the domiciliary situs
6
7 of the taxpayer, except that:
7
8 (1) where such property has acquired a nonunitary
8
9 business or commercial situs apart from the
9
10 domicile of the taxpayer such income shall be
10
11 allocated in accordance with such business or
11
12 commercial situs; interest income from
12
13 investments held to generate working capital for
13
14 a unitary business enterprise shall be included
14
15 in apportionable income; a resident trust or
15
16 resident estate shall be treated as having a
16
17 separate commercial or business situs insofar as
17
18 undistributed income is concerned, but shall not
18
19 be treated as having a separate commercial or
19
20 business situs insofar as distributed income is
20
21 concerned,
21
22 (2) for taxable years beginning after December 31,
22
23 2003, capital or ordinary gains or losses from
23
24 the sale of an ownership interest in a publicly
24
Req. No. 3530 Page 6
1 traded partnership, as defined by Section 7704(b)
1 of the Internal Revenue Code of 1986, as amended,
2 shall be allocated to this state in the ratio of
2 the original cost of such partnership's tangible
3 property in this state to the original cost of
3 such partnership's tangible property everywhere,
4 as determined at the time of the sale; if more
4 than fifty percent (50%) of the value of the
5 partnership's assets consists of intangible
5 assets, capital or ordinary gains or losses from
6 the sale of an ownership interest in the
6 partnership shall be allocated to this state in
7 accordance with the sales factor of the
7 partnership for its first full tax period
8 immediately preceding its tax period during which
8 the ownership interest in the partnership was
9 sold; the provisions of this division shall only
9 apply if the capital or ordinary gains or losses
10 from the sale of an ownership interest in a
10 partnership do not constitute qualifying gain
11 receiving capital treatment as defined in
11 subparagraph a of paragraph 2 of subsection F of
12 this section,
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13 Page 7
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Req. No. 3530
1 (3) income from such property which is required to be
1
2 allocated pursuant to the provisions of paragraph
2
3 5 of this subsection shall be allocated as herein
3
4 provided;
4
5 c. Net income or loss from a business activity which is
5
6 not a part of business carried on within or without
6
7 the state of a unitary character shall be separately
7
8 allocated to the state in which such activity is
8
9 conducted;
9
10 d. In the case of a manufacturing or processing
10
11 enterprise the business of which in Oklahoma this
11
12 state consists solely of marketing its products by:
12
13 (1) sales having a situs without this state, shipped
13
14 directly to a point from without the state to a
14
15 purchaser within the state, commonly known as
15
16 interstate sales,
16
17 (2) sales of the product stored in public warehouses
17
18 within the state pursuant to "in transit"
18
19 tariffs, as prescribed and allowed by the
19
20 Interstate Commerce Commission, to a purchaser
20
21 within the state,
21
22 (3) sales of the product stored in public warehouses
22
23 within the state where the shipment to such
23
24 warehouses is not covered by "in transit"
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Req. No. 3530 Page 8
1 tariffs, as prescribed and allowed by the
1
2 Interstate Commerce Commission, to a purchaser
2
3 within or without the state,
3
4 the Oklahoma net income shall, at the option of the
4
5 taxpayer, be that portion of the total net income of
5
6 the taxpayer for federal income tax purposes derived
6
7 from the manufacture and/or processing and sales
7
8 everywhere as determined by the ratio of the sales
8
9 defined in this section made to the purchaser within
9
10 the state to the total sales everywhere. The term
10
11 "public warehouse" as used in this subparagraph means
11
12 a licensed public warehouse, the principal business of
12
13 which is warehousing merchandise for the public;
13
14 e. In the case of insurance companies, Oklahoma taxable
14
15 income shall be taxable income of the taxpayer for
15
16 federal tax purposes, as adjusted for the adjustments
16
17 provided pursuant to the provisions of paragraphs 1
17
18 and 2 of this subsection, apportioned as follows:
18
19 (1) except as otherwise provided by division (2) of
19
20 this subparagraph, taxable income of an insurance
20
21 company for a taxable year shall be apportioned
21
22 to this state by multiplying such income by a
22
23 fraction, the numerator of which is the direct
23
24 premiums written for insurance on property or
24
Req. No. 3530 Page 9
1 risks in this state, and the denominator of which
1
2 is the direct premiums written for insurance on
2
3 property or risks everywhere. For purposes of
3
4 this subsection subparagraph, the term "direct
4
5 premiums written" means the total amount of
5
6 direct premiums written, assessments and annuity
6
7 considerations as reported for the taxable year
7
8 on the annual statement filed by the company with
8
9 the Insurance Commissioner in the form approved
9
10 by the National Association of Insurance
10
11 Commissioners, or such other form as may be
11
12 prescribed in lieu thereof,
12
13 (2) if the principal source of premiums written by an
13
14 insurance company consists of premiums for
14
15 reinsurance accepted by it, the taxable income of
15
16 such company shall be apportioned to this state
16
17 by multiplying such income by a fraction, the
17
18 numerator of which is the sum of (a) direct
18
19 premiums written for insurance on property or
19
20 risks in this state, plus (b) premiums written
20
21 for reinsurance accepted in respect of property
21
22 or risks in this state, and the denominator of
22
23 which is the sum of (c) direct premiums written
23
24 for insurance on property or risks everywhere,
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Req. No. 3530 Page 10
1 plus (d) premiums written for reinsurance
1
2 accepted in respect of property or risks
2
3 everywhere. For purposes of this paragraph
3
4 subparagraph, premiums written for reinsurance
4
5 accepted in respect of property or risks in this
5
6 state, whether or not otherwise determinable, may
6
7 at the election of the company be determined on
7
8 the basis of the proportion which premiums
8
9 written for insurance accepted from companies
9
10 commercially domiciled in Oklahoma this state
10
11 bears to premiums written for reinsurance
11
12 accepted from all sources, or alternatively in
12
13 the proportion which the sum of the direct
13
14 premiums written for insurance on property or
14
15 risks in this state by each ceding company from
15
16 which reinsurance is accepted bears to the sum of
16
17 the total direct premiums written by each such
17
18 ceding company for the taxable year.
18
19 5. The net income or loss remaining after the separate
19
20 allocation in paragraph 4 of this subsection, being that which is
20
21 derived from a unitary business enterprise, shall be apportioned to
21
22 this state on the basis of the arithmetical average of three factors
22
23 consisting of property, payroll and sales or gross revenue
23
24 enumerated as subparagraphs a, b and c of this paragraph. Net
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Req. No. 3530 Page 11
1 income or loss as used in this paragraph includes that derived from
1
2 patent or copyright royalties, purchase discounts, and interest on
2
3 accounts receivable relating to or arising from a business activity,
3
4 the income from which is apportioned pursuant to this subsection,
4
5 including the sale or other disposition of such property and any
5
6 other property used in the unitary enterprise. Deductions used in
6
7 computing such net income or loss shall not include taxes based on
7
8 or measured by income. Provided, for corporations whose property
8
9 for purposes of the tax imposed by Section 2355 of this title has an
9
10 initial investment cost equaling or exceeding Two Hundred Million
10
11 Dollars ($200,000,000.00) and such investment is made on or after
11
12 July 1, 1997, or for corporations which expand their property or
12
13 facilities in this state and such expansion has an investment cost
13
14 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
14
15 over a period not to exceed three (3) years, and such expansion is
15
16 commenced on or after January 1, 2000, the three factors shall be
16
17 apportioned with property and payroll, each comprising twenty-five
17
18 percent (25%) of the apportionment factor and sales comprising fifty
18
19 percent (50%) of the apportionment factor. The apportionment
19
20 factors shall be computed as follows:
20
21 a. The property factor is a fraction, the numerator of
21
22 which is the average value of the taxpayer's real and
22
23 tangible personal property owned or rented and used in
23
24 this state during the tax period and the denominator
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Req. No. 3530 Page 12
1 of which is the average value of all the taxpayer's
1
2 real and tangible personal property everywhere owned
2
3 or rented and used during the tax period.
3
4 (1) Property, the income from which is separately
4
5 allocated in paragraph 4 of this subsection,
5
6 shall not be included in determining this
6
7 fraction. The numerator of the fraction shall
7
8 include a portion of the investment in
8
9 transportation and other equipment having no
9
10 fixed situs, such as rolling stock, buses, trucks
10
11 and trailers, including machinery and equipment
11
12 carried thereon, airplanes, salespersons'
12
13 automobiles and other similar equipment, in the
13
14 proportion that miles traveled in Oklahoma this
14
15 state by such equipment bears to total miles
15
16 traveled,
16
17 (2) Property owned by the taxpayer is valued at its
17
18 original cost. Property rented by the taxpayer
18
19 is valued at eight times the net annual rental
19
20 rate. Net annual rental rate is the annual
20
21 rental rate paid by the taxpayer, less any annual
21
22 rental rate received by the taxpayer from
22
23 subrentals,
23
24
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Req. No. 3530 Page 13
1 (3) The average value of property shall be determined
1
2 by averaging the values at the beginning and
2
3 ending of the tax period but the Oklahoma Tax
3
4 Commission may require the averaging of monthly
4
5 values during the tax period if reasonably
5
6 required to reflect properly the average value of
6
7 the taxpayer's property;
7
8 b. The payroll factor is a fraction, the numerator of
8
9 which is the total compensation for services rendered
9
10 in the state during the tax period, and the
10
11 denominator of which is the total compensation for
11
12 services rendered everywhere during the tax period.
