{"data":{"id":"us-ok/okla.-stat.-tit.-68-68-2358v2","jurisdiction":"us-ok","citation":"Okla. Stat. tit. 68, § 68-2358v2","heading":"Adjustments to arrive at Oklahoma taxable income and","body":"Oklahoma adjusted gross income.\n\nFor all tax years beginning after December 31, 1981, taxable\n\nincome and adjusted gross income shall be adjusted to arrive at\n\nOklahoma taxable income and Oklahoma adjusted gross income as\n\nrequired by this section.\n\nA. The taxable income of any taxpayer shall be adjusted to\n\narrive at Oklahoma taxable income for corporations and Oklahoma\n\nadjusted gross income for individuals, as follows:\n\n1. There shall be added interest income on obligations of any\n\nstate or political subdivision thereto which is not otherwise\n\nexempted pursuant to other laws of this state, to the extent that\n\nsuch interest is not included in taxable income and adjusted gross\n\nincome.\n\n2. There shall be deducted amounts included in such income that\n\nthe state is prohibited from taxing because of the provisions of the\n\nFederal Constitution, the State Constitution, federal laws or laws\n\nof Oklahoma.\n\n3. The amount of any federal net operating loss deduction shall\n\nbe adjusted as follows:\n\na. For carryovers and carrybacks to taxable years\n\nbeginning before January 1, 1981, the amount of any\n\nnet operating loss deduction allowed to a taxpayer for\n\nfederal income tax purposes shall be reduced to an\n\namount which is the same portion thereof as the loss\n\nfrom sources within this state, as determined pursuant\n\nto this section and Section 2362 of this title, for\n\nthe taxable year in which such loss is sustained is of\n\nthe total loss for such year;\n\nb. For carryovers and carrybacks to taxable years\n\nbeginning after December 31, 1980, the amount of any\n\nnet operating loss deduction allowed for the taxable\n\nyear shall be an amount equal to the aggregate of the\n\nOklahoma net operating loss carryovers and carrybacks\n\nto such year. Oklahoma net operating losses shall be\n\nseparately determined by reference to Section 172 of\n\nthe Internal Revenue Code, 26 U.S.C., Section 172, as\n\nmodified by the Oklahoma Income Tax Act, Section 2351\n\net seq. of this title, and shall be allowed without\n\nregard to the existence of a federal net operating\n\nloss. For tax years beginning after December 31,\n\n2000, and ending before January 1, 2008, the years to\n\nwhich such losses may be carried shall be determined\n\nsolely by reference to Section 172 of the Internal\n\nRevenue Code, 26 U.S.C., Section 172, with the\n\nexception that the terms “net operating loss” and\n\n“taxable income” shall be replaced with “Oklahoma net\n\noperating loss” and “Oklahoma taxable income”. For\n\ntax years beginning after December 31, 2007, and\n\nending before January 1, 2009, years to which such\n\nlosses may be carried back shall be limited to two (2)\n\nyears. For tax years beginning after December 31,\n\n2008, the years to which such losses may be carried\n\nback shall be determined solely by reference to\n\nSection 172 of the Internal Revenue Code, 26 U.S.C.,\n\nSection 172, with the exception that the terms “net\n\noperating loss” and “taxable income” shall be replaced\n\nwith “Oklahoma net operating loss” and “Oklahoma\n\ntaxable income”.\n\n4. Items of the following nature shall be allocated as\n\nindicated. Allowable deductions attributable to items separately\n\nallocable in subparagraphs a, b and c of this paragraph, whether or\n\nnot such items of income were actually received, shall be allocated\n\non the same basis as those items:\n\na. Income from real and tangible personal property, such\n\nas rents, oil and mining production or royalties, and\n\ngains or losses from sales of such property, shall be\n\nallocated in accordance with the situs of such\n\nproperty;\n\nb. Income from intangible personal property, such as\n\ninterest, dividends, patent or copyright royalties,\n\nand gains or losses from sales of such property, shall\n\nbe allocated in accordance with the domiciliary situs\n\nof the taxpayer, except that:\nd mining production or royalties, and\n\ngains or losses from sales of such property, shall be\n\nallocated in accordance with the situs of such\n\nproperty;\n\nb. Income from intangible personal property, such as\n\ninterest, dividends, patent or copyright royalties,\n\nand gains or losses from sales of such property, shall\n\nbe allocated in accordance with the domiciliary situs\n\nof the taxpayer, except that:\n\n(1) where such property has acquired a nonunitary\n\nbusiness or commercial situs apart from the\n\ndomicile of the taxpayer such income shall be\n\nallocated in accordance with