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1 STATE OF OKLAHOMA
1
2 1st Session of the 60th Legislature (2025)
2
3 SENATE BILL 299 By: Rader
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8 AS INTRODUCED
8
9 An Act relating to income tax; amending 68 O.S. 2021,
9 Section 2358, as last amended by Section 155, Chapter
10 452, O.S.L. 2024 (68 O.S. Supp. 2024, Section 2358),
10 which relates to adjustments; modifying certain
11 apportionment factor for calculation of Oklahoma
11 taxable income; updating statutory language; updating
12 statutory references; and providing an effective
12 date.
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18 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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19 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2358, as
19
20 last amended by Section 155, Chapter 452, O.S.L. 2024 (68 O.S. Supp.
20
21 2024, Section 2358), is amended to read as follows:
21
22 Section 2358. For all tax years beginning after December 31,
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23 1981, taxable income and adjusted gross income shall be adjusted to
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Req. No. 616 Page 1
1 arrive at Oklahoma taxable income and Oklahoma adjusted gross income
1
2 as required by this section.
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3 A. The taxable income of any taxpayer shall be adjusted to
3
4 arrive at Oklahoma taxable income for corporations and Oklahoma
4
5 adjusted gross income for individuals, as follows:
5
6 1. There shall be added interest income on obligations of any
6
7 state or political subdivision thereto which is not otherwise
7
8 exempted pursuant to other laws of this state, to the extent that
8
9 such interest is not included in taxable income and adjusted gross
9
10 income.
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11 2. There shall be deducted amounts included in such income that
11
12 the state is prohibited from taxing because of the provisions of the
12
13 Federal United States Constitution, the State Oklahoma Constitution,
13
14 federal laws or laws of Oklahoma.
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15 3. The amount of any federal net operating loss deduction shall
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16 be adjusted as follows:
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17 a. For carryovers and carrybacks to taxable years
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18 beginning before January 1, 1981, the amount of any
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19 net operating loss deduction allowed to a taxpayer for
19
20 federal income tax purposes shall be reduced to an
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21 amount which is the same portion thereof as the loss
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22 from sources within this state, as determined pursuant
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23 to this section and Section 2362 of this title, for
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Req. No. 616 Page 2
1 the taxable year in which such loss is sustained is of
1
2 the total loss for such year;
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3 b. For carryovers and carrybacks to taxable years
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4 beginning after December 31, 1980, the amount of any
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5 net operating loss deduction allowed for the taxable
5
6 year shall be an amount equal to the aggregate of the
6
7 Oklahoma net operating loss carryovers and carrybacks
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8 to such year. Oklahoma net operating losses shall be
8
9 separately determined by reference to Section 172 of
9
10 the Internal Revenue Code of 1986, as amended, 26
10
11 U.S.C., Section 172, as modified by the Oklahoma
11
12 Income Tax Act, Section 2351 et seq. of this title,
12
13 and shall be allowed without regard to the existence
13
14 of a federal net operating loss. For tax years
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15 beginning after December 31, 2000, and ending before
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16 January 1, 2008, the years to which such losses may be
16
17 carried shall be determined solely by reference to
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18 Section 172 of the Internal Revenue Code of 1986, as
18
19 amended, 26 U.S.C., Section 172, with the exception
19
20 that the terms "net operating loss" and "taxable
20
21 income" shall be replaced with "Oklahoma net operating
21
22 loss" and "Oklahoma taxable income". For tax years
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23 beginning after December 31, 2007, and ending before
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24 January 1, 2009, years to which such losses may be
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Req. No. 616 Page 3
1 carried back shall be limited to two (2) years. For
1
2 tax years beginning after December 31, 2008, the years
2
3 to which such losses may be carried back shall be
3
4 determined solely by reference to Section 172 of the
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5 Internal Revenue Code of 1986, as amended, 26 U.S.C.,
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6 Section 172, with the exception that the terms "net
6
7 operating loss" and "taxable income" shall be replaced
7
8 with "Oklahoma net operating loss" and "Oklahoma
8
9 taxable income".
9
10 4. Items of the following nature shall be allocated as
10
11 indicated. Allowable deductions attributable to items separately
11
12 allocable in subparagraphs a, b and c of this paragraph, whether or
12
13 not such items of income were actually received, shall be allocated
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14 on the same basis as those items:
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15 a. Income from real and tangible personal property, such
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16 as rents, oil and mining production or royalties, and
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17 gains or losses from sales of such property, shall be
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18 allocated in accordance with the situs of such
18
19 property;
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20 b. Income from intangible personal property, such as
20
21 interest, dividends, patent or copyright royalties,
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22 and gains or losses from sales of such property, shall
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23 be allocated in accordance with the domiciliary situs
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24 of the taxpayer, except that:
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Req. No. 616 Page 4
1 (1) where such property has acquired a nonunitary
1
2 business or commercial situs apart from the
2
3 domicile of the taxpayer such income shall be
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4 allocated in accordance with such business or
4
5 commercial situs; interest income from
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6 investments held to generate working capital for
6
7 a unitary business enterprise shall be included
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8 in apportionable income; a resident trust or
8
9 resident estate shall be treated as having a
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10 separate commercial or business situs insofar as
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11 undistributed income is concerned, but shall not
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12 be treated as having a separate commercial or
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13 business situs insofar as distributed income is
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14 concerned,
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15 (2) for taxable years beginning after December 31,
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16 2003, capital or ordinary gains or losses from
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17 the sale of an ownership interest in a publicly
17
18 traded partnership, as defined by Section 7704(b)
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19 of the Internal Revenue Code of 1986, as amended,
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20 shall be allocated to this state in the ratio of
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21 the original cost of such partnership's tangible
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22 property in this state to the original cost of
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23 such partnership's tangible property everywhere,
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24 as determined at the time of the sale; if more
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Req. No. 616 Page 5
1 than fifty percent (50%) of the value of the
1
2 partnership's assets consists of intangible
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3 assets, capital or ordinary gains or losses from
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4 the sale of an ownership interest in the
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5 partnership shall be allocated to this state in
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6 accordance with the sales factor of the
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7 partnership for its first full tax period
7
8 immediately preceding its tax period during which
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9 the ownership interest in the partnership was
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10 sold; the provisions of this division shall only
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11 apply if the capital or ordinary gains or losses
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12 from the sale of an ownership interest in a
12
13 partnership do not constitute qualifying gain
13
14 receiving capital treatment as defined in
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15 subparagraph a of paragraph 2 of subsection F of
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16 this section,
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17 (3) income from such property which is required to be
17
18 allocated pursuant to the provisions of paragraph
18
19 5 of this subsection shall be allocated as herein
19
20 provided;
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21 c. Net income or loss from a business activity which is
21
22 not a part of business carried on within or without
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23 the state of a unitary character shall be separately
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24
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Req. No. 616 Page 6
1 allocated to the state in which such activity is
1
2 conducted;
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3 d. In the case of a manufacturing or processing
3
4 enterprise the business of which in Oklahoma this
4
5 state consists solely of marketing its products by:
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6 (1) sales having a situs without this state, shipped
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7 directly to a point from without the state to a
7
8 purchaser within the state, commonly known as
8
9 interstate sales,
9
10 (2) sales of the product stored in public warehouses
10
11 within the state pursuant to "in transit"
11
12 tariffs, as prescribed and allowed by the
12
13 Interstate Commerce Commission, to a purchaser
13
14 within the state,
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15 (3) sales of the product stored in public warehouses
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16 within the state where the shipment to such
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17 warehouses is not covered by "in transit"
17
18 tariffs, as prescribed and allowed by the
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19 Interstate Commerce Commission, to a purchaser
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20 within or without the state,
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21 the Oklahoma net income shall, at the option of the
21
22 taxpayer, be that portion of the total net income of
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23 the taxpayer for federal income tax purposes derived
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24 from the manufacture and/or processing and sales
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Req. No. 616 Page 7
1 everywhere as determined by the ratio of the sales
1
2 defined in this section made to the purchaser within
2
3 the state to the total sales everywhere. The term
3
4 "public warehouse" as used in this subparagraph means
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5 a licensed public warehouse, the principal business of
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6 which is warehousing merchandise for the public;
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7 e. In the case of insurance companies, Oklahoma taxable
7
8 income shall be taxable income of the taxpayer for
8
9 federal tax purposes, as adjusted for the adjustments
9
10 provided pursuant to the provisions of paragraphs 1
10
11 and 2 of this subsection, apportioned as follows:
11
12 (1) except as otherwise provided by division (2) of
12
13 this subparagraph, taxable income of an insurance
13
14 company for a taxable year shall be apportioned
14
15 to this state by multiplying such income by a
15
16 fraction, the numerator of which is the direct
16
17 premiums written for insurance on property or
17
18 risks in this state, and the denominator of which
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19 is the direct premiums written for insurance on
19
20 property or risks everywhere. For purposes of
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21 this subsection, the term "direct premiums
21
22 written" means the total amount of direct
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23 premiums written, assessments and annuity
23
24 considerations as reported for the taxable year
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Req. No. 616 Page 8
1 on the annual statement filed by the company with
1
2 the Insurance Commissioner in the form approved
2
3 by the National Association of Insurance
3
4 Commissioners, or such other form as may be
4
5 prescribed in lieu thereof,
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6 (2) if the principal source of premiums written by an
6
7 insurance company consists of premiums for
7
8 reinsurance accepted by it, the taxable income of
8
9 such company shall be apportioned to this state
9
10 by multiplying such income by a fraction, the
10
11 numerator of which is the sum of (a) direct
11
12 premiums written for insurance on property or
12
13 risks in this state, plus (b) premiums written
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14 for reinsurance accepted in respect of property
14
15 or risks in this state, and the denominator of
15
16 which is the sum of (c) direct premiums written
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17 for insurance on property or risks everywhere,
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18 plus (d) premiums written for reinsurance
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19 accepted in respect of property or risks
19
20 everywhere. For purposes of this paragraph,
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21 premiums written for reinsurance accepted in
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22 respect of property or risks in this state,
22
23 whether or not otherwise determinable, may at the
23
24 election of the company be determined on the
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Req. No. 616 Page 9
1 basis of the proportion which premiums written
1
2 for insurance accepted from companies
2
3 commercially domiciled in Oklahoma this state
3
4 bears to premiums written for reinsurance
4
5 accepted from all sources, or alternatively in
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6 the proportion which the sum of the direct
6
7 premiums written for insurance on property or
7
8 risks in this state by each ceding company from
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9 which reinsurance is accepted bears to the sum of
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10 the total direct premiums written by each such
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11 ceding company for the taxable year.