12
13 "Compensation", as used in this subsection paragraph,
13
14 means those paid-for services to the extent related to
14
15 the unitary business but does not include officers'
15
16 salaries, wages and other compensation.
16
17 (1) In the case of a transportation enterprise, the
17
18 numerator of the fraction shall include a portion
18
19 of such expenditure in connection with employees
19
20 operating equipment over a fixed route, such as
20
21 railroad employees, airline pilots, or bus
21
22 drivers, in this state only a part of the time,
22
23 in the proportion that mileage traveled in
23
24
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Req. No. 3530 Page 14
1 Oklahoma this state bears to total mileage
1
2 traveled by such employees,
2
3 (2) In any case the numerator of the fraction shall
3
4 include a portion of such expenditures in
4
5 connection with itinerant employees, such as
5
6 traveling salespersons, in this state only a part
6
7 of the time, in the proportion that time spent in
7
8 Oklahoma this state bears to total time spent in
8
9 furtherance of the enterprise by such employees;
9
10 c. The sales factor is a fraction, the numerator of which
10
11 is the total sales or gross revenue of the taxpayer in
11
12 this state during the tax period, and the denominator
12
13 of which is the total sales or gross revenue of the
13
14 taxpayer everywhere during the tax period. "Sales",
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15 as used in this subsection, does not include sales or
15
16 gross revenue which are separately allocated in
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17 paragraph 4 of this subsection.
17
18 (1) Sales of tangible personal property have a situs
18
19 in this state if the property is delivered or
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20 shipped to a purchaser other than the United
20
21 States government, within this state regardless
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22 of the FOB Freight on Board (FOB) point or other
22
23 conditions of the sale; or the property is
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24 shipped from an office, store, warehouse, factory
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Req. No. 3530 Page 15
1 or other place of storage in this state and (a)
1
2 the purchaser is the United States government or
2
3 (b) the taxpayer is not doing business in the
3
4 state of the destination of the shipment.
4
5 (2) In the case of a railroad or interurban railway
5
6 enterprise, the numerator of the fraction shall
6
7 not be less than the allocation of revenues to
7
8 this state as shown in its annual report to the
8
9 Corporation Commission.
9
10 (3) In the case of an airline, truck or bus
10
11 enterprise or freight car, tank car, refrigerator
11
12 car or other railroad equipment enterprise, the
12
13 numerator of the fraction shall include a portion
13
14 of revenue from interstate transportation in the
14
15 proportion that interstate mileage traveled in
15
16 Oklahoma this state bears to total interstate
16
17 mileage traveled.
17
18 (4) In the case of an oil, gasoline or gas pipeline
18
19 enterprise, the numerator of the fraction shall
19
20 be either the total of traffic units of the
20
21 enterprise within Oklahoma this state or the
21
22 revenue allocated to Oklahoma this state based
22
23 upon miles moved, at the option of the taxpayer,
23
24 and the denominator of which shall be the total
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Req. No. 3530 Page 16
1 of traffic units of the enterprise or the revenue
1
2 of the enterprise everywhere as appropriate to
2
3 the numerator. A "traffic unit" is hereby
3
4 defined as the transportation for a distance of
4
5 one (1) mile of one (1) barrel of oil, one (1)
5
6 gallon of gasoline or one thousand (1,000) cubic
6
7 feet of natural or casinghead gas, as the case
7
8 may be.
8
9 (5) In the case of a telephone or telegraph or other
9
10 communication enterprise, the numerator of the
10
11 fraction shall include that portion of the
11
12 interstate revenue as is allocated pursuant to
12
13 the accounting procedures prescribed by the
13
14 Federal Communications Commission; provided that
14
15 in respect to each corporation or business entity
15
16 required by the Federal Communications Commission
16
17 to keep its books and records in accordance with
17
18 a uniform system of accounts prescribed by such
18
19 Commission, the intrastate net income shall be
19
20 determined separately in the manner provided by
20
21 such uniform system of accounts and only the
21
22 interstate income shall be subject to allocation
22
23 pursuant to the provisions of this subsection.
23
24 Provided further, that the gross revenue factors
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Req. No. 3530 Page 17
1 shall be those as are determined pursuant to the
1
2 accounting procedures prescribed by the Federal
2
3 Communications Commission.
3
4 In any case where the apportionment of the three factors
4
5 prescribed in this paragraph attributes to Oklahoma this state a
5
6 portion of net income of the enterprise out of all appropriate
6
7 proportion to the property owned and/or business transacted within
7
8 this state, because of the fact that one or more of the factors so
8
9 prescribed are not employed to any appreciable extent in furtherance
9
10 of the enterprise; or because one or more factors not so prescribed
10
11 are employed to a considerable extent in furtherance of the
11
12 enterprise; or because of other reasons, the Tax Commission is
12
13 empowered to permit, after a showing by taxpayer that an excessive
13
14 portion of net income has been attributed to Oklahoma this state, or
14
15 require, when in its judgment an insufficient portion of net income
15
16 has been attributed to Oklahoma this state, the elimination,
16
17 substitution, or use of additional factors, or reduction or increase
17
18 in the weight of such prescribed factors. Provided, however, that
18
19 any such variance from such prescribed factors which has the effect
19
20 of increasing the portion of net income attributable to Oklahoma
20
21 this state must not be inherently arbitrary, and application of the
21
22 recomputed final apportionment to the net income of the enterprise
22
23 must attribute to Oklahoma this state only a reasonable portion
23
24 thereof.
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Req. No. 3530 Page 18
1 6. For calendar years 1997 and 1998, the owner of a new or
1
2 expanded agricultural commodity processing facility in this state
2
3 may exclude from Oklahoma taxable income, or in the case of an
3
4 individual, the Oklahoma adjusted gross income, fifteen percent
4
5 (15%) of the investment by the owner in the new or expanded
5
6 agricultural commodity processing facility. For calendar year 1999,
6
7 and all subsequent years, the percentage, not to exceed fifteen
7
8 percent (15%), available to the owner of a new or expanded
8
9 agricultural commodity processing facility in this state claiming
9
10 the exemption shall be adjusted annually so that the total estimated
10
11 reduction in tax liability does not exceed One Million Dollars
11
12 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
12
13 for determining the percentage of the investment which each eligible
13
14 taxpayer may exclude. The exclusion provided by this paragraph
14
15 shall be taken in the taxable year when the investment is made. In
15
16 the event the total reduction in tax liability authorized by this
16
17 paragraph exceeds One Million Dollars ($1,000,000.00) in any
17
18 calendar year, the Tax Commission shall permit any excess over One
18
19 Million Dollars ($1,000,000.00) and shall factor such excess into
19
20 the percentage for subsequent years. Any amount of the exemption
20
21 permitted to be excluded pursuant to the provisions of this
21
22 paragraph but not used in any year may be carried forward as an
22
23 exemption from income pursuant to the provisions of this paragraph
23
24
24
Req. No. 3530 Page 19
1 for a period not exceeding six (6) years following the year in which
1
2 the investment was originally made.
2
3 For purposes of this paragraph:
3
4 a. "Agricultural commodity processing facility" means
4
5 building buildings, structures, fixtures and
5
6 improvements used or operated primarily for the
6
7 processing or production of marketable products from
7
8 agricultural commodities. The term shall also mean a
8
9 dairy operation that requires a depreciable investment
9
10 of at least Two Hundred Fifty Thousand Dollars
10
11 ($250,000.00) and which produces milk from dairy cows.
11
12 The term does not include a facility that provides
12
13 only, and nothing more than, storage, cleaning, drying
13
14 or transportation of agricultural commodities, and
14
15 b. "Facility" means each part of the facility which is
15
16 used in a process primarily for:
16
17 (1) the processing of agricultural commodities,
17
18 including receiving or storing agricultural
18
19 commodities, or the production of milk at a dairy
19
20 operation,
20
21 (2) transporting the agricultural commodities or
21
22 product before, during or after the processing,
22
23 or
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24
24
Req. No. 3530 Page 20
1 (3) packaging or otherwise preparing the product for
1
2 sale or shipment.
2
3 7. Despite any provision to the contrary in paragraph 3 of this
3
4 subsection, for taxable years beginning after December 31, 1999, in
4
5 the case of a taxpayer which has a farming loss, such farming loss
5
6 shall be considered a net operating loss carryback in accordance
6
7 with and to the extent of the Internal Revenue Code of 1986, as
7
8 amended, 26 U.S.C., Section 172(b)(G) 172(b)(1)(B). However, the
8
9 amount of the net operating loss carryback shall not exceed the
9
10 lesser of:
10
11 a. Sixty Thousand Dollars ($60,000.00), or
11
12 b. the loss properly shown on Schedule F of the Internal
12
13 Revenue Service Form 1040 reduced by one-half (1/2) of
13
14 the income from all other sources other than reflected
14
15 on Schedule F.
15
16 8. In taxable years beginning after December 31, 1995, all
16
17 qualified wages equal to the federal income tax credit set forth in
17
18 26 U.S.C.A., Section 45A, shall be deducted from taxable income.
18
19 The deduction allowed pursuant to this paragraph shall only be
19
20 permitted for the tax years in which the federal tax credit pursuant
20
21 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
21
22 paragraph, "qualified wages" means those wages used to calculate the
22
23 federal credit pursuant to 26 U.S.C.A., Section 45A.
