{"data":{"id":"us-ok/okla.-stat.-tit.-68-68-2354","jurisdiction":"us-ok","citation":"Okla. Stat. tit. 68, § 68-2354","heading":"Optional transitional deduction","body":"A. If a taxpayer (including a partnership) shall have been\n\nrequired to report his taxable income to the State of Oklahoma for\n\nyears prior to the effective date of this act, in a manner different\n\nthan he has been required to report his federal income for the same\n\nperiod of time, and, as a consequence of the differences in\n\nreporting income during that period of time, has a different basis\n\nof assets for gain or loss through the taking of different amounts\n\nfor depletion, depreciation or amortization, or shall have a\n\ndifferent amount of some prepaid income or deferred expense or other\n\nsimilar balance sheet item, such taxpayer shall be entitled, at his\n\noption, to a transitional deduction. The determination of the\n\namount of the deduction shall be made as though an application to\n\nchange accounting method had been granted and shall include all\n\nitems subject to adjustment, whether resulting in an increase or\n\ndecrease in the transitional deduction. Items subject to adjustment\n\nshall be only those which:\n\n1. Have been treated differently in determining amounts subject\n\nto tax under Oklahoma and federal income tax laws which were\n\napplicable in a prior period;\n\n2. Have been an element in determining Oklahoma income subject\n\nto tax in periods with respect to which Oklahoma income tax was\n\npaid; and\n\n3. Except for the required change in reporting income, would\n\nhave produced in a subsequent taxable period an adjustment to income\n\nsubject to tax on account of the differences in federal and Oklahoma\n\ntax reporting.\n\nItems subject to adjustment may consist of deductions taken or\n\nnot taken in prior years, or amounts of income required to be\n\nincluded or excluded in such years, but such items shall be\n\ndisregarded to the extent it can be shown that the prior treatment\n\nof such items had no actual effect on the amount of Oklahoma income\n\ntax paid; in making such showing, no items other than the items\n\nsubject to this transitional adjustment shall be considered.\n\nNo net addition to Oklahoma taxable income shall be required by\n\nreason of this section, but, at the election of the taxpayer, a\n\ndeduction in the amount of such net adjustment shall be available as\n\nprovided below.\n\nB. An affirmative election to use the optional transitional\n\ndeduction shall be made on the income tax return filed for the first\n\ntaxable period in which a deduction under this section is allowable,\n\non or before the due date of the return including any extension of\n\ntime granted in which to file said return or on an amended return.\n\nFailure to claim such deduction within three (3) years shall be\n\ndeemed an election not to claim the optional transitional deduction.\n\nC. The net deduction allowable under this section shall be\n\ndeductible only in equal amounts of one-third (1/3) each over the\n\nfirst three taxable periods ending after the effective date of this\n\nact except that if such net deduction is less than Twenty-five\n\nThousand Dollars ($25,000.00) the deduction shall be allowable in\n\nfull in the first taxable period after the effective date hereof to\n\nthe extent of the taxpayer's taxable income and to the second and\n\nthird taxable period thereafter to the extent not previously taken\n\nin the earliest successive taxable year. In no event shall the\n\ndeduction allowed under this section be carried back or applied\n\nagainst income for years prior to the effective date of this act or\n\ncarried forward to any taxable year subsequent to the third full\n\ntaxable year following the effective date hereof.","path":["OK Code","Title 68"],"source_url":"https://www.oklegislature.gov/OK_Statutes/CompleteTitles/os68.pdf","current_through":"2026-08-14","vintage":"open-us-law v2026.08, retrieved 2026-09-14","retrieved_at":"2026-09-14T18:32:36Z","sha256":"ec68f9bc5c27ac516bc8e732bfee3f1cb30d178891446c05f38bf58ed7bfc7fe","source_id":"us-ok","stale":false,"prev":"us-ok/okla.-stat.-tit.-68-68-2353","next":"us-ok/okla.-stat.-tit.-68-68-2355"},"notice":"GroundRules: Original legal text. Not legal advice."}