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12 5. The net income or loss remaining after the separate
12
13 allocation in paragraph 4 of this subsection, being that which is
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14 derived from a unitary business enterprise, shall be apportioned to
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15 this state on the basis of the arithmetical average of three factors
15
16 consisting of property, payroll and sales or gross revenue
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17 enumerated as subparagraphs a, b and c of this paragraph. Net
17
18 income or loss as used in this paragraph includes that derived from
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19 patent or copyright royalties, purchase discounts, and interest on
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20 accounts receivable relating to or arising from a business activity,
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21 the income from which is apportioned pursuant to this subsection,
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22 including the sale or other disposition of such property and any
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23 other property used in the unitary enterprise. Deductions used in
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24 computing such net income or loss shall not include taxes based on
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Req. No. 616 Page 10
1 or measured by income. Provided, for corporations whose property
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2 for purposes of the tax imposed by Section 2355 of this title has an
2
3 initial investment cost equaling or exceeding Two Hundred Million
3
4 Dollars ($200,000,000.00) and such investment is made on or after
4
5 July 1, 1997, or for corporations which expand their property or
5
6 facilities in this state and such expansion has an investment cost
6
7 equaling or exceeding Two Hundred Million Dollars ($200,000,000.00)
7
8 over a period not to exceed three (3) years, and such expansion is
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9 commenced on or after January 1, 2000, the three factors shall be
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10 apportioned with property and payroll, each comprising twenty-five
10
11 percent (25%) of the apportionment factor and sales comprising fifty
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12 percent (50%) of the apportionment factor. The apportionment
12
13 factors shall be computed as follows:
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14 a. The property factor is a fraction, the numerator of
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15 which is the average value of the taxpayer's real and
15
16 tangible personal property owned or rented and used in
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17 this state during the tax period and the denominator
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18 of which is the average value of all the taxpayer's
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19 real and tangible personal property everywhere owned
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20 or rented and used during the tax period.
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21 (1) Property, the income from which is separately
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22 allocated in paragraph 4 of this subsection,
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23 shall not be included in determining this
23
24 fraction. The numerator of the fraction shall
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Req. No. 616 Page 11
1 include a portion of the investment in
1
2 transportation and other equipment having no
2
3 fixed situs, such as rolling stock, buses, trucks
3
4 and trailers, including machinery and equipment
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5 carried thereon, airplanes, salespersons'
5
6 automobiles and other similar equipment, in the
6
7 proportion that miles traveled in Oklahoma this
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8 state by such equipment bears to total miles
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9 traveled,
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10 (2) Property owned by the taxpayer is valued at its
10
11 original cost. Property rented by the taxpayer
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12 is valued at eight times the net annual rental
12
13 rate. Net annual rental rate is the annual
13
14 rental rate paid by the taxpayer, less any annual
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15 rental rate received by the taxpayer from
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16 subrentals,
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17 (3) The average value of property shall be determined
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18 by averaging the values at the beginning and
18
19 ending of the tax period but the Oklahoma Tax
19
20 Commission may require the averaging of monthly
20
21 values during the tax period if reasonably
21
22 required to reflect properly the average value of
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23 the taxpayer's property;
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24
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Req. No. 616 Page 12
1 b. The payroll factor is a fraction, the numerator of
1
2 which is the total compensation for services rendered
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3 in the state during the tax period, and the
3
4 denominator of which is the total compensation for
4
5 services rendered everywhere during the tax period.
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6 "Compensation", as used in this subsection, means
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7 those paid-for services to the extent related to the
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8 unitary business but does not include officers'
8
9 salaries, wages and other compensation.
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10 (1) In the case of a transportation enterprise, the
10
11 numerator of the fraction shall include a portion
11
12 of such expenditure in connection with employees
12
13 operating equipment over a fixed route, such as
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14 railroad employees, airline pilots, or bus
14
15 drivers, in this state only a part of the time,
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16 in the proportion that mileage traveled in
16
17 Oklahoma this state bears to total mileage
17
18 traveled by such employees,
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19 (2) In any case the numerator of the fraction shall
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20 include a portion of such expenditures in
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21 connection with itinerant employees, such as
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22 traveling salespersons, in this state only a part
22
23 of the time, in the proportion that time spent in
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24
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Req. No. 616 Page 13
1 Oklahoma this state bears to total time spent in
1
2 furtherance of the enterprise by such employees;
2
3 c. The sales factor is a fraction, the numerator of which
3
4 is the total sales or gross revenue of the taxpayer in
4
5 this state during the tax period, and the denominator
5
6 of which is the total sales or gross revenue of the
6
7 taxpayer everywhere during the tax period. "Sales",
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8 as used in this subsection, does not include sales or
8
9 gross revenue which are separately allocated in
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10 paragraph 4 of this subsection.
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11 (1) Sales of tangible personal property have a situs
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12 in this state if the property is delivered or
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13 shipped to a purchaser other than the United
13
14 States government, within this state regardless
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15 of the FOB Freight on Board (FOB) point or other
15
16 conditions of the sale; or the property is
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17 shipped from an office, store, warehouse,
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18 factory, or other place of storage in this state
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19 and (a) the purchaser is the United States
19
20 government or (b), for tax year 2025 and previous
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21 tax years, the taxpayer is not doing business in
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22 the state of the destination of the shipment.
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23 (2) In the case of a railroad or interurban railway
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24 enterprise, the numerator of the fraction shall
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Req. No. 616 Page 14
1 not be less than the allocation of revenues to
1
2 this state as shown in its annual report to the
2
3 Corporation Commission.
3
4 (3) In the case of an airline, truck or bus
4
5 enterprise or freight car, tank car, refrigerator
5
6 car or other railroad equipment enterprise, the
6
7 numerator of the fraction shall include a portion
7
8 of revenue from interstate transportation in the
8
9 proportion that interstate mileage traveled in
9
10 Oklahoma this state bears to total interstate
10
11 mileage traveled.
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12 (4) In the case of an oil, gasoline or gas pipeline
12
13 enterprise, the numerator of the fraction shall
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14 be either the total of traffic units of the
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15 enterprise within Oklahoma this state or the
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16 revenue allocated to Oklahoma this state based
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17 upon miles moved, at the option of the taxpayer,
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18 and the denominator of which shall be the total
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19 of traffic units of the enterprise or the revenue
19
20 of the enterprise everywhere as appropriate to
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21 the numerator. A "traffic unit" is hereby
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22 defined as the transportation for a distance of
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23 one (1) mile of one (1) barrel of oil, one (1)
23
24 gallon of gasoline or one thousand (1,000) cubic
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Req. No. 616 Page 15
1 feet of natural or casinghead gas, as the case
1
2 may be.
2
3 (5) In the case of a telephone or telegraph or other
3
4 communication enterprise, the numerator of the
4
5 fraction shall include that portion of the
5
6 interstate revenue as is allocated pursuant to
6
7 the accounting procedures prescribed by the
7
8 Federal Communications Commission; provided that
8
9 in respect to each corporation or business entity
9
10 required by the Federal Communications Commission
10
11 to keep its books and records in accordance with
11
12 a uniform system of accounts prescribed by such
12
13 Commission, the intrastate net income shall be
13
14 determined separately in the manner provided by
14
15 such uniform system of accounts and only the
15
16 interstate income shall be subject to allocation
16
17 pursuant to the provisions of this subsection.
17
18 Provided further, that the gross revenue factors
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19 shall be those as are determined pursuant to the
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20 accounting procedures prescribed by the Federal
20
21 Communications Commission.
21
22 In any case where the apportionment of the three factors
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23 prescribed in this paragraph attributes to Oklahoma this state a
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24 portion of net income of the enterprise out of all appropriate
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Req. No. 616 Page 16
1 proportion to the property owned and/or business transacted within
1
2 this state, because of the fact that one or more of the factors so
2
3 prescribed are not employed to any appreciable extent in furtherance
3
4 of the enterprise; or because one or more factors not so prescribed
4
5 are employed to a considerable extent in furtherance of the
5
6 enterprise; or because of other reasons, the Tax Commission is
6
7 empowered to permit, after a showing by taxpayer that an excessive
7
8 portion of net income has been attributed to Oklahoma this state, or
8
9 require, when in its judgment an insufficient portion of net income
9
10 has been attributed to Oklahoma this state, the elimination,
10
11 substitution, or use of additional factors, or reduction or increase
11
12 in the weight of such prescribed factors. Provided, however, that
12
13 any such variance from such prescribed factors which has the effect
13
14 of increasing the portion of net income attributable to Oklahoma
14
15 this state must not be inherently arbitrary, and application of the
15
16 recomputed final apportionment to the net income of the enterprise
16
17 must attribute to Oklahoma this state only a reasonable portion
17
18 thereof.