23
24
24
Req. No. 3530 Page 21
1 9. In taxable years beginning after December 31, 2005, an
1
2 employer that is eligible for and utilizes the Safety Pays OSHA
2
3 Consultation Service provided by the Oklahoma Department of Labor
3
4 shall receive an exemption from taxable income in the amount of One
4
5 Thousand Dollars ($1,000.00) for the tax year that the service is
5
6 utilized.
6
7 10. For taxable years beginning on or after January 1, 2010,
7
8 there shall be added to Oklahoma taxable income an amount equal to
8
9 the amount of deferred income not included in such taxable income
9
10 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
10
11 as amended by Section 1231 of the American Recovery and Reinvestment
11
12 Act of 2009 (P.L. No. 111-5). There shall be subtracted from
12
13 Oklahoma taxable income an amount equal to the amount of deferred
13
14 income included in such taxable income pursuant to Section 108(i)(1)
14
15 of the Internal Revenue Code of 1986 as amended by Section 1231 of
15
16 the American Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
16
17 11. For taxable years beginning on or after January 1, 2019,
17
18 there shall be subtracted from Oklahoma taxable income or adjusted
18
19 gross income any item of income or gain, and there shall be added to
19
20 Oklahoma taxable income or adjusted gross income any item of loss or
20
21 deduction that in the absence of an election pursuant to the
21
22 provisions of the Pass-Through Entity Tax Equity Act of 2019 would
22
23 be allocated to a member or to an indirect member of an electing
23
24 pass-through entity pursuant to Section 2351 et seq. of this title,
24
Req. No. 3530 Page 22
1 if (i) the electing pass-through entity has accounted for such item
1
2 in computing its Oklahoma net entity income or loss pursuant to the
2
3 provisions of the Pass-Through Entity Tax Equity Act of 2019, and
3
4 (ii) the total amount of tax attributable to any resulting Oklahoma
4
5 net entity income has been paid. The Oklahoma Tax Commission shall
5
6 promulgate rules for the reporting of such exclusion to direct and
6
7 indirect members of the electing pass-through entity. As used in
7
8 this paragraph, "electing pass-through entity", "indirect member",
8
9 and "member" shall be defined in the same manner as prescribed by
9
10 Section 2355.1P-2 of this title. Notwithstanding the application of
10
11 this paragraph, the adjusted tax basis of any ownership interest in
11
12 a pass-through entity for purposes of Section 2351 et seq. of this
12
13 title shall be equal to its adjusted tax basis for federal income
13
14 tax purposes.
14
15 B. 1. The taxable income of any corporation shall be further
15
16 adjusted to arrive at Oklahoma taxable income, except those
16
17 corporations electing treatment as provided in subchapter S of the
17
18 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1361
18
19 et seq., and Section 2365 of this title, deductions pursuant to the
19
20 provisions of the Modified Accelerated Cost Recovery System as
20
21 defined provided and allowed in the Economic Recovery Tax Act of
21
22 1981, Public Law 97-34, 26 U.S.C., Section 168, for depreciation of
22
23 assets placed into service after December 31, 1981, shall not be
23
24 allowed in calculating Oklahoma taxable income. Such corporations
24
Req. No. 3530 Page 23
1 shall be allowed a deduction for depreciation of assets placed into
1
2 service after December 31, 1981, in accordance with provisions of
2
3 the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1
3
4 et seq., in effect immediately prior to the enactment of the
4
5 Modified Accelerated Cost Recovery System. The Oklahoma tax basis
5
6 for all such assets placed into service after December 31, 1981,
6
7 calculated in this section shall be retained and utilized for all
7
8 Oklahoma income tax purposes through the final disposition of such
8
9 assets.
9
10 Notwithstanding any other provisions of the Oklahoma Income Tax
10
11 Act, Section 2351 et seq. of this title, or of the Internal Revenue
11
12 Code of 1986, as amended, to the contrary, this subsection shall
12
13 control calculation of depreciation of assets placed into service
13
14 after December 31, 1981, and before January 1, 1983.
14
15 For assets placed in service and held by a corporation in which
15
16 accelerated cost recovery system the Modified Accelerated Cost
16
17 Recovery System was previously disallowed, an adjustment to taxable
17
18 income is required in the first taxable year beginning after
18
19 December 31, 1982, to reconcile the basis of such assets to the
19
20 basis allowed in the Internal Revenue Code of 1986, as amended. The
20
21 purpose of this adjustment is to equalize the basis and allowance
21
22 for depreciation accounts between that reported to the Internal
22
23 Revenue Service and that reported to Oklahoma this state.
23
24
24
Req. No. 3530 Page 24
1 2. For tax years beginning on or after January 1, 2009, and
1
2 ending on or before December 31, 2009, there shall be added to
2
3 Oklahoma taxable income any amount in excess of One Hundred Seventy-
3
4 five Thousand Dollars ($175,000.00) which has been deducted as a
4
5 small business expense under Internal Revenue Code of 1986, as
5
6 amended, 26 U.S.C., Section 179, as provided in the American
6
7 Recovery and Reinvestment Act of 2009.
7
8 C. 1. For taxable years beginning after December 31, 1987, the
8
9 taxable income of any corporation shall be further adjusted to
9
10 arrive at Oklahoma taxable income for transfers of technology to
10
11 qualified small businesses located in Oklahoma this state. Such
11
12 transferor corporation shall be allowed an exemption from taxable
12
13 income of an amount equal to the amount of royalty payment received
13
14 as a result of such transfer; provided, however, such amount shall
14
15 not exceed ten percent (10%) of the amount of gross proceeds
15
16 received by such transferor corporation as a result of the
16
17 technology transfer. Such exemption shall be allowed for a period
17
18 not to exceed ten (10) years from the date of receipt of the first
18
19 royalty payment accruing from such transfer. No exemption may be
19
20 claimed for transfers of technology to qualified small businesses
20
21 made prior to January 1, 1988.
21
22 2. For purposes of this subsection:
22
23 a. "Qualified small business" means an entity, whether
23
24 organized as a corporation, partnership, or
24
Req. No. 3530 Page 25
1 proprietorship, organized for profit with its
1
2 principal place of business located within this state
2
3 and which meets the following criteria:
3
4 (1) Capitalization of not more than Two Hundred Fifty
4
5 Thousand Dollars ($250,000.00),
5
6 (2) Having at least fifty percent (50%) of its
6
7 employees and assets located in Oklahoma this
7
8 state at the time of the transfer, and
8
9 (3) Not a subsidiary or affiliate of the transferor
9
10 corporation;
10
11 b. "Technology" means a proprietary process, formula,
11
12 pattern, device or compilation of scientific or
12
13 technical information which is not in the public
13
14 domain;
14
15 c. "Transferor corporation" means a corporation which is
15
16 the exclusive and undisputed owner of the technology
16
17 at the time the transfer is made; and
17
18 d. "Gross proceeds" means the total amount of
18
19 consideration for the transfer of technology, whether
19
20 the consideration is in money or otherwise.
20
21 D. 1. For taxable years beginning after December 31, 2005, the
21
22 taxable income of any corporation, estate or trust, shall be further
22
23 adjusted for qualifying gains receiving capital treatment. Such
23
24 corporations, estates or trusts shall be allowed a deduction from
24
Req. No. 3530 Page 26
1 Oklahoma taxable income for the amount of qualifying gains receiving
1
2 capital treatment earned by the corporation, estate or trust during
2
3 the taxable year and included in the federal taxable income of such
3
4 corporation, estate or trust.
4
5 2. As used in this subsection:
5
6 a. "qualifying gains receiving capital treatment" means
6
7 the amount of net capital gains, as defined in Section
7
8 1222(11) of the Internal Revenue Code of 1986, as
8
9 amended, included in the federal income tax return of
9
10 the corporation, estate or trust that result from:
10
11 (1) the sale of real property or tangible personal
11
12 property located within Oklahoma this state that
12
13 has been directly or indirectly owned by the
13
14 corporation, estate or trust for a holding period
14
15 of at least five (5) years prior to the date of
15
16 the transaction from which such net capital gains
16
17 arise,
17
18 (2) the sale of stock or on the sale of an ownership
18
19 interest in an Oklahoma company, limited
19
20 liability company, or partnership where such
20
21 stock or ownership interest has been directly or
21
22 indirectly owned by the corporation, estate or
22
23 trust for a holding period of at least three (3)
23
24
24
Req. No. 3530 Page 27
1 years prior to the date of the transaction from
1
2 which the net capital gains arise, or
2
3 (3) the sale of real property, tangible personal
3
4 property or intangible personal property located
4
5 within Oklahoma this state as part of the sale of
5
6 all or substantially all of the assets of an
6
7 Oklahoma company, limited liability company, or
7
8 partnership where such property has been directly
8
9 or indirectly owned by such entity owned by the
9
10 owners of such entity, and used in or derived
10
11 from such entity for a period of at least three
11
12 (3) years prior to the date of the transaction
12
13 from which the net capital gains arise, or
13
14 (4) the sale or exchange of specie, as defined in
14
15 Section 4500 of Title 62 of the Oklahoma
15
16 Statutes, for tax year 2027 and subsequent tax
16
17 years,
17
18 b. "holding period" means an uninterrupted period of
18
19 time. The holding period shall include any additional
19
20 period when the property was held by another
20
21 individual or entity, if such additional period is
21
22 included in the taxpayer's holding period for the
22
23 asset pursuant to the Internal Revenue Code of 1986,
23
24 as amended,
24
Req. No. 3530 Page 28
1 c. "Oklahoma company", "limited liability company", or
1
2 "partnership" means an entity whose primary
2
3 headquarters have been located in Oklahoma this state
3
4 for at least three (3) uninterrupted years prior to
4
5 the date of the transaction from which the net capital
5
6 gains arise,
6
7 d. "direct" means the taxpayer directly owns the asset,
7
8 and
8
9 e. "indirect" means the taxpayer owns an interest in a
9
10 pass-through entity (or chain of pass-through
10
11 entities) that sells the asset that gives rise to the
11
12 qualifying gains receiving capital treatment.