18
19 6. For calendar years 1997 and 1998, the owner of a new or
19
20 expanded agricultural commodity processing facility in this state
20
21 may exclude from Oklahoma taxable income, or in the case of an
21
22 individual, the Oklahoma adjusted gross income, fifteen percent
22
23 (15%) of the investment by the owner in the new or expanded
23
24 agricultural commodity processing facility. For calendar year 1999,
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Req. No. 616 Page 17
1 and all subsequent years, the percentage, not to exceed fifteen
1
2 percent (15%), available to the owner of a new or expanded
2
3 agricultural commodity processing facility in this state claiming
3
4 the exemption shall be adjusted annually so that the total estimated
4
5 reduction in tax liability does not exceed One Million Dollars
5
6 ($1,000,000.00) annually. The Tax Commission shall promulgate rules
6
7 for determining the percentage of the investment which each eligible
7
8 taxpayer may exclude. The exclusion provided by this paragraph
8
9 shall be taken in the taxable year when the investment is made. In
9
10 the event the total reduction in tax liability authorized by this
10
11 paragraph exceeds One Million Dollars ($1,000,000.00) in any
11
12 calendar year, the Tax Commission shall permit any excess over One
12
13 Million Dollars ($1,000,000.00) and shall factor such excess into
13
14 the percentage for subsequent years. Any amount of the exemption
14
15 permitted to be excluded pursuant to the provisions of this
15
16 paragraph but not used in any year may be carried forward as an
16
17 exemption from income pursuant to the provisions of this paragraph
17
18 for a period not exceeding six (6) years following the year in which
18
19 the investment was originally made.
19
20 For purposes of this paragraph:
20
21 a. "Agricultural commodity processing facility" means
21
22 building buildings, structures, fixtures and
22
23 improvements used or operated primarily for the
23
24 processing or production of marketable products from
24
Req. No. 616 Page 18
1 agricultural commodities. The term shall also mean a
1
2 dairy operation that requires a depreciable investment
2
3 of at least Two Hundred Fifty Thousand Dollars
3
4 ($250,000.00) and which produces milk from dairy cows.
4
5 The term does not include a facility that provides
5
6 only, and nothing more than, storage, cleaning, drying
6
7 or transportation of agricultural commodities, and
7
8 b. "Facility" means each part of the facility which is
8
9 used in a process primarily for:
9
10 (1) the processing of agricultural commodities,
10
11 including receiving or storing agricultural
11
12 commodities, or the production of milk at a dairy
12
13 operation,
13
14 (2) transporting the agricultural commodities or
14
15 product before, during or after the processing,
15
16 or
16
17 (3) packaging or otherwise preparing the product for
17
18 sale or shipment.
18
19 7. Despite any provision to the contrary in paragraph 3 of this
19
20 subsection, for taxable years beginning after December 31, 1999, in
20
21 the case of a taxpayer which has a farming loss, such farming loss
21
22 shall be considered a net operating loss carryback in accordance
22
23 with and to the extent of the Internal Revenue Code of 1986, as
23
24 amended, 26 U.S.C., Section 172(b)(G) 172(b)(1)(B). However, the
24
Req. No. 616 Page 19
1 amount of the net operating loss carryback shall not exceed the
1
2 lesser of:
2
3 a. Sixty Thousand Dollars ($60,000.00), or
3
4 b. the loss properly shown on Schedule F of the Internal
4
5 Revenue Service Form 1040 reduced by one-half (1/2) of
5
6 the income from all other sources other than reflected
6
7 on Schedule F.
7
8 8. In taxable years beginning after December 31, 1995, all
8
9 qualified wages equal to the federal income tax credit set forth in
9
10 26 U.S.C.A., Section 45A, shall be deducted from taxable income.
10
11 The deduction allowed pursuant to this paragraph shall only be
11
12 permitted for the tax years in which the federal tax credit pursuant
12
13 to 26 U.S.C.A., Section 45A, is allowed. For purposes of this
13
14 paragraph, "qualified wages" means those wages used to calculate the
14
15 federal credit pursuant to 26 U.S.C.A., Section 45A.
15
16 9. In taxable years beginning after December 31, 2005, an
16
17 employer that is eligible for and utilizes the Safety Pays OSHA
17
18 Consultation Service provided by the Oklahoma Department of Labor
18
19 shall receive an exemption from taxable income in the amount of One
19
20 Thousand Dollars ($1,000.00) for the tax year that the service is
20
21 utilized.
21
22 10. For taxable years beginning on or after January 1, 2010,
22
23 there shall be added to Oklahoma taxable income an amount equal to
23
24 the amount of deferred income not included in such taxable income
24
Req. No. 616 Page 20
1 pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986
1
2 as amended by Section 1231 of the American Recovery and Reinvestment
2
3 Act of 2009 (P.L. No. 111-5). There shall be subtracted from
3
4 Oklahoma taxable income an amount equal to the amount of deferred
4
5 income included in such taxable income pursuant to Section 108(i)(1)
5
6 of the Internal Revenue Code of 1986 as amended by Section 1231 of
6
7 the American Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
7
8 11. For taxable years beginning on or after January 1, 2019,
8
9 there shall be subtracted from Oklahoma taxable income or adjusted
9
10 gross income any item of income or gain, and there shall be added to
10
11 Oklahoma taxable income or adjusted gross income any item of loss or
11
12 deduction that in the absence of an election pursuant to the
12
13 provisions of the Pass-Through Entity Tax Equity Act of 2019 would
13
14 be allocated to a member or to an indirect member of an electing
14
15 pass-through entity pursuant to Section 2351 et seq. of this title,
15
16 if (i) the electing pass-through entity has accounted for such item
16
17 in computing its Oklahoma net entity income or loss pursuant to the
17
18 provisions of the Pass-Through Entity Tax Equity Act of 2019, and
18
19 (ii) the total amount of tax attributable to any resulting Oklahoma
19
20 net entity income has been paid. The Oklahoma Tax Commission shall
20
21 promulgate rules for the reporting of such exclusion to direct and
21
22 indirect members of the electing pass-through entity. As used in
22
23 this paragraph, "electing pass-through entity", "indirect member",
23
24 and "member" shall be defined in the same manner as prescribed by
24
Req. No. 616 Page 21
1 Section 2355.1P-2 of this title. Notwithstanding the application of
1
2 this paragraph, the adjusted tax basis of any ownership interest in
2
3 a pass-through entity for purposes of Section 2351 et seq. of this
3
4 title shall be equal to its adjusted tax basis for federal income
4
5 tax purposes.
5
6 B. 1. The taxable income of any corporation shall be further
6
7 adjusted to arrive at Oklahoma taxable income, except those
7
8 corporations electing treatment as provided in subchapter S of the
8
9 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1361
9
10 et seq., and Section 2365 of this title, deductions pursuant to the
10
11 provisions of the Accelerated Cost Recovery System as defined
11
12 provided and allowed in the Economic Recovery Tax Act of 1981,
12
13 Public Law 97-34, 26 U.S.C., Section 168, for depreciation of assets
13
14 placed into service after December 31, 1981, shall not be allowed in
14
15 calculating Oklahoma taxable income. Such corporations shall be
15
16 allowed a deduction for depreciation of assets placed into service
16
17 after December 31, 1981, in accordance with provisions of the
17
18 Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1 et
18
19 seq., in effect immediately prior to the enactment of the
19
20 Accelerated Cost Recovery System. The Oklahoma tax basis for all
20
21 such assets placed into service after December 31, 1981, calculated
21
22 in this section shall be retained and utilized for all Oklahoma
22
23 income tax purposes through the final disposition of such assets.
23
24
24
Req. No. 616 Page 22
1 Notwithstanding any other provisions of the Oklahoma Income Tax
1
2 Act, Section 2351 et seq. of this title, or of the Internal Revenue
2
3 Code of 1986, as amended, to the contrary, this subsection shall
3
4 control calculation of depreciation of assets placed into service
4
5 after December 31, 1981, and before January 1, 1983.
5
6 For assets placed in service and held by a corporation in which
6
7 accelerated cost recovery system the Accelerated Cost Recovery
7
8 System was previously disallowed, an adjustment to taxable income is
8
9 required in the first taxable year beginning after December 31,
9
10 1982, to reconcile the basis of such assets to the basis allowed in
10
11 the Internal Revenue Code of 1986, as amended. The purpose of this
11
12 adjustment is to equalize the basis and allowance for depreciation
12
13 accounts between that reported to the Internal Revenue Service and
13
14 that reported to Oklahoma this state.
14
15 2. For tax years beginning on or after January 1, 2009, and
15
16 ending on or before December 31, 2009, there shall be added to
16
17 Oklahoma taxable income any amount in excess of One Hundred Seventy-
17
18 five Thousand Dollars ($175,000.00) which has been deducted as a
18
19 small business expense under Internal Revenue Code of 1986, as
19
20 amended, Section 179 as provided in the American Recovery and
20
21 Reinvestment Act of 2009.
21
22 C. 1. For taxable years beginning after December 31, 1987, the
22
23 taxable income of any corporation shall be further adjusted to
23
24 arrive at Oklahoma taxable income for transfers of technology to
24
Req. No. 616 Page 23
1 qualified small businesses located in Oklahoma this state. Such
1
2 transferor corporation shall be allowed an exemption from taxable
2
3 income of an amount equal to the amount of royalty payment received
3
4 as a result of such transfer; provided, however, such amount shall
4
5 not exceed ten percent (10%) of the amount of gross proceeds
5
6 received by such transferor corporation as a result of the
6
7 technology transfer. Such exemption shall be allowed for a period
7
8 not to exceed ten (10) years from the date of receipt of the first
8
9 royalty payment accruing from such transfer. No exemption may be
9
10 claimed for transfers of technology to qualified small businesses
10
11 made prior to January 1, 1988.
11
12 2. For purposes of this subsection:
12
13 a. "Qualified small business" means an entity, whether
13
14 organized as a corporation, partnership, or
14
15 proprietorship, organized for profit with its
15
16 principal place of business located within this state
16
17 and which meets the following criteria:
17
18 (1) Capitalization of not more than Two Hundred Fifty
18
19 Thousand Dollars ($250,000.00),
19
20 (2) Having at least fifty percent (50%) of its
20
21 employees and assets located in Oklahoma this
21
22 state at the time of the transfer, and
22
23 (3) Not a subsidiary or affiliate of the transferor
23
24 corporation;
24
Req. No. 616 Page 24
1 b. "Technology" means a proprietary process, formula,
1
2 pattern, device or compilation of scientific or
2
3 technical information which is not in the public
3
4 domain;
4
5 c. "Transferor corporation" means a corporation which is
5
6 the exclusive and undisputed owner of the technology
6
7 at the time the transfer is made; and
7
8 d. "Gross proceeds" means the total amount of
8
9 consideration for the transfer of technology, whether
9
10 the consideration is in money or otherwise.
10
11 D. 1. For taxable years beginning after December 31, 2005, the
11
12 taxable income of any corporation, estate or trust, shall be further
12
13 adjusted for qualifying gains receiving capital treatment. Such
13
14 corporations, estates or trusts shall be allowed a deduction from
14
15 Oklahoma taxable income for the amount of qualifying gains receiving
15
16 capital treatment earned by the corporation, estate or trust during
16
17 the taxable year and included in the federal taxable income of such
17
18 corporation, estate or trust.
18
19 2. As used in this subsection:
19
20 a. "qualifying gains receiving capital treatment" means
20
21 the amount of net capital gains, as defined in Section
21
22 1222(11) of the Internal Revenue Code of 1986, as
22
23 amended, included in the federal income tax return of
23
24 the corporation, estate or trust that result from:
24
Req. No. 616 Page 25
1 (1) the sale of real property or tangible personal
1
2 property located within Oklahoma this state that
2
3 has been directly or indirectly owned by the
3
4 corporation, estate or trust for a holding period
4
5 of at least five (5) years prior to the date of
5
6 the transaction from which such net capital gains
6
7 arise,
7
8 (2) the sale of stock or on the sale of an ownership
8
9 interest in an Oklahoma company, limited
9
10 liability company, or partnership where such
10
11 stock or ownership interest has been directly or
11
12 indirectly owned by the corporation, estate or
12
13 trust for a holding period of at least three (3)
13
14 years prior to the date of the transaction from
14
15 which the net capital gains arise, or
15
16 (3) the sale of real property, tangible personal
16
17 property or intangible personal property located
17
18 within Oklahoma this state as part of the sale of
18
19 all or substantially all of the assets of an
19
20 Oklahoma company, limited liability company, or
20
21 partnership where such property has been directly
21
22 or indirectly owned by such entity owned by the
22
23 owners of such entity, and used in or derived
23
24 from such entity for a period of at least three
24
Req. No. 616 Page 26
1 (3) years prior to the date of the transaction
1
2 from which the net capital gains arise,
2
3 b. "holding period" means an uninterrupted period of
3
4 time. The holding period shall include any additional
4
5 period when the property was held by another
5
6 individual or entity, if such additional period is
6
7 included in the taxpayer's holding period for the
7
8 asset pursuant to the Internal Revenue Code of 1986,
8
9 as amended,
9
10 c. "Oklahoma company", "limited liability company", or
10
11 "partnership" means an entity whose primary
11
12 headquarters have been located in Oklahoma this state
12
13 for at least three (3) uninterrupted years prior to
13
14 the date of the transaction from which the net capital
14
15 gains arise,
15
16 d. "direct" means the taxpayer directly owns the asset,
16
17 and
17
18 e. "indirect" means the taxpayer owns an interest in a
18
19 pass-through entity (or chain of pass-through
19
20 entities) that sells the asset that gives rise to the
20
21 qualifying gains receiving capital treatment.
21
22 (1) With respect to sales of real property or
22
23 tangible personal property located within
23
24 Oklahoma this state, the deduction described in
24
Req. No. 616 Page 27
1 this subsection shall not apply unless the pass-
1
2 through entity that makes the sale has held the
2
3 property for not less than five (5) uninterrupted
3
4 years prior to the date of the transaction that
4
5 created the capital gain, and each pass-through
5
6 entity included in the chain of ownership has
6
7 been a member, partner, or shareholder of the
7
8 pass-through entity in the tier immediately below
8
9 it for an uninterrupted period of not less than
9
10 five (5) years.
10
11 (2) With respect to sales of stock or ownership
11
12 interest in or sales of all or substantially all
12
13 of the assets of an Oklahoma company, limited
13
14 liability company, or partnership, the deduction
14
15 described in this subsection shall not apply
15
16 unless the pass-through entity that makes the
16
17 sale has held the stock or ownership interest or
17
18 the assets for not less than three (3)
18
19 uninterrupted years prior to the date of the
19
20 transaction that created the capital gain, and
20
21 each pass-through entity included in the chain of
21
22 ownership has been a member, partner or
22
23 shareholder of the pass-through entity in the
23
24
24
Req. No. 616 Page 28
1 tier immediately below it for an uninterrupted
1
2 period of not less than three (3) years.
2
3 E. The Oklahoma adjusted gross income of any individual
3
4 taxpayer shall be further adjusted as follows to arrive at Oklahoma
4
5 taxable income:
5
6 1. a. In the case of individuals, there shall be added or
6
7 deducted, as the case may be, the difference necessary
7
8 to allow personal exemptions of One Thousand Dollars
8
9 ($1,000.00) in lieu of the personal exemptions allowed
9
10 by the Internal Revenue Code of 1986, as amended.
10
11 b. There shall be allowed an additional exemption of One
11
12 Thousand Dollars ($1,000.00) for each taxpayer or
12
13 spouse who is blind at the close of the tax year. For
13
14 purposes of this subparagraph, an individual is blind
14
15 only if the central visual acuity of the individual
15
16 does not exceed 20/200 in the better eye with
16
17 correcting lenses, or if the visual acuity of the
17
18 individual is greater than 20/200, but is accompanied
18
19 by a limitation in the fields of vision such that the
19
20 widest diameter of the visual field subtends an angle
20
21 no greater than twenty (20) degrees.
21
22 c. There shall be allowed an additional exemption of One
22
23 Thousand Dollars ($1,000.00) for each taxpayer or
23
24 spouse who is sixty-five (65) years of age or older at
24
Req. No. 616 Page 29
1 the close of the tax year based upon the filing status
1
2 and federal adjusted gross income of the taxpayer.
2
3 Taxpayers with the following filing status may claim
3
4 this exemption if the federal adjusted gross income
4
5 does not exceed:
5
6 (1) Twenty-five Thousand Dollars ($25,000.00) if
6
7 married and filing jointly,
7
8 (2) Twelve Thousand Five Hundred Dollars ($12,500.00)
8
9 if married and filing separately,
9
10 (3) Fifteen Thousand Dollars ($15,000.00) if single,
10
11 and
11
12 (4) Nineteen Thousand Dollars ($19,000.00) if a
12
13 qualifying head of household.
13
14 Provided, for taxable years beginning after December
14
15 31, 1999, amounts included in the calculation of
15
16 federal adjusted gross income pursuant to the
16
17 conversion of a traditional individual retirement
17
18 account to a Roth individual retirement account shall
18
19 be excluded from federal adjusted gross income for
19
20 purposes of the income thresholds provided in this
20
21 subparagraph.
21
22 2. a. For taxable years beginning on or before December 31,
22
23 2005, in the case of individuals who use the standard
23
24 deduction in determining taxable income, there shall
24
Req. No. 616 Page 30
1 be added or deducted, as the case may be, the
1
2 difference necessary to allow a standard deduction in
2
3 lieu of the standard deduction allowed by the Internal
3
4 Revenue Code of 1986, as amended, in an amount equal
4
5 to the larger of fifteen percent (15%) of the Oklahoma
5
6 adjusted gross income or One Thousand Dollars
6
7 ($1,000.00), but not to exceed Two Thousand Dollars
7
8 ($2,000.00), except that in the case of a married
8
9 individual filing a separate return such deduction
9
10 shall be the larger of fifteen percent (15%) of such
10
11 Oklahoma adjusted gross income or Five Hundred Dollars
11
12 ($500.00), but not to exceed the maximum amount of One
12
13 Thousand Dollars ($1,000.00).
13
14 b. For taxable years beginning on or after January 1,
14
15 2006, and before January 1, 2007, in the case of
15
16 individuals who use the standard deduction in
16
17 determining taxable income, there shall be added or
17
18 deducted, as the case may be, the difference necessary
18
19 to allow a standard deduction in lieu of the standard
19
20 deduction allowed by the Internal Revenue Code of
20
21 1986, as amended, in an amount equal to:
21
22 (1) Three Thousand Dollars ($3,000.00), if the filing
22
23 status is married filing joint, head of household
23
24 or qualifying widow, or
24
Req. No. 616 Page 31
1 (2) Two Thousand Dollars ($2,000.00), if the filing
1
2 status is single or married filing separate.
2
3 c. For the taxable year beginning on January 1, 2007, and
3
4 ending December 31, 2007, in the case of individuals
4
5 who use the standard deduction in determining taxable
5
6 income, there shall be added or deducted, as the case
6
7 may be, the difference necessary to allow a standard
7
8 deduction in lieu of the standard deduction allowed by
8
9 the Internal Revenue Code of 1986, as amended, in an
9
10 amount equal to:
10
11 (1) Five Thousand Five Hundred Dollars ($5,500.00),
11
12 if the filing status is married filing joint or
12
13 qualifying widow, or
13
14 (2) Four Thousand One Hundred Twenty-five Dollars
14
15 ($4,125.00) for a head of household, or
15
16 (3) Two Thousand Seven Hundred Fifty Dollars
16
17 ($2,750.00), if the filing status is single or
17
18 married filing separate.