12
13 (1) With respect to sales of real property or
13
14 tangible personal property located within
14
15 Oklahoma this state, the deduction described in
15
16 this subsection shall not apply unless the pass-
16
17 through entity that makes the sale has held the
17
18 property for not less than five (5) uninterrupted
18
19 years prior to the date of the transaction that
19
20 created the capital gain, and each pass-through
20
21 entity included in the chain of ownership has
21
22 been a member, partner, or shareholder of the
22
23 pass-through entity in the tier immediately below
23
24
24
Req. No. 3530 Page 29
1 it for an uninterrupted period of not less than
1
2 five (5) years.
2
3 (2) With respect to sales of stock or ownership
3
4 interest in or sales of all or substantially all
4
5 of the assets of an Oklahoma company, limited
5
6 liability company, or partnership, the deduction
6
7 described in this subsection shall not apply
7
8 unless the pass-through entity that makes the
8
9 sale has held the stock or ownership interest or
9
10 the assets for not less than three (3)
10
11 uninterrupted years prior to the date of the
11
12 transaction that created the capital gain, and
12
13 each pass-through entity included in the chain of
13
14 ownership has been a member, partner or
14
15 shareholder of the pass-through entity in the
15
16 tier immediately below it for an uninterrupted
16
17 period of not less than three (3) years.
17
18 E. The Oklahoma adjusted gross income of any individual
18
19 taxpayer shall be further adjusted as follows to arrive at Oklahoma
19
20 taxable income:
20
21 1. a. In the case of individuals, there shall be added or
21
22 deducted, as the case may be, the difference necessary
22
23 to allow personal exemptions of One Thousand Dollars
23
24
24
Req. No. 3530 Page 30
1 ($1,000.00) in lieu of the personal exemptions allowed
1
2 by the Internal Revenue Code of 1986, as amended.
2
3 b. There shall be allowed an additional exemption of One
3
4 Thousand Dollars ($1,000.00) for each taxpayer or
4
5 spouse who is blind at the close of the tax year. For
5
6 purposes of this subparagraph, an individual is blind
6
7 only if the central visual acuity of the individual
7
8 does not exceed 20/200 in the better eye with
8
9 correcting lenses, or if the visual acuity of the
9
10 individual is greater than 20/200, but is accompanied
10
11 by a limitation in the fields of vision such that the
11
12 widest diameter of the visual field subtends an angle
12
13 no greater than twenty (20) degrees.
13
14 c. There shall be allowed an additional exemption of One
14
15 Thousand Dollars ($1,000.00) for each taxpayer or
15
16 spouse who is sixty-five (65) years of age or older at
16
17 the close of the tax year based upon the filing status
17
18 and federal adjusted gross income of the taxpayer.
18
19 Taxpayers with the following filing status may claim
19
20 this exemption if the federal adjusted gross income
20
21 does not exceed:
21
22 (1) Twenty-five Thousand Dollars ($25,000.00) if
22
23 married and filing jointly,
23
24
24
Req. No. 3530 Page 31
1 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
1
2 if married and filing separately,
2
3 (3) Fifteen Thousand Dollars ($15,000.00) if single,
3
4 and
4
5 (4) Nineteen Thousand Dollars ($19,000.00) if a
5
6 qualifying head of household.
6
7 Provided, for taxable years beginning after December
7
8 31, 1999, amounts included in the calculation of
8
9 federal adjusted gross income pursuant to the
9
10 conversion of a traditional individual retirement
10
11 account to a Roth individual retirement account shall
11
12 be excluded from federal adjusted gross income for
12
13 purposes of the income thresholds provided in this
13
14 subparagraph.
14
15 2. a. For taxable years beginning on or before December 31,
15
16 2005, in the case of individuals who use the standard
16
17 deduction in determining taxable income, there shall
17
18 be added or deducted, as the case may be, the
18
19 difference necessary to allow a standard deduction in
19
20 lieu of the standard deduction allowed by the Internal
20
21 Revenue Code of 1986, as amended, in an amount equal
21
22 to the larger of fifteen percent (15%) of the Oklahoma
22
23 adjusted gross income or One Thousand Dollars
23
24 ($1,000.00), but not to exceed Two Thousand Dollars
24
Req. No. 3530 Page 32
1 ($2,000.00), except that in the case of a married
1
2 individual filing a separate return such deduction
2
3 shall be the larger of fifteen percent (15%) of such
3
4 Oklahoma adjusted gross income or Five Hundred Dollars
4
5 ($500.00), but not to exceed the maximum amount of One
5
6 Thousand Dollars ($1,000.00).
6
7 b. For taxable years beginning on or after January 1,
7
8 2006, and before January 1, 2007, in the case of
8
9 individuals who use the standard deduction in
9
10 determining taxable income, there shall be added or
10
11 deducted, as the case may be, the difference necessary
11
12 to allow a standard deduction in lieu of the standard
12
13 deduction allowed by the Internal Revenue Code of
13
14 1986, as amended, in an amount equal to:
14
15 (1) Three Thousand Dollars ($3,000.00), if the filing
15
16 status is married filing joint, head of household
16
17 or qualifying widow, or
17
18 (2) Two Thousand Dollars ($2,000.00), if the filing
18
19 status is single or married filing separate.
19
20 c. For the taxable year beginning on January 1, 2007, and
20
21 ending December 31, 2007, in the case of individuals
21
22 who use the standard deduction in determining taxable
22
23 income, there shall be added or deducted, as the case
23
24 may be, the difference necessary to allow a standard
24
Req. No. 3530 Page 33
1 deduction in lieu of the standard deduction allowed by
1
2 the Internal Revenue Code of 1986, as amended, in an
2
3 amount equal to:
3
4 (1) Five Thousand Five Hundred Dollars ($5,500.00),
4
5 if the filing status is married filing joint or
5
6 qualifying widow, or
6
7 (2) Four Thousand One Hundred Twenty-five Dollars
7
8 ($4,125.00) for a head of household, or
8
9 (3) Two Thousand Seven Hundred Fifty Dollars
9
10 ($2,750.00), if the filing status is single or
10
11 married filing separate.
11
12 d. For the taxable year beginning on January 1, 2008, and
12
13 ending December 31, 2008, in the case of individuals
13
14 who use the standard deduction in determining taxable
14
15 income, there shall be added or deducted, as the case
15
16 may be, the difference necessary to allow a standard
16
17 deduction in lieu of the standard deduction allowed by
17
18 the Internal Revenue Code of 1986, as amended, in an
18
19 amount equal to:
19
20 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
20
21 the filing status is married filing joint or
21
22 qualifying widow,
22
23 (2) Four Thousand Eight Hundred Seventy-five Dollars
23
24 ($4,875.00) for a head of household, or
24
Req. No. 3530 Page 34
1 (3) Three Thousand Two Hundred Fifty Dollars
1
2 ($3,250.00), if the filing status is single or
2
3 married filing separate.
3
4 e. For the taxable year beginning on January 1, 2009, and
4
5 ending December 31, 2009, in the case of individuals
5
6 who use the standard deduction in determining taxable
6
7 income, there shall be added or deducted, as the case
7
8 may be, the difference necessary to allow a standard
8
9 deduction in lieu of the standard deduction allowed by
9
10 the Internal Revenue Code of 1986, as amended, in an
10
11 amount equal to:
11
12 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
12
13 if the filing status is married filing joint or
13
14 qualifying widow,
14
15 (2) Six Thousand Three Hundred Seventy-five Dollars
15
16 ($6,375.00) for a head of household, or
16
17 (3) Four Thousand Two Hundred Fifty Dollars
17
18 ($4,250.00), if the filing status is single or
18
19 married filing separate.
19
20 Oklahoma adjusted gross income shall be increased by
20
21 any amounts paid for motor vehicle excise taxes which
21
22 were deducted as allowed by the Internal Revenue Code
22
23 of 1986, as amended.
23
24
24
Req. No. 3530 Page 35
1 f. For taxable years beginning on or after January 1,
1
2 2010, and ending on December 31, 2016, in the case of
2
3 individuals who use the standard deduction in
3
4 determining taxable income, there shall be added or
4
5 deducted, as the case may be, the difference necessary
5
6 to allow a standard deduction equal to the standard
6
7 deduction allowed by the Internal Revenue Code of
7
8 1986, as amended, based upon the amount and filing
8
9 status prescribed by such Code for purposes of filing
9
10 federal individual income tax returns.