18
19 d. For the taxable year beginning on January 1, 2008, and
19
20 ending December 31, 2008, in the case of individuals
20
21 who use the standard deduction in determining taxable
21
22 income, there shall be added or deducted, as the case
22
23 may be, the difference necessary to allow a standard
23
24 deduction in lieu of the standard deduction allowed by
24
Req. No. 616 Page 32
1 the Internal Revenue Code of 1986, as amended, in an
1
2 amount equal to:
2
3 (1) Six Thousand Five Hundred Dollars ($6,500.00), if
3
4 the filing status is married filing joint or
4
5 qualifying widow,
5
6 (2) Four Thousand Eight Hundred Seventy-five Dollars
6
7 ($4,875.00) for a head of household, or
7
8 (3) Three Thousand Two Hundred Fifty Dollars
8
9 ($3,250.00), if the filing status is single or
9
10 married filing separate.
10
11 e. For the taxable year beginning on January 1, 2009, and
11
12 ending December 31, 2009, in the case of individuals
12
13 who use the standard deduction in determining taxable
13
14 income, there shall be added or deducted, as the case
14
15 may be, the difference necessary to allow a standard
15
16 deduction in lieu of the standard deduction allowed by
16
17 the Internal Revenue Code of 1986, as amended, in an
17
18 amount equal to:
18
19 (1) Eight Thousand Five Hundred Dollars ($8,500.00),
19
20 if the filing status is married filing joint or
20
21 qualifying widow,
21
22 (2) Six Thousand Three Hundred Seventy-five Dollars
22
23 ($6,375.00) for a head of household, or
23
24
24
Req. No. 616 Page 33
1 (3) Four Thousand Two Hundred Fifty Dollars
1
2 ($4,250.00), if the filing status is single or
2
3 married filing separate.
3
4 Oklahoma adjusted gross income shall be increased by
4
5 any amounts paid for motor vehicle excise taxes which
5
6 were deducted as allowed by the Internal Revenue Code
6
7 of 1986, as amended.
7
8 f. For taxable years beginning on or after January 1,
8
9 2010, and ending on December 31, 2016, in the case of
9
10 individuals who use the standard deduction in
10
11 determining taxable income, there shall be added or
11
12 deducted, as the case may be, the difference necessary
12
13 to allow a standard deduction equal to the standard
13
14 deduction allowed by the Internal Revenue Code of
14
15 1986, as amended, based upon the amount and filing
15
16 status prescribed by such Code for purposes of filing
16
17 federal individual income tax returns.
17
18 g. For taxable years beginning on or after January 1,
18
19 2017, in the case of individuals who use the standard
19
20 deduction in determining taxable income, there shall
20
21 be added or deducted, as the case may be, the
21
22 difference necessary to allow a standard deduction in
22
23 lieu of the standard deduction allowed by the Internal
23
24 Revenue Code of 1986, as amended, as follows:
24
Req. No. 616 Page 34
1 (1) Six Thousand Three Hundred Fifty Dollars
1
2 ($6,350.00) for single or married filing
2
3 separately,
3
4 (2) Twelve Thousand Seven Hundred Dollars
4
5 ($12,700.00) for married filing jointly or
5
6 qualifying widower with dependent child, and
6
7 (3) Nine Thousand Three Hundred Fifty Dollars
7
8 ($9,350.00) for head of household.
8
9 3. a. In the case of resident and part-year resident
9
10 individuals having adjusted gross income from sources
10
11 both within and without the state, the itemized or
11
12 standard deductions and personal exemptions shall be
12
13 reduced to an amount which is the same portion of the
13
14 total thereof as Oklahoma adjusted gross income is of
14
15 adjusted gross income. To the extent itemized
15
16 deductions include allowable moving expense, proration
16
17 of moving expense shall not be required or permitted
17
18 but allowable moving expense shall be fully deductible
18
19 for those taxpayers moving within or into Oklahoma
19
20 this state and no part of moving expense shall be
20
21 deductible for those taxpayers moving without or out
21
22 of Oklahoma this state. All other itemized or
22
23 standard deductions and personal exemptions shall be
23
24 subject to proration as provided by law.
24
Req. No. 616 Page 35
1 b. For taxable years beginning on or after January 1,
1
2 2018, the net amount of itemized deductions allowable
2
3 on an Oklahoma income tax return, subject to the
3
4 provisions of paragraph 24 of this subsection, shall
4
5 not exceed Seventeen Thousand Dollars ($17,000.00).
5
6 For purposes of this subparagraph, charitable
6
7 contributions and medical expenses deductible for
7
8 federal income tax purposes shall be excluded from the
8
9 amount of Seventeen Thousand Dollars ($17,000.00) as
9
10 specified by this subparagraph.
10
11 4. A resident individual with a physical disability
11
12 constituting a substantial handicap to employment may deduct from
12
13 Oklahoma adjusted gross income such expenditures to modify a motor
13
14 vehicle, home or workplace as are necessary to compensate for his or
14
15 her handicap. A veteran certified by the United States Department
15
16 of Veterans Affairs of the federal government as having a service-
16
17 connected disability shall be conclusively presumed to be an
17
18 individual with a physical disability constituting a substantial
18
19 handicap to employment. The Tax Commission shall promulgate rules
19
20 containing a list of combinations of common disabilities and
20
21 modifications which may be presumed to qualify for this deduction.
21
22 The Tax Commission shall prescribe necessary requirements for
22
23 verification.
23
24
24
Req. No. 616 Page 36
1 5. a. Before July 1, 2010, the first One Thousand Five
1
2 Hundred Dollars ($1,500.00) received by any person
2
3 from the United States as salary or compensation in
3
4 any form, other than retirement benefits, as a member
4
5 of any component of the Armed Forces of the United
5
6 States shall be deducted from taxable income.
6
7 b. On or after July 1, 2010, one hundred percent (100%)
7
8 of the income received by any person from the United
8
9 States as salary or compensation in any form, other
9
10 than retirement benefits, as a member of any component
10
11 of the Armed Forces of the United States shall be
11
12 deducted from taxable income.
12
13 c. Whenever the filing of a timely income tax return by a
13
14 member of the Armed Forces of the United States is
14
15 made impracticable or impossible of accomplishment by
15
16 reason of:
16
17 (1) absence from the United States, which term
17
18 includes only the states and the District of
18
19 Columbia,
19
20 (2) absence from the State of Oklahoma this state
20
21 while on active duty, or
21
22 (3) confinement in a hospital within the United
22
23 States for treatment of wounds, injuries or
23
24 disease,
24
Req. No. 616 Page 37
1 the time for filing a return and paying an income tax
1
2 shall be and is hereby extended without incurring
2
3 liability for interest or penalties, to the fifteenth
3
4 day of the third month following the month in which:
4
5 (a) Such individual shall return to the United
5
6 States if the extension is granted pursuant
6
7 to subparagraph a division 1 of this
7
8 paragraph subparagraph, return to the State
8
9 of Oklahoma this state if the extension is
9
10 granted pursuant to subparagraph b division
10
11 2 of this paragraph subparagraph or be
11
12 discharged from such hospital if the
12
13 extension is granted pursuant to
13
14 subparagraph c division 3 of this paragraph
14
15 subparagraph, or
15
16 (b) An executor, administrator, or conservator
16
17 of the estate of the taxpayer is appointed,
17
18 whichever event occurs the earliest.
18
19 Provided, that the Tax Commission may, in its discretion, grant
19
20 any member of the Armed Forces of the United States an extension of
20
21 time for filing of income tax returns and payment of income tax
21
22 without incurring liabilities for interest or penalties. Such
22
23 extension may be granted only when in the judgment of the Tax
23
24 Commission a good cause exists therefor and may be for a period in
24
Req. No. 616 Page 38
1 excess of six (6) months. A record of every such extension granted,
1
2 and the reason therefor, shall be kept.
2
3 6. Before July 1, 2010, the salary or any other form of
3
4 compensation, received from the United States by a member of any
4
5 component of the Armed Forces of the United States, shall be
5
6 deducted from taxable income during the time in which the person is
6
7 detained by the enemy in a conflict, is a prisoner of war or is
7
8 missing in action and not deceased; provided, after July 1, 2010,
8
9 all such salary or compensation shall be subject to the deduction as
9
10 provided pursuant to paragraph 5 of this subsection.
10
11 7. a. An individual taxpayer, whether resident or
11
12 nonresident, may deduct an amount equal to the federal
12
13 income taxes paid by the taxpayer during the taxable
13
14 year.
14
15 b. Federal taxes as described in subparagraph a of this
15
16 paragraph shall be deductible by any individual
16
17 taxpayer, whether resident or nonresident, only to the
17
18 extent they relate to income subject to taxation
18
19 pursuant to the provisions of the Oklahoma Income Tax
19
20 Act. The maximum amount allowable in the preceding
20
21 paragraph 5 of this subsection shall be prorated on
21
22 the ratio of the Oklahoma adjusted gross income to
22
23 federal adjusted gross income.
23
24
24
Req. No. 616 Page 39
1 c. For the purpose of this paragraph, "federal income
1
2 taxes paid" shall mean federal income taxes, surtaxes
2
3 imposed on incomes or excess profits taxes, as though
3
4 the taxpayer was on the accrual basis. In determining
4
5 the amount of deduction for federal income taxes for
5
6 tax year 2001, the amount of the deduction shall not
6
7 be adjusted by the amount of any accelerated ten
7
8 percent (10%) tax rate bracket credit or advanced
8
9 refund of the credit received during the tax year
9
10 provided pursuant to the federal Economic Growth and
10
11 Tax Relief Reconciliation Act of 2001, P.L. No. 107-
11
12 16, and the advanced refund of such credit shall not
12
13 be subject to taxation.
13
14 d. The provisions of this paragraph shall apply to all
14
15 taxable years ending after December 31, 1978, and
15
16 beginning before January 1, 2006.
16
17 8. Retirement benefits not to exceed Five Thousand Five Hundred
17
18 Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five
18
19 Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand
19
20 Dollars ($10,000.00) for the 2006 tax year and all subsequent tax
20
21 years, which are received by an individual from the civil service of
21
22 the United States, the Oklahoma Public Employees Retirement System,
22
23 the Teachers' Retirement System of Oklahoma, the Oklahoma Law
23
24 Enforcement Retirement System, the Oklahoma Firefighters Pension and
24
Req. No. 616 Page 40
1 Retirement System, the Oklahoma Police Pension and Retirement
1
2 System, the employee retirement systems created by counties pursuant
2
3 to Section 951 et seq. of Title 19 of the Oklahoma Statutes, the The
3
4 Uniform Retirement System for Justices and Judges, the Oklahoma
4
5 Wildlife Conservation Department Retirement Fund, the Oklahoma
5
6 Employment Security Commission Retirement Plan, or the employee
6
7 retirement systems created by municipalities pursuant to Section 48-
7
8 101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt
8
9 from taxable income.
9
10 9. In taxable years beginning after December 3l, 1984, Social
10
11 Security benefits received by an individual shall be exempt from
11
12 taxable income, to the extent such benefits are included in the
12
13 federal adjusted gross income pursuant to the provisions of Section
13
14 86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C.,
14
15 Section 86.
15
16 10. For taxable years beginning after December 31, 1994, lump-
16
17 sum distributions from employer plans of deferred compensation,
17
18 which are not qualified plans within the meaning of Section 401(a)
18
19 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
19
20 401(a), and which are deposited in and accounted for within a
20
21 separate bank account or brokerage account in a financial
21
22 institution within this state, shall be excluded from taxable income
22
23 in the same manner as a qualifying rollover contribution to an
23
24 individual retirement account within the meaning of Section 408 of
24
Req. No. 616 Page 41
1 the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section
1
2 408. Amounts withdrawn from such bank or brokerage account,
2
3 including any earnings thereon, shall be included in taxable income
3
4 when withdrawn in the same manner as withdrawals from individual
4
5 retirement accounts within the meaning of Section 408 of the
5
6 Internal Revenue Code of 1986, as amended.
6
7 11. In taxable years beginning after December 31, 1995,
7
8 contributions made to and interest received from a medical savings
8
9 account established pursuant to Sections 2621 through 2623 of Title
9
10 63 of the Oklahoma Statutes shall be exempt from taxable income.
10
11 12. For taxable years beginning after December 31, 1996, the
11
12 Oklahoma adjusted gross income of any individual taxpayer who is a
12
13 swine or poultry producer may be further adjusted for the deduction
13
14 for depreciation allowed for new construction or expansion costs
14
15 which may be computed using the same depreciation method elected for
15
16 federal income tax purposes except that the useful life shall be
16
17 seven (7) years for purposes of this paragraph. If depreciation is
17
18 allowed as a deduction in determining the adjusted gross income of
18
19 an individual, any depreciation calculated and claimed pursuant to
19
20 this section shall in no event be a duplication of any depreciation
20
21 allowed or permitted on the federal income tax return of the
21
22 individual.
22
23 13. a. In taxable years beginning before January 1, 2005,
23
24 retirement benefits not to exceed the amounts
24
Req. No. 616 Page 42
1 specified in this paragraph, which are received by an
1
2 individual sixty-five (65) years of age or older and
2
3 whose Oklahoma adjusted gross income is Twenty-five
3
4 Thousand Dollars ($25,000.00) or less if the filing
4
5 status is single, head of household, or married filing
5
6 separate, or Fifty Thousand Dollars ($50,000.00) or
6
7 less if the filing status is married filing joint or
7
8 qualifying widow, shall be exempt from taxable income.
8
9 In taxable years beginning after December 31, 2004,
9
10 retirement benefits not to exceed the amounts
10
11 specified in this paragraph, which are received by an
11
12 individual whose Oklahoma adjusted gross income is
12
13 less than the qualifying amount specified in this
13
14 paragraph, shall be exempt from taxable income.
14
15 b. For purposes of this paragraph, the qualifying amount
15
16 shall be as follows:
16
17 (1) in taxable years beginning after December 31,
17
18 2004, and prior to January 1, 2007, the
18
19 qualifying amount shall be Thirty-seven Thousand
19
20 Five Hundred Dollars ($37,500.00) or less if the
20
21 filing status is single, head of household, or
21
22 married filing separate, or Seventy-five Thousand
22
23 Dollars ($75,000.00) or less if the filing status
23
24 is married filing jointly or qualifying widow,
24
Req. No. 616 Page 43
1 (2) in the taxable year beginning January 1, 2007,
1
2 the qualifying amount shall be Fifty Thousand
2
3 Dollars ($50,000.00) or less if the filing status
3
4 is single, head of household, or married filing
4
5 separate, or One Hundred Thousand Dollars
5
6 ($100,000.00) or less if the filing status is
6
7 married filing jointly or qualifying widow,
7
8 (3) in the taxable year beginning January 1, 2008,
8
9 the qualifying amount shall be Sixty-two Thousand
9
10 Five Hundred Dollars ($62,500.00) or less if the
10
11 filing status is single, head of household, or
11
12 married filing separate, or One Hundred Twenty-
12
13 five Thousand Dollars ($125,000.00) or less if
13
14 the filing status is married filing jointly or
14
15 qualifying widow,
15
16 (4) in the taxable year beginning January 1, 2009,
16
17 the qualifying amount shall be One Hundred
17
18 Thousand Dollars ($100,000.00) or less if the
18
19 filing status is single, head of household, or
19
20 married filing separate, or Two Hundred Thousand
20
21 Dollars ($200,000.00) or less if the filing
21
22 status is married filing jointly or qualifying
22
23 widow, and
23
24
24
Req. No. 616 Page 44
1 (5) in the taxable year beginning January 1, 2010,
1
2 and subsequent taxable years, there shall be no
2
3 limitation upon the qualifying amount.
3
4 c. For purposes of this paragraph, "retirement benefits"
4
5 means the total distributions or withdrawals from the
5
6 following:
6
7 (1) an employee pension benefit plan which satisfies
7
8 the requirements of Section 401 of the Internal
8
9 Revenue Code of 1986, as amended, 26 U.S.C.,
9
10 Section 401,
10
11 (2) an eligible deferred compensation plan that
11
12 satisfies the requirements of Section 457 of the
12
13 Internal Revenue Code of 1986, as amended, 26
13
14 U.S.C., Section 457,
14
15 (3) an individual retirement account, annuity or
15
16 trust or simplified employee pension that
16
17 satisfies the requirements of Section 408 of the
17
18 Internal Revenue Code of 1986, as amended, 26
18
19 U.S.C., Section 408,
19
20 (4) an employee annuity subject to the provisions of
20
21 Section 403(a) or (b) of the Internal Revenue
21
22 Code of 1986, as amended, 26 U.S.C., Section
22
23 403(a) or (b),
23
24
24
Req. No. 616 Page 45
1 (5) United States Retirement Bonds which satisfy the
1
2 requirements of Section 86 of the Internal
2
3 Revenue Code of 1986, as amended, 26 U.S.C.,
3
4 Section 86, or
4
5 (6) lump-sum distributions from a retirement plan
5
6 which satisfies the requirements of Section
6
7 402(e) of the Internal Revenue Code of 1986, as
7
8 amended, 26 U.S.C., Section 402(e).
8
9 d. The amount of the exemption provided by this paragraph
9
10 shall be limited to Five Thousand Five Hundred Dollars
10
11 ($5,500.00) for the 2004 tax year, Seven Thousand Five
11
12 Hundred Dollars ($7,500.00) for the 2005 tax year and
12
13 Ten Thousand Dollars ($10,000.00) for the tax year
13
14 2006 and for all subsequent tax years. Any individual
14
15 who claims the exemption provided for in paragraph 8
15
16 of this subsection shall not be permitted to claim a
16
17 combined total exemption pursuant to this paragraph
17
18 and paragraph 8 of this subsection in an amount
18
19 exceeding Five Thousand Five Hundred Dollars
19
20 ($5,500.00) for the 2004 tax year, Seven Thousand Five
20
21 Hundred Dollars ($7,500.00) for the 2005 tax year and
21
22 Ten Thousand Dollars ($10,000.00) for the 2006 tax
22
23 year and all subsequent tax years.
23
24
24
Req. No. 616 Page 46
1 14. In taxable years beginning after December 31, 1999, for an
1
2 individual engaged in production agriculture who has filed a
2
3 Schedule F form with the taxpayer's federal income tax return for
3
4 such taxable year, there shall be excluded from taxable income any
4
5 amount which was included as federal taxable income or federal
5
6 adjusted gross income and which consists of the discharge of an
6
7 obligation by a creditor of the taxpayer incurred to finance the
7
8 production of agricultural products.
8
9 15. In taxable years beginning December 31, 2000, an amount
9
10 equal to one hundred percent (100%) of the amount of any scholarship
10
11 or stipend received from participation in the Oklahoma Police Corps
11
12 Program, as established in Section 2-140.3 of Title 47 of the
12
13 Oklahoma Statutes shall be exempt from taxable income.
13
14 16. a. In taxable years beginning after December 31, 2001,
14
15 and before January 1, 2005, there shall be allowed a
15
16 deduction in the amount of contributions to accounts
16
17 established pursuant to the Oklahoma College Savings
17
18 Plan Act. The deduction shall equal the amount of
18
19 contributions to accounts, but in no event shall the
19
20 deduction for each contributor exceed Two Thousand
20
21 Five Hundred Dollars ($2,500.00) each taxable year for
21
22 each account.
22
23 b. In taxable years beginning after December 31, 2004,
23
24 each taxpayer shall be allowed a deduction for
24
Req. No. 616 Page 47
1 contributions to accounts established pursuant to the
1
2 Oklahoma College Savings Plan Act. The maximum annual
2
3 deduction shall equal the amount of contributions to
3
4 all such accounts plus any contributions to such
4
5 accounts by the taxpayer for prior taxable years after
5
6 December 31, 2004, which were not deducted, but in no
6
7 event shall the deduction for each tax year exceed Ten
7
8 Thousand Dollars ($10,000.00) for each individual
8
9 taxpayer or Twenty Thousand Dollars ($20,000.00) for
9
10 taxpayers filing a joint return. Any amount of a
10
11 contribution that is not deducted by the taxpayer in
11
12 the year for which the contribution is made may be
12
13 carried forward as a deduction from income for the
13
14 succeeding five (5) years. For taxable years
14
15 beginning after December 31, 2005, deductions may be
15
16 taken for contributions and rollovers made during a
16
17 taxable year and up to April 15 of the succeeding
17
18 year, or the due date of a taxpayer's state income tax
18
19 return, excluding extensions, whichever is later.