10
11 g. For taxable years beginning on or after January 1,
11
12 2017, in the case of individuals who use the standard
12
13 deduction in determining taxable income, there shall
13
14 be added or deducted, as the case may be, the
14
15 difference necessary to allow a standard deduction in
15
16 lieu of the standard deduction allowed by the Internal
16
17 Revenue Code of 1986, as amended, as follows:
17
18 (1) Six Thousand Three Hundred Fifty Dollars
18
19 ($6,350.00) for single or married filing
19
20 separately,
20
21 (2) Twelve Thousand Seven Hundred Dollars
21
22 ($12,700.00) for married filing jointly or
22
23 qualifying widower with dependent child, and
23
24
24
Req. No. 3530 Page 36
1 (3) Nine Thousand Three Hundred Fifty Dollars
1
2 ($9,350.00) for head of household.
2
3 3. a. In the case of resident and part-year resident
3
4 individuals having adjusted gross income from sources
4
5 both within and without the state, the itemized or
5
6 standard deductions and personal exemptions shall be
6
7 reduced to an amount which is the same portion of the
7
8 total thereof as Oklahoma adjusted gross income is of
8
9 adjusted gross income. To the extent itemized
9
10 deductions include allowable moving expense, proration
10
11 of moving expense shall not be required or permitted
11
12 but allowable moving expense shall be fully deductible
12
13 for those taxpayers moving within or into Oklahoma
13
14 this state and no part of moving expense shall be
14
15 deductible for those taxpayers moving without or out
15
16 of Oklahoma this state. All other itemized or
16
17 standard deductions and personal exemptions shall be
17
18 subject to proration as provided by law.
18
19 b. For taxable years beginning on or after January 1,
19
20 2018, the net amount of itemized deductions allowable
20
21 on an Oklahoma income tax return, subject to the
21
22 provisions of paragraph 24 23 of this subsection,
22
23 shall not exceed Seventeen Thousand Dollars
23
24 ($17,000.00). For purposes of this subparagraph,
24
Req. No. 3530 Page 37
1 charitable contributions and medical expenses
1
2 deductible for federal income tax purposes shall be
2
3 excluded from the amount of Seventeen Thousand Dollars
3
4 ($17,000.00) as specified by this subparagraph.
4
5 4. A resident individual with a physical disability
5
6 constituting a substantial handicap to employment may deduct from
6
7 Oklahoma adjusted gross income such expenditures to modify a motor
7
8 vehicle, home or workplace as are necessary to compensate for his or
8
9 her handicap disability. A veteran certified by the United States
9
10 Department of Veterans Affairs of the federal government as having a
10
11 service-connected disability shall be conclusively presumed to be an
11
12 individual with a physical disability constituting a substantial
12
13 handicap to employment. The Tax Commission shall promulgate rules
13
14 containing a list of combinations of common disabilities and
14
15 modifications which may be presumed to qualify for this deduction.
15
16 The Tax Commission shall prescribe necessary requirements for
16
17 verification.
17
18 5. a. Before July 1, 2010, the first One Thousand Five
18
19 Hundred Dollars ($1,500.00) received by any person
19
20 from the United States as salary or compensation in
20
21 any form, other than retirement benefits, as a member
21
22 of any component of the Armed Forces of the United
22
23 States shall be deducted from taxable income.
23
24
24
Req. No. 3530 Page 38
1 b. On or after July 1, 2010, one hundred percent (100%)
1
2 of the income received by any person from the United
2
3 States as salary or compensation in any form, other
3
4 than retirement benefits, as a member of any component
4
5 of the Armed Forces of the United States shall be
5
6 deducted from taxable income.
6
7 c. Whenever the filing of a timely income tax return by a
7
8 member of the Armed Forces of the United States is
8
9 made impracticable or impossible of accomplishment by
9
10 reason of:
10
11 (1) absence from the United States, which term
11
12 includes only the states and the District of
12
13 Columbia,
13
14 (2) absence from the State of Oklahoma this state
14
15 while on active duty, or
15
16 (3) confinement in a hospital within the United
16
17 States for treatment of wounds, injuries or
17
18 disease,
18
19 the time for filing a return and paying an income tax
19
20 shall be and is hereby extended without incurring
20
21 liability for interest or penalties, to the fifteenth
21
22 day of the third month following the month in which:
22
23 (a) Such individual shall return to the United
23
24 States if the extension is granted pursuant
24
Req. No. 3530 Page 39
1 to subparagraph a division 1 of this
1
2 paragraph subparagraph, return to the State
2
3 of Oklahoma this state if the extension is
3
4 granted pursuant to subparagraph b division
4
5 2 of this paragraph subparagraph or be
5
6 discharged from such hospital if the
6
7 extension is granted pursuant to
7
8 subparagraph c division 3 of this paragraph
8
9 subparagraph, or
9
10 (b) An executor, administrator, or conservator
10
11 of the estate of the taxpayer is appointed,
11
12 whichever event occurs the earliest.
12
13 Provided, that the Tax Commission may, in its discretion, grant
13
14 any member of the Armed Forces of the United States an extension of
14
15 time for filing of income tax returns and payment of income tax
15
16 without incurring liabilities for interest or penalties. Such
16
17 extension may be granted only when in the judgment of the Tax
17
18 Commission a good cause exists therefor and may be for a period in
18
19 excess of six (6) months. A record of every such extension granted,
19
20 and the reason therefor, shall be kept.
20
21 6. Before July 1, 2010, the salary or any other form of
21
22 compensation, received from the United States by a member of any
22
23 component of the Armed Forces of the United States, shall be
23
24 deducted from taxable income during the time in which the person is
24
Req. No. 3530 Page 40
1 detained by the enemy in a conflict, is a prisoner of war or is
1
2 missing in action and not deceased; provided, after July 1, 2010,
2
3 all such salary or compensation shall be subject to the deduction as
3
4 provided pursuant to paragraph 5 of this subsection.
4
5 7. a. An individual taxpayer, whether resident or
5
6 nonresident, may deduct an amount equal to the federal
6
7 income taxes paid by the taxpayer during the taxable
7
8 year.
8
9 b. Federal taxes as described in subparagraph a of this
9
10 paragraph shall be deductible by any individual
10
11 taxpayer, whether resident or nonresident, only to the
11
12 extent they relate to income subject to taxation
12
13 pursuant to the provisions of the Oklahoma Income Tax
13
14 Act. The maximum amount allowable in the preceding
14
15 paragraph 5 of this subsection shall be prorated on
15
16 the ratio of the Oklahoma adjusted gross income to
16
17 federal adjusted gross income.
17
18 c. For the purpose of this paragraph, "federal income
18
19 taxes paid" shall mean federal income taxes, surtaxes
19
20 imposed on incomes or excess profits taxes, as though
20
21 the taxpayer was on the accrual basis. In determining
21
22 the amount of deduction for federal income taxes for
22
23 tax year 2001, the amount of the deduction shall not
23
24 be adjusted by the amount of any accelerated ten
24
Req. No. 3530 Page 41
1 percent (10%) tax rate bracket credit or advanced
1
2 refund of the credit received during the tax year
2
3 provided pursuant to the federal Economic Growth and
3
4 Tax Relief Reconciliation Act of 2001, P.L. No. 107-
4
5 16, and the advanced refund of such credit shall not
5
6 be subject to taxation.
6
7 d. The provisions of this paragraph shall apply to all
7
8 taxable years ending after December 31, 1978, and
8
9 beginning before January 1, 2006.
9
10 8. Retirement benefits not to exceed Five Thousand Five Hundred
10
11 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
11
12 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
12
13 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
13
14 years, which are received by an individual from the civil service of
14
15 the United States, the Oklahoma Public Employees Retirement System,
15
16 the Teachers' Retirement System of Oklahoma, the Oklahoma Law
16
17 Enforcement Retirement System, the Oklahoma Firefighters Pension and
17
18 Retirement System, the Oklahoma Police Pension and Retirement
18
19 System, the employee retirement systems created by counties pursuant
19
20 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the The
20
21 Uniform Retirement System for Justices and Judges, the Oklahoma
21
22 Wildlife Conservation Department Retirement Fund, the Oklahoma
22
23 Employment Security Commission Retirement Plan, or the employee
23
24 retirement systems created by municipalities pursuant to Section 48-
24
Req. No. 3530 Page 42
1 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
1
2 from taxable income.
2
3 9. In taxable years beginning after December 3l, 1984, Social
3
4 Security benefits received by an individual shall be exempt from
4
5 taxable income, to the extent such benefits are included in the
5
6 federal adjusted gross income pursuant to the provisions of Section
6
7 86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C.,
7
8 Section 86.
8
9 10. For taxable years beginning after December 31, 1994, lump-
9
10 sum distributions from employer plans of deferred compensation,
10
11 which are not qualified plans within the meaning of Section 401(a)
11
12 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
12
13 401(a), and which are deposited in and accounted for within a
13
14 separate bank account or brokerage account in a financial
14
15 institution within this state, shall be excluded from taxable income
15
16 in the same manner as a qualifying rollover contribution to an
16
17 individual retirement account within the meaning of Section 408 of
17
18 the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
18
19 408. Amounts withdrawn from such bank or brokerage account,
19
20 including any earnings thereon, shall be included in taxable income
20
21 when withdrawn in the same manner as withdrawals from individual
21
22 retirement accounts within the meaning of Section 408 of the
22
23 Internal Revenue Code of 1986, as amended.
23
24
24
Req. No. 3530 Page 43
1 11. In taxable years beginning after December 31, 1995,
1
2 contributions made to and interest received from a medical savings
2
3 account established pursuant to Sections 2621 through 2623 of Title
3
4 63 of the Oklahoma Statutes shall be exempt from taxable income.
4
5 12. For taxable years beginning after December 31, 1996, the
5
6 Oklahoma adjusted gross income of any individual taxpayer who is a
6
7 swine or poultry producer may be further adjusted for the deduction
7
8 for depreciation allowed for new construction or expansion costs
8
9 which may be computed using the same depreciation method elected for
9
10 federal income tax purposes except that the useful life shall be
10
11 seven (7) years for purposes of this paragraph. If depreciation is
11
12 allowed as a deduction in determining the adjusted gross income of
12
13 an individual, any depreciation calculated and claimed pursuant to
13
14 this section shall in no event be a duplication of any depreciation
14
15 allowed or permitted on the federal income tax return of the
15
16 individual.
16
17 13. a. In taxable years beginning before January 1, 2005,
17
18 retirement benefits not to exceed the amounts
18
19 specified in this paragraph, which are received by an
19
20 individual sixty-five (65) years of age or older and
20
21 whose Oklahoma adjusted gross income is Twenty-five
21
22 Thousand Dollars ($25,000.00) or less if the filing
22
23 status is single, head of household, or married filing
23
24 separate, or Fifty Thousand Dollars ($50,000.00) or
24
Req. No. 3530 Page 44
1 less if the filing status is married filing joint or
1
2 qualifying widow, shall be exempt from taxable income.
2
3 In taxable years beginning after December 31, 2004,
3
4 retirement benefits not to exceed the amounts
4
5 specified in this paragraph, which are received by an
5
6 individual whose Oklahoma adjusted gross income is
6
7 less than the qualifying amount specified in this
7
8 paragraph, shall be exempt from taxable income.
8
9 b. For purposes of this paragraph, the qualifying amount
9
10 shall be as follows:
10
11 (1) in taxable years beginning after December 31,
11
12 2004, and prior to January 1, 2007, the
12
13 qualifying amount shall be Thirty-seven Thousand
13
14 Five Hundred Dollars ($37,500.00) or less if the
14
15 filing status is single, head of household, or
15
16 married filing separate, or Seventy-five Thousand
16
17 Dollars ($75,000.00) or less if the filing status
17
18 is married filing jointly or qualifying widow,
18
19 (2) in the taxable year beginning January 1, 2007,
19
20 the qualifying amount shall be Fifty Thousand
20
21 Dollars ($50,000.00) or less if the filing status
21
22 is single, head of household, or married filing
22
23 separate, or One Hundred Thousand Dollars
23
24
24
Req. No. 3530 Page 45
1 ($100,000.00) or less if the filing status is
1
2 married filing jointly or qualifying widow,
2
3 (3) in the taxable year beginning January 1, 2008,
3
4 the qualifying amount shall be Sixty-two Thousand
4
5 Five Hundred Dollars ($62,500.00) or less if the
5
6 filing status is single, head of household, or
6
7 married filing separate, or One Hundred Twenty-
7
8 five Thousand Dollars ($125,000.00) or less if
8
9 the filing status is married filing jointly or
9
10 qualifying widow,
10
11 (4) in the taxable year beginning January 1, 2009,
11
12 the qualifying amount shall be One Hundred
12
13 Thousand Dollars ($100,000.00) or less if the
13
14 filing status is single, head of household, or
14
15 married filing separate, or Two Hundred Thousand
15
16 Dollars ($200,000.00) or less if the filing
16
17 status is married filing jointly or qualifying
17
18 widow, and
18
19 (5) in the taxable year beginning January 1, 2010,
19
20 and subsequent taxable years, there shall be no
20
21 limitation upon the qualifying amount.
21
22 c. For purposes of this paragraph, "retirement benefits"
22
23 means the total distributions or withdrawals from the
23
24 following:
24
Req. No. 3530 Page 46
1 (1) an employee pension benefit plan which satisfies
1
2 the requirements of Section 401 of the Internal
2
3 Revenue Code of 1986, as amended, 26 U.S.C.,
3
4 Section 401,
4
5 (2) an eligible deferred compensation plan that
5
6 satisfies the requirements of Section 457 of the
6
7 Internal Revenue Code of 1986, as amended, 26
7
8 U.S.C., Section 457,
8
9 (3) an individual retirement account, annuity or
9
10 trust or simplified employee pension that
10
11 satisfies the requirements of Section 408 of the
11
12 Internal Revenue Code of 1986, as amended, 26
12
13 U.S.C., Section 408,
13
14 (4) an employee annuity subject to the provisions of
14
15 Section 403(a) or (b) of the Internal Revenue
15
16 Code of 1986, as amended, 26 U.S.C., Section
16
17 403(a) or (b),
17
18 (5) United States Retirement Bonds which satisfy the
18
19 requirements of Section 86 of the Internal
19
20 Revenue Code of 1986, as amended, 26 U.S.C.,
20
21 Section 86, or
21
22 (6) lump-sum distributions from a retirement plan
22
23 which satisfies the requirements of Section
23
24
24
Req. No. 3530 Page 47
1 402(e) of the Internal Revenue Code of 1986, as
1
2 amended, 26 U.S.C., Section 402(e).
2
3 d. The amount of the exemption provided by this paragraph
3
4 shall be limited to Five Thousand Five Hundred Dollars
4
5 ($5,500.00) for the 2004 tax year, Seven Thousand Five
5
6 Hundred Dollars ($7,500.00) for the 2005 tax year and
6
7 Ten Thousand Dollars ($10,000.00) for the tax year
7
8 2006 and for all subsequent tax years. Any individual
8
9 who claims the exemption provided for in paragraph 8
9
10 of this subsection shall not be permitted to claim a
10
11 combined total exemption pursuant to this paragraph
11
12 and paragraph 8 of this subsection in an amount
12
13 exceeding Five Thousand Five Hundred Dollars
13
14 ($5,500.00) for the 2004 tax year, Seven Thousand Five
14
15 Hundred Dollars ($7,500.00) for the 2005 tax year and
15
16 Ten Thousand Dollars ($10,000.00) for the 2006 tax
16
17 year and all subsequent tax years.
17
18 14. In taxable years beginning after December 31, 1999, for an
18
19 individual engaged in production agriculture who has filed a
19
20 Schedule F form with the taxpayer's federal income tax return for
20
21 such taxable year, there shall be excluded from taxable income any
21
22 amount which was included as federal taxable income or federal
22
23 adjusted gross income and which consists of the discharge of an
23
24
24
Req. No. 3530 Page 48
1 obligation by a creditor of the taxpayer incurred to finance the
1
2 production of agricultural products.
2
3 15. In taxable years beginning December 31, 2000, an amount
3
4 equal to one hundred percent (100%) of the amount of any scholarship
4
5 or stipend received from participation in the Oklahoma Police Corps
5
6 Program, as established in Section 2-140.3 of Title 47 of the
6
7 Oklahoma Statutes shall be exempt from taxable income.
7
8 16. a. In taxable years beginning after December 31, 2001,
8
9 and before January 1, 2005, there shall be allowed a
9
10 deduction in the amount of contributions to accounts
10
11 established pursuant to the Oklahoma College Savings
11
12 Plan Act. The deduction shall equal the amount of
12
13 contributions to accounts, but in no event shall the
13
14 deduction for each contributor exceed Two Thousand
14
15 Five Hundred Dollars ($2,500.00) each taxable year for
15
16 each account.
16
17 b. In taxable years beginning after December 31, 2004,
17
18 each taxpayer shall be allowed a deduction for
18
19 contributions to accounts established pursuant to the
19
20 Oklahoma College Savings Plan Act. The maximum annual
20
21 deduction shall equal the amount of contributions to
21
22 all such accounts plus any contributions to such
22
23 accounts by the taxpayer for prior taxable years after
23
24 December 31, 2004, which were not deducted, but in no
24
Req. No. 3530 Page 49
1 event shall the deduction for each tax year exceed Ten
1
2 Thousand Dollars ($10,000.00) for each individual
2
3 taxpayer or Twenty Thousand Dollars ($20,000.00) for
3
4 taxpayers filing a joint return. Any amount of a
4
5 contribution that is not deducted by the taxpayer in
5
6 the year for which the contribution is made may be
6
7 carried forward as a deduction from income for the
7
8 succeeding five (5) years. For taxable years
8
9 beginning after December 31, 2005, deductions may be
9
10 taken for contributions and rollovers made during a
10
11 taxable year and up to April 15 of the succeeding
11
12 year, or the due date of a taxpayer's state income tax
12
13 return, excluding extensions, whichever is later.
13
14 Provided, a deduction for the same contribution may
14
15 not be taken for two (2) different taxable years.