19
20 Provided, a deduction for the same contribution may
20
21 not be taken for two (2) different taxable years.
21
22 c. In taxable years beginning after December 31, 2006,
22
23 deductions for contributions made pursuant to
23
24
24
Req. No. 616 Page 48
1 subparagraph b of this paragraph shall be limited as
1
2 follows:
2
3 (1) for a taxpayer who qualified for the five-year
3
4 carryforward election and who takes a rollover or
4
5 nonqualified withdrawal during that period, the
5
6 tax deduction otherwise available pursuant to
6
7 subparagraph b of this paragraph shall be reduced
7
8 by the amount which is equal to the rollover or
8
9 nonqualified withdrawal, and
9
10 (2) for a taxpayer who elects to take a rollover or
10
11 nonqualified withdrawal within the same tax year
11
12 in which a contribution was made to the
12
13 taxpayer's account, the tax deduction otherwise
13
14 available pursuant to subparagraph b of this
14
15 paragraph shall be reduced by the amount of the
15
16 contribution which is equal to the rollover or
16
17 nonqualified withdrawal.
17
18 d. If a taxpayer elects to take a rollover on a
18
19 contribution for which a deduction has been taken
19
20 pursuant to subparagraph b of this paragraph within
20
21 one (1) year of the date of contribution, the amount
21
22 of such rollover shall be included in the adjusted
22
23 gross income of the taxpayer in the taxable year of
23
24 the rollover.
24
Req. No. 616 Page 49
1 e. If a taxpayer makes a nonqualified withdrawal of
1
2 contributions for which a deduction was taken pursuant
2
3 to subparagraph b of this paragraph, such nonqualified
3
4 withdrawal and any earnings thereon shall be included
4
5 in the adjusted gross income of the taxpayer in the
5
6 taxable year of the nonqualified withdrawal.
6
7 f. As used in this paragraph:
7
8 (1) "non-qualified withdrawal" means a withdrawal
8
9 from an Oklahoma College Savings Plan account
9
10 other than one of the following:
10
11 (a) a qualified withdrawal,
11
12 (b) a withdrawal made as a result of the death
12
13 or disability of the designated beneficiary
13
14 of an account,
14
15 (c) a withdrawal that is made on the account of
15
16 a scholarship or the allowance or payment
16
17 described in Section 135(d)(1)(B) or (C) or
17
18 by the Internal Revenue Code of 1986, as
18
19 amended, received by the designated
19
20 beneficiary to the extent the amount of the
20
21 refund does not exceed the amount of the
21
22 scholarship, allowance, or payment, or
22
23 (d) a rollover or change of designated
23
24 beneficiary as permitted by subsection F of
24
Req. No. 616 Page 50
1 Section 3970.7 of Title 70 of the Oklahoma
1
2 Statutes, and
2
3 (2) "rollover" means the transfer of funds from the
3
4 Oklahoma College Savings Plan to any other plan
4
5 under Section 529 of the Internal Revenue Code of
5
6 1986, as amended.
6
7 17. For tax years 2006 through 2021, retirement benefits
7
8 received by an individual from any component of the Armed Forces of
8
9 the United States in an amount not to exceed the greater of seventy-
9
10 five percent (75%) of such benefits or Ten Thousand Dollars
10
11 ($10,000.00) shall be exempt from taxable income but in no case less
11
12 than the amount of the exemption provided by paragraph 13 of this
12
13 subsection. For tax year 2022 and subsequent tax years, retirement
13
14 benefits received by an individual from any component of the Armed
14
15 Forces of the United States shall be exempt from taxable income.
15
16 18. For taxable years beginning after December 31, 2006,
16
17 retirement benefits received by federal civil service retirees,
17
18 including survivor annuities, paid in lieu of Social Security
18
19 benefits shall be exempt from taxable income to the extent such
19
20 benefits are included in the federal adjusted gross income pursuant
20
21 to the provisions of Section 86 of the Internal Revenue Code of
21
22 1986, as amended, 26 U.S.C., Section 86, according to the following
22
23 schedule:
23
24
24
Req. No. 616 Page 51
1 a. in the taxable year beginning January 1, 2007, twenty
1
2 percent (20%) of such benefits shall be exempt,
2
3 b. in the taxable year beginning January 1, 2008, forty
3
4 percent (40%) of such benefits shall be exempt,
4
5 c. in the taxable year beginning January 1, 2009, sixty
5
6 percent (60%) of such benefits shall be exempt,
6
7 d. in the taxable year beginning January 1, 2010, eighty
7
8 percent (80%) of such benefits shall be exempt, and
8
9 e. in the taxable year beginning January 1, 2011, and
9
10 subsequent taxable years, one hundred percent (100%)
10
11 of such benefits shall be exempt.
11
12 19. a. For taxable years beginning after December 31, 2007, a
12
13 resident individual may deduct up to Ten Thousand
13
14 Dollars ($10,000.00) from Oklahoma adjusted gross
14
15 income if the individual, or the dependent of the
15
16 individual, while living, donates one or more human
16
17 organs of the individual to another human being for
17
18 human organ transplantation. As used in this
18
19 paragraph, "human organ" means all or part of a liver,
19
20 pancreas, kidney, intestine, lung, or bone marrow. A
20
21 deduction that is claimed under this paragraph may be
21
22 claimed in the taxable year in which the human organ
22
23 transplantation occurs.
23
24
24
Req. No. 616 Page 52
1 b. An individual may claim this deduction only once, and
1
2 the deduction may be claimed only for unreimbursed
2
3 expenses that are incurred by the individual and
3
4 related to the organ donation of the individual.
4
5 c. The Oklahoma Tax Commission shall promulgate rules to
5
6 implement the provisions of this paragraph which shall
6
7 contain a specific list of expenses which may be
7
8 presumed to qualify for the deduction. The Tax
8
9 Commission shall prescribe necessary requirements for
9
10 verification.
10
11 20. For taxable years beginning after December 31, 2009, there
11
12 shall be exempt from taxable income any amount received by the
12
13 beneficiary of the death benefit for an emergency medical technician
13
14 or a registered emergency medical responder provided by Section 1-
14
15 2505.1 of Title 63 of the Oklahoma Statutes.
15
16 21. For taxable years beginning after December 31, 2008,
16
17 taxable income shall be increased by any unemployment compensation
17
18 exempted under Section 85(c) of the Internal Revenue Code of 1986,
18
19 as amended, 26 U.S.C., Section 85(c)(2009).
19
20 22. For taxable years beginning after December 31, 2008, there
20
21 shall be exempt from taxable income any payment in an amount less
21
22 than Six Hundred Dollars ($600.00) received by a person as an award
22
23 for participation in a competitive livestock show event. For
23
24 purposes of this paragraph, the payment shall be treated as a
24
Req. No. 616 Page 53
1 scholarship amount paid by the entity sponsoring the event and the
1
2 sponsoring entity shall cause the payment to be categorized as a
2
3 scholarship in its books and records.
3
4 23. For taxable years beginning on or after January 1, 2016,
4
5 taxable income shall be increased by any amount of state and local
5
6 sales or income taxes deducted under 26 U.S.C., Section 164 of the
6
7 Internal Revenue Code of 1986, as amended. If the amount of state
7
8 and local taxes deducted on the federal return is limited, taxable
8
9 income on the state return shall be increased only by the amount
9
10 actually deducted after any such limitations are applied.
10
11 24. For taxable years beginning after December 31, 2020, each
11
12 taxpayer shall be allowed a deduction for contributions to accounts
12
13 established pursuant to the Achieving a Better Life Experience
13
14 (ABLE) Program program as established in Section 4001.1 et seq. of
14
15 Title 56 of the Oklahoma Statutes. For any tax year, the deduction
15
16 provided for in this paragraph shall not exceed Ten Thousand Dollars
16
17 ($10,000.00) for an individual taxpayer or Twenty Thousand Dollars
17
18 ($20,000.00) for taxpayers filing a joint return. Any amount of
18
19 contribution not deducted by the taxpayer in the tax year for which
19
20 the contribution is made may be carried forward as a deduction from
20
21 income for up to five (5) tax years. Deductions may be taken for
21
22 contributions made during the tax year and through April 15 of the
22
23 succeeding tax year, or through the due date of a taxpayer's state
23
24 income tax return excluding extensions, whichever is later.
24
Req. No. 616 Page 54
1 Provided, a deduction for the same contribution may not be taken in
1
2 more than one (1) tax year.
2
3 F. 1. For taxable years beginning after December 31, 2004, a
3
4 deduction from the Oklahoma adjusted gross income of any individual
4
5 taxpayer shall be allowed for qualifying gains receiving capital
5
6 treatment that are included in the federal adjusted gross income of
6
7 such individual taxpayer during the taxable year.