15
16 c. In taxable years beginning after December 31, 2006,
16
17 deductions for contributions made pursuant to
17
18 subparagraph b of this paragraph shall be limited as
18
19 follows:
19
20 (1) for a taxpayer who qualified for the five-year
20
21 carryforward election and who takes a rollover or
21
22 nonqualified withdrawal during that period, the
22
23 tax deduction otherwise available pursuant to
23
24 subparagraph b of this paragraph shall be reduced
24
Req. No. 3530 Page 50
1 by the amount which is equal to the rollover or
1
2 nonqualified withdrawal, and
2
3 (2) for a taxpayer who elects to take a rollover or
3
4 nonqualified withdrawal within the same tax year
4
5 in which a contribution was made to the
5
6 taxpayer's account, the tax deduction otherwise
6
7 available pursuant to subparagraph b of this
7
8 paragraph shall be reduced by the amount of the
8
9 contribution which is equal to the rollover or
9
10 nonqualified withdrawal.
10
11 d. If a taxpayer elects to take a rollover on a
11
12 contribution for which a deduction has been taken
12
13 pursuant to subparagraph b of this paragraph within
13
14 one (1) year of the date of contribution, the amount
14
15 of such rollover shall be included in the adjusted
15
16 gross income of the taxpayer in the taxable year of
16
17 the rollover.
17
18 e. If a taxpayer makes a nonqualified withdrawal of
18
19 contributions for which a deduction was taken pursuant
19
20 to subparagraph b of this paragraph, such nonqualified
20
21 withdrawal and any earnings thereon shall be included
21
22 in the adjusted gross income of the taxpayer in the
22
23 taxable year of the nonqualified withdrawal.
23
24 f. As used in this paragraph:
24
Req. No. 3530 Page 51
1 (1) "non-qualified "nonqualified withdrawal" means a
1
2 withdrawal from an Oklahoma College Savings Plan
2
3 account other than one of the following:
3
4 (a) a qualified withdrawal,
4
5 (b) a withdrawal made as a result of the death
5
6 or disability of the designated beneficiary
6
7 of an account,
7
8 (c) a withdrawal that is made on the account of
8
9 a scholarship or the allowance or payment
9
10 described in Section 135(d)(1)(B) or (C) or
10
11 by the Internal Revenue Code of 1986, as
11
12 amended, received by the designated
12
13 beneficiary to the extent the amount of the
13
14 refund does not exceed the amount of the
14
15 scholarship, allowance, or payment, or
15
16 (d) a rollover or change of designated
16
17 beneficiary as permitted by subsection F of
17
18 Section 3970.7 of Title 70 of the Oklahoma
18
19 Statutes, and
19
20 (2) "rollover" means the transfer of funds from the
20
21 Oklahoma College Savings Plan to any other plan
21
22 under Section 529 of the Internal Revenue Code of
22
23 1986, as amended.
23
24
24
Req. No. 3530 Page 52
1 17. For tax years 2006 through 2021, retirement benefits
1
2 received by an individual from any component of the Armed Forces of
2
3 the United States in an amount not to exceed the greater of seventy-
3
4 five percent (75%) of such benefits or Ten Thousand Dollars
4
5 ($10,000.00) shall be exempt from taxable income but in no case less
5
6 than the amount of the exemption provided by paragraph 13 of this
6
7 subsection. For tax year 2022 and subsequent tax years, retirement
7
8 benefits received by an individual from any component of the Armed
8
9 Forces of the United States shall be exempt from taxable income.
9
10 18. For taxable years beginning after December 31, 2006,
10
11 retirement benefits received by federal civil service retirees,
11
12 including survivor annuities, paid in lieu of Social Security
12
13 benefits shall be exempt from taxable income to the extent such
13
14 benefits are included in the federal adjusted gross income pursuant
14
15 to the provisions of Section 86 of the Internal Revenue Code of
15
16 1986, as amended, 26 U.S.C., Section 86, according to the following
16
17 schedule:
17
18 a. in the taxable year beginning January 1, 2007, twenty
18
19 percent (20%) of such benefits shall be exempt,
19
20 b. in the taxable year beginning January 1, 2008, forty
20
21 percent (40%) of such benefits shall be exempt,
21
22 c. in the taxable year beginning January 1, 2009, sixty
22
23 percent (60%) of such benefits shall be exempt,
23
24
24
Req. No. 3530 Page 53
1 d. in the taxable year beginning January 1, 2010, eighty
1
2 percent (80%) of such benefits shall be exempt, and
2
3 e. in the taxable year beginning January 1, 2011, and
3
4 subsequent taxable years, one hundred percent (100%)
4
5 of such benefits shall be exempt.
5
6 19. a. For taxable years beginning after December 31, 2007, a
6
7 resident individual may deduct up to Ten Thousand
7
8 Dollars ($10,000.00) from Oklahoma adjusted gross
8
9 income if the individual, or the dependent of the
9
10 individual, while living, donates one or more human
10
11 organs of the individual to another human being for
11
12 human organ transplantation. As used in this
12
13 paragraph, "human organ" means all or part of a liver,
13
14 pancreas, kidney, intestine, lung, or bone marrow. A
14
15 deduction that is claimed under this paragraph may be
15
16 claimed in the taxable year in which the human organ
16
17 transplantation occurs.
17
18 b. An individual may claim this deduction only once, and
18
19 the deduction may be claimed only for unreimbursed
19
20 expenses that are incurred by the individual and
20
21 related to the organ donation of the individual.
21
22 c. The Oklahoma Tax Commission shall promulgate rules to
22
23 implement the provisions of this paragraph which shall
23
24 contain a specific list of expenses which may be
24
Req. No. 3530 Page 54
1 presumed to qualify for the deduction. The Tax
1
2 Commission shall prescribe necessary requirements for
2
3 verification.
3
4 20. For taxable years beginning after December 31, 2009, there
4
5 shall be exempt from taxable income any amount received by the
5
6 beneficiary of the death benefit for an any licensed emergency
6
7 medical technician personnel or a registered certified emergency
7
8 medical responder provided by Section 1-2505.1 of Title 63 of the
8
9 Oklahoma Statutes.
9
10 21. For taxable years beginning after December 31, 2008,
10
11 taxable income shall be increased by any unemployment compensation
11
12 exempted under Section 85(c) of the Internal Revenue Code of 1986,
12
13 as amended, 26 U.S.C., Section 85(c)(2009).
13
14 22. For taxable years beginning after December 31, 2008, there
14
15 shall be exempt from taxable income any payment in an amount less
15
16 than Six Hundred Dollars ($600.00) received by a person as an award
16
17 for participation in a competitive livestock show event. For
17
18 purposes of this paragraph, the payment shall be treated as a
18
19 scholarship amount paid by the entity sponsoring the event and the
19
20 sponsoring entity shall cause the payment to be categorized as a
20
21 scholarship in its books and records.
21
22 23. For taxable years beginning on or after January 1, 2016,
22
23 taxable income shall be increased by any amount of state and local
23
24 sales or income taxes deducted under 26 U.S.C., Section 164 of the
24
Req. No. 3530 Page 55
1 Internal Revenue Code of 1986, as amended. If the amount of state
1
2 and local taxes deducted on the federal return is limited, taxable
2
3 income on the state return shall be increased only by the amount
3
4 actually deducted after any such limitations are applied.
4
5 24. For taxable years beginning after December 31, 2020, each
5
6 taxpayer shall be allowed a deduction for contributions to accounts
6
7 established pursuant to the Achieving a Better Life Experience
7
8 (ABLE) Program program as established in Section 4001.1 et seq. of
8
9 Title 56 of the Oklahoma Statutes. For any tax year, the deduction
9
10 provided for in this paragraph shall not exceed Ten Thousand Dollars
10
11 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
11
12 ($20,000.00) for taxpayers filing a joint return. Any amount of
12
13 contribution not deducted by the taxpayer in the tax year for which
13
14 the contribution is made may be carried forward as a deduction from
14
15 income for up to five (5) tax years. Deductions may be taken for
15
16 contributions made during the tax year and through April 15 of the
16
17 succeeding tax year, or through the due date of a taxpayer's state
17
18 income tax return excluding extensions, whichever is later.
18
19 Provided, a deduction for the same contribution may not be taken in
19
20 more than one (1) tax year.
20
21 F. 1. For taxable years beginning after December 31, 2004, a
21
22 deduction from the Oklahoma adjusted gross income of any individual
22
23 taxpayer shall be allowed for qualifying gains receiving capital
23
24
24
Req. No. 3530 Page 56
1 treatment that are included in the federal adjusted gross income of
1
2 such individual taxpayer during the taxable year.