7
8 2. As used in this subsection:
8
9 a. "qualifying gains receiving capital treatment" means
9
10 the amount of net capital gains, as defined in Section
10
11 1222(11) of the Internal Revenue Code of 1986, as
11
12 amended, included in an individual taxpayer's federal
12
13 income tax return that result from:
13
14 (1) the sale of real property or tangible personal
14
15 property located within Oklahoma this state that
15
16 has been directly or indirectly owned by the
16
17 individual taxpayer for a holding period of at
17
18 least five (5) years prior to the date of the
18
19 transaction from which such net capital gains
19
20 arise,
20
21 (2) the sale of stock or the sale of a direct or
21
22 indirect ownership interest in an Oklahoma
22
23 company, limited liability company, or
23
24 partnership where such stock or ownership
24
Req. No. 616 Page 55
1 interest has been directly or indirectly owned by
1
2 the individual taxpayer for a holding period of
2
3 at least two (2) years prior to the date of the
3
4 transaction from which the net capital gains
4
5 arise, or
5
6 (3) the sale of real property, tangible personal
6
7 property or intangible personal property located
7
8 within Oklahoma this state as part of the sale of
8
9 all or substantially all of the assets of an
9
10 Oklahoma company, limited liability company, or
10
11 partnership or an Oklahoma proprietorship
11
12 business enterprise where such property has been
12
13 directly or indirectly owned by such entity or
13
14 business enterprise or owned by the owners of
14
15 such entity or business enterprise for a period
15
16 of at least two (2) years prior to the date of
16
17 the transaction from which the net capital gains
17
18 arise,
18
19 b. "holding period" means an uninterrupted period of
19
20 time. The holding period shall include any additional
20
21 period when the property was held by another
21
22 individual or entity, if such additional period is
22
23 included in the taxpayer's holding period for the
23
24
24
Req. No. 616 Page 56
1 asset pursuant to the Internal Revenue Code of 1986,
1
2 as amended,
2
3 c. "Oklahoma company," "limited liability company," or
3
4 "partnership" means an entity whose primary
4
5 headquarters have been located in Oklahoma this state
5
6 for at least three (3) uninterrupted years prior to
6
7 the date of the transaction from which the net capital
7
8 gains arise,
8
9 d. "direct" means the individual taxpayer directly owns
9
10 the asset,
10
11 e. "indirect" means the individual taxpayer owns an
11
12 interest in a pass-through entity (or chain of pass-
12
13 through entities) that sells the asset that gives rise
13
14 to the qualifying gains receiving capital treatment.
14
15 (1) With respect to sales of real property or
15
16 tangible personal property located within
16
17 Oklahoma this state, the deduction described in
17
18 this subsection shall not apply unless the pass-
18
19 through entity that makes the sale has held the
19
20 property for not less than five (5) uninterrupted
20
21 years prior to the date of the transaction that
21
22 created the capital gain, and each pass-through
22
23 entity included in the chain of ownership has
23
24 been a member, partner, or shareholder of the
24
Req. No. 616 Page 57
1 pass-through entity in the tier immediately below
1
2 it for an uninterrupted period of not less than
2
3 five (5) years.
3
4 (2) With respect to sales of stock or ownership
4
5 interest in or sales of all or substantially all
5
6 of the assets of an Oklahoma company, limited
6
7 liability company, partnership or Oklahoma
7
8 proprietorship business enterprise, the deduction
8
9 described in this subsection shall not apply
9
10 unless the pass-through entity that makes the
10
11 sale has held the stock or ownership interest for
11
12 not less than two (2) uninterrupted years prior
12
13 to the date of the transaction that created the
13
14 capital gain, and each pass-through entity
14
15 included in the chain of ownership has been a
15
16 member, partner or shareholder of the pass-
16
17 through entity in the tier immediately below it
17
18 for an uninterrupted period of not less than two
18
19 (2) years. For purposes of this division,
19
20 uninterrupted ownership prior to July 1, 2007,
20
21 shall be included in the determination of the
21
22 required holding period prescribed by this
22
23 division, and
23
24
24
Req. No. 616 Page 58
1 f. "Oklahoma proprietorship business enterprise" means a
1
2 business enterprise whose income and expenses have
2
3 been reported on Schedule C or F of an individual
3
4 taxpayer's federal income tax return, or any similar
4
5 successor schedule published by the Internal Revenue
5
6 Service and whose primary headquarters have been
6
7 located in Oklahoma this state for at least three (3)
7
8 uninterrupted years prior to the date of the
8
9 transaction from which the net capital gains arise.
9
10 G. 1. For purposes of computing its Oklahoma taxable income
10
11 under this section, the dividends-paid deduction otherwise allowed
11
12 by federal law in computing net income of a real estate investment
12
13 trust that is subject to federal income tax shall be added back in
13
14 computing the tax imposed by this state under this title if the real
14
15 estate investment trust is a captive real estate investment trust.
15
16 2. For purposes of computing its Oklahoma taxable income under
16
17 this section, a taxpayer shall add back otherwise deductible rents
17
18 and interest expenses paid to a captive real estate investment trust
18
19 that is not subject to the provisions of paragraph 1 of this
19
20 subsection. As used in this subsection:
20
21 a. the term "real estate investment trust" or "REIT"
21
22 means the meaning ascribed to such term in Section 856
22
23 of the Internal Revenue Code of 1986, as amended,
23
24
24
Req. No. 616 Page 59
1 b. the term "captive real estate investment trust" means
1
2 a real estate investment trust, the shares or
2
3 beneficial interests of which are not regularly traded
3
4 on an established securities market and more than
4
5 fifty percent (50%) of the voting power or value of
5
6 the beneficial interests or shares of which are owned
6
7 or controlled, directly or indirectly, or
7
8 constructively, by a single entity that is:
8
9 (1) treated as an association taxable as a
9
10 corporation under the Internal Revenue Code of
10
11 1986, as amended, and
11
12 (2) not exempt from federal income tax pursuant to
12
13 the provisions of Section 501(a) of the Internal
13
14 Revenue Code of 1986, as amended.
14
15 The term shall not include a real estate investment
15
16 trust that is intended to be regularly traded on an
16
17 established securities market, and that satisfies the
17
18 requirements of Section 856(a)(5) and (6) of the U.S.
18
19 Internal Revenue Code of 1986, as amended, by reason
19
20 of Section 856(h)(2) of the Internal Revenue Code of
20
21 1986, as amended,
21
22 c. the term "association taxable as a corporation" shall
22
23 not include the following entities:
23
24
24
Req. No. 616 Page 60
1 (1) any real estate investment trust as defined in
1
2 paragraph a of this subsection other than a
2
3 "captive real estate investment trust" captive
3
4 real estate investment trust,
4
5 (2) any qualified real estate investment trust
5
6 subsidiary under Section 856(i) of the Internal
6
7 Revenue Code of 1986, as amended, other than a
7
8 qualified REIT subsidiary of a "captive real
8
9 estate investment trust" captive real estate
9
10 investment trust,
10
11 (3) any Listed Australian Property Trust listed
11
12 Australian property trust (meaning an Australian
12
13 unit trust registered as a "Managed Investment
13
14 Scheme" "managed investment scheme" under the
14
15 Australian Corporations Act 2001 in which the
15
16 principal class of units is listed on a
16
17 recognized stock exchange in Australia and is
17
18 regularly traded on an established securities
18
19 market), or an entity organized as a trust,
19
20 provided that a Listed Australian Property Trust
20
21 listed Australian property trust owns or
21
22 controls, directly or indirectly, seventy-five
22
23 percent (75%) or more of the voting power or
23
24
24
Req. No. 616 Page 61
1 value of the beneficial interests or shares of
1
2 such trust, or
2
3 (4) any Qualified Foreign Entity qualified foreign
3
4 entity, meaning a corporation, trust, association
4
5 or partnership organized outside the laws of the
5
6 United States and which satisfies the following
6
7 criteria:
7
8 (a) at least seventy-five percent (75%) of the
8
9 entity's total asset value at the close of
9
10 its taxable year is represented by real
10
11 estate assets, as defined in Section
11
12 856(c)(5)(B) of the Internal Revenue Code of
12
13 1986, as amended, thereby including shares
13
14 or certificates of beneficial interest in
14
15 any real estate investment trust, cash and
15
16 cash equivalents, and U.S. Government
16
17 securities,
17
18 (b) the entity receives a dividend-paid
18
19 deduction comparable to Section 561 of the
19
20 Internal Revenue Code of 1986, as amended,
20
21 or is exempt from entity level tax,
21
22 (c) the entity is required to distribute at
22
23 least eighty-five percent (85%) of its
23
24 taxable income, as computed in the
24
Req. No. 616 Page 62
1 jurisdiction in which it is organized, to
1
2 the holders of its shares or certificates of
2
3 beneficial interest on an annual basis,
3
4 (d) not more than ten percent (10%) of the
4
5 voting power or value in such entity is held
5
6 directly or indirectly or constructively by
6
7 a single entity or individual, or the shares
7
8 or beneficial interests of such entity are
8
9 regularly traded on an established
9
10 securities market, and
10
11 (e) the entity is organized in a country which
11
12 has a tax treaty with the United States.
12
13 3. For purposes of this subsection, the constructive ownership
13
14 rules of Section 318(a) of the Internal Revenue Code, as modified by
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15 Section 856(d)(5) of the Internal Revenue Code of 1986, as amended,
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16 shall apply in determining the ownership of stock, assets, or net
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17 profits of any person.
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18 4. A real estate investment trust that does not become
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19 regularly traded on an established securities market within one (1)
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20 year of the date on which it first becomes a real estate investment
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21 trust shall be deemed not to have been regularly traded on an
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22 established securities market, retroactive to the date it first
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23 became a real estate investment trust, and shall file an amended
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24 return reflecting such retroactive designation for any tax year or
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1 part year occurring during its initial year of status as a real
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2 estate investment trust. For purposes of this subsection, a real
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3 estate investment trust becomes a real estate investment trust on
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4 the first day it has both met the requirements of Section 856 of the
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5 Internal Revenue Code of 1986, as amended, and has elected to be
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6 treated as a real estate investment trust pursuant to Section
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7 856(c)(1) of the Internal Revenue Code of 1986, as amended.
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8 SECTION 2. This act shall become effective November 1, 2025.
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10 60-1-616 QD 12/30/2024 11:40:46 PM
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Req. No. 616 Page 64Every fact on this page links to its source, starting with the official bill record.