2
3 2. As used in this subsection:
3
4 a. "qualifying gains receiving capital treatment" means
4
5 the amount of net capital gains, as defined in Section
5
6 1222(11) of the Internal Revenue Code of 1986, as
6
7 amended, included in an individual taxpayer's federal
7
8 income tax return that result from:
8
9 (1) the sale of real property or tangible personal
9
10 property located within Oklahoma this state that
10
11 has been directly or indirectly owned by the
11
12 individual taxpayer for a holding period of at
12
13 least five (5) years prior to the date of the
13
14 transaction from which such net capital gains
14
15 arise,
15
16 (2) the sale of stock or the sale of a direct or
16
17 indirect ownership interest in an Oklahoma
17
18 company, limited liability company, or
18
19 partnership where such stock or ownership
19
20 interest has been directly or indirectly owned by
20
21 the individual taxpayer for a holding period of
21
22 at least two (2) years prior to the date of the
22
23 transaction from which the net capital gains
23
24 arise, or
24
Req. No. 3530 Page 57
1 (3) the sale of real property, tangible personal
1
2 property or intangible personal property located
2
3 within Oklahoma this state as part of the sale of
3
4 all or substantially all of the assets of an
4
5 Oklahoma company, limited liability company, or
5
6 partnership or an Oklahoma proprietorship
6
7 business enterprise where such property has been
7
8 directly or indirectly owned by such entity or
8
9 business enterprise or owned by the owners of
9
10 such entity or business enterprise for a period
10
11 of at least two (2) years prior to the date of
11
12 the transaction from which the net capital gains
12
13 arise, or
13
14 (4) the sale or exchange of specie, as defined in
14
15 Section 4500 of Title 62 of the Oklahoma
15
16 Statutes, for tax year 2027 and subsequent tax
16
17 years,
17
18 b. "holding period" means an uninterrupted period of
18
19 time. The holding period shall include any additional
19
20 period when the property was held by another
20
21 individual or entity, if such additional period is
21
22 included in the taxpayer's holding period for the
22
23 asset pursuant to the Internal Revenue Code of 1986,
23
24 as amended,
24
Req. No. 3530 Page 58
1 c. "Oklahoma company," "limited liability company," or
1
2 "partnership" means an entity whose primary
2
3 headquarters have been located in Oklahoma this state
3
4 for at least three (3) uninterrupted years prior to
4
5 the date of the transaction from which the net capital
5
6 gains arise,
6
7 d. "direct" means the individual taxpayer directly owns
7
8 the asset,
8
9 e. "indirect" means the individual taxpayer owns an
9
10 interest in a pass-through entity (or chain of pass-
10
11 through entities) that sells the asset that gives rise
11
12 to the qualifying gains receiving capital treatment.
12
13 (1) With respect to sales of real property or
13
14 tangible personal property located within
14
15 Oklahoma this state, the deduction described in
15
16 this subsection shall not apply unless the pass-
16
17 through entity that makes the sale has held the
17
18 property for not less than five (5) uninterrupted
18
19 years prior to the date of the transaction that
19
20 created the capital gain, and each pass-through
20
21 entity included in the chain of ownership has
21
22 been a member, partner, or shareholder of the
22
23 pass-through entity in the tier immediately below
23
24
24
Req. No. 3530 Page 59
1 it for an uninterrupted period of not less than
1
2 five (5) years.
2
3 (2) With respect to sales of stock or ownership
3
4 interest in or sales of all or substantially all
4
5 of the assets of an Oklahoma company, limited
5
6 liability company, partnership or Oklahoma
6
7 proprietorship business enterprise, the deduction
7
8 described in this subsection shall not apply
8
9 unless the pass-through entity that makes the
9
10 sale has held the stock or ownership interest for
10
11 not less than two (2) uninterrupted years prior
11
12 to the date of the transaction that created the
12
13 capital gain, and each pass-through entity
13
14 included in the chain of ownership has been a
14
15 member, partner or shareholder of the pass-
15
16 through entity in the tier immediately below it
16
17 for an uninterrupted period of not less than two
17
18 (2) years. For purposes of this division,
18
19 uninterrupted ownership prior to July 1, 2007,
19
20 shall be included in the determination of the
20
21 required holding period prescribed by this
21
22 division, and
22
23 f. "Oklahoma proprietorship business enterprise" means a
23
24 business enterprise whose income and expenses have
24
Req. No. 3530 Page 60
1 been reported on Schedule C or F of an individual
1
2 taxpayer's federal income tax return, or any similar
2
3 successor schedule published by the Internal Revenue
3
4 Service and whose primary headquarters have been
4
5 located in Oklahoma this state for at least three (3)
5
6 uninterrupted years prior to the date of the
6
7 transaction from which the net capital gains arise.
7
8 G. 1. For purposes of computing its Oklahoma taxable income
8
9 under this section, the dividends-paid deduction otherwise allowed
9
10 by federal law in computing net income of a real estate investment
10
11 trust (REIT) that is subject to federal income tax shall be added
11
12 back in computing the tax imposed by this state under this title if
12
13 the real estate investment trust is a captive real estate investment
13
14 trust.
14
15 2. For purposes of computing its Oklahoma taxable income under
15
16 this section, a taxpayer shall add back otherwise deductible rents
16
17 and interest expenses paid to a captive real estate investment trust
17
18 that is not subject to the provisions of paragraph 1 of this
18
19 subsection. As used in this subsection:
19
20 a. the term "real estate investment trust" or "REIT"
20
21 means the meaning ascribed to such term in Section 856
21
22 of the Internal Revenue Code of 1986, as amended,
22
23 b. the term "captive real estate investment trust" means
23
24 a real estate investment trust, the shares or
24
Req. No. 3530 Page 61
1 beneficial interests of which are not regularly traded
1
2 on an established securities market and more than
2
3 fifty percent (50%) of the voting power or value of
3
4 the beneficial interests or shares of which are owned
4
5 or controlled, directly or indirectly, or
5
6 constructively, by a single entity that is:
6
7 (1) treated as an association taxable as a
7
8 corporation under the Internal Revenue Code of
8
9 1986, as amended, and
9
10 (2) not exempt from federal income tax pursuant to
10
11 the provisions of Section 501(a) of the Internal
11
12 Revenue Code of 1986, as amended.
12
13 The term shall not include a real estate investment
13
14 trust that is intended to be regularly traded on an
14
15 established securities market, and that satisfies the
15
16 requirements of Section 856(a)(5) and (6) of the U.S.
16
17 Internal Revenue Code of 1986, as amended, by reason
17
18 of Section 856(h)(2) of the Internal Revenue Code of
18
19 1986, as amended,
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20 c. the term "association taxable as a corporation" shall
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21 not include the following entities:
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22 (1) any real estate investment trust as defined in
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23 paragraph a of this subsection other than a
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1 "captive real estate investment trust" captive
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2 real estate investment trust,
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3 (2) any qualified real estate investment trust
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4 subsidiary under Section 856(i) of the Internal
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5 Revenue Code of 1986, as amended, other than a
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6 qualified REIT subsidiary of a "captive real
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7 estate investment trust" captive real estate
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8 investment trust,
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9 (3) any Listed Australian Property Trust listed
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10 Australian property trust (meaning an Australian
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11 unit trust registered as a "Managed Investment
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12 Scheme" "managed investment scheme" under the
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13 Australian Corporations Act 2001 in which the
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14 principal class of units is listed on a
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15 recognized stock exchange in Australia and is
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16 regularly traded on an established securities
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17 market), or an entity organized as a trust,
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18 provided that a Listed Australian Property Trust
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19 listed Australian property trust owns or
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20 controls, directly or indirectly, seventy-five
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21 percent (75%) or more of the voting power or
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22 value of the beneficial interests or shares of
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23 such trust, or
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1 (4) any Qualified Foreign Entity qualified foreign
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2 entity, meaning a corporation, trust, association
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3 or partnership organized outside the laws of the
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4 United States and which satisfies the following
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5 criteria:
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6 (a) at least seventy-five percent (75%) of the
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7 entity's total asset value at the close of
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8 its taxable year is represented by real
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9 estate assets, as defined in Section
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10 856(c)(5)(B) of the Internal Revenue Code of
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11 1986, as amended, thereby including shares
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12 or certificates of beneficial interest in
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13 any real estate investment trust, cash and
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14 cash equivalents, and U.S. Government United
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15 States government securities,
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16 (b) the entity receives a dividend-paid
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17 deduction comparable to Section 561 of the
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18 Internal Revenue Code of 1986, as amended,
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19 or is exempt from entity level tax,
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20 (c) the entity is required to distribute at
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21 least eighty-five percent (85%) of its
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22 taxable income, as computed in the
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23 jurisdiction in which it is organized, to
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1 the holders of its shares or certificates of
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2 beneficial interest on an annual basis,
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3 (d) not more than ten percent (10%) of the
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4 voting power or value in such entity is held
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5 directly or indirectly or constructively by
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6 a single entity or individual, or the shares
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7 or beneficial interests of such entity are
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8 regularly traded on an established
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9 securities market, and
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10 (e) the entity is organized in a country which
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11 has a tax treaty with the United States.
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12 3. For purposes of this subsection, the constructive ownership
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13 rules of Section 318(a) of the Internal Revenue Code, as modified by
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14 Section 856(d)(5) of the Internal Revenue Code of 1986, as amended,
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15 shall apply in determining the ownership of stock, assets, or net
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16 profits of any person.
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17 4. A real estate investment trust that does not become
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18 regularly traded on an established securities market within one (1)
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19 year of the date on which it first becomes a real estate investment
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20 trust shall be deemed not to have been regularly traded on an
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21 established securities market, retroactive to the date it first
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22 became a real estate investment trust, and shall file an amended
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23 return reflecting such retroactive designation for any tax year or
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24 part year occurring during its initial year of status as a real
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Req. No. 3530 Page 65
1 estate investment trust. For purposes of this subsection, a real
1
2 estate investment trust becomes a real estate investment trust on
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3 the first day it has both met the requirements of Section 856 of the
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4 Internal Revenue Code of 1986, as amended, and has elected to be
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5 treated as a real estate investment trust pursuant to Section
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6 856(c)(1) of the Internal Revenue Code of 1986, as amended.
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7 SECTION 3. This act shall become effective November 1, 2026.
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9 60-2-3530 BRC 1/14/2026 11:28:00 PM
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Req. No. 3530 Page 66Every fact on this page links to its source, starting with the official bill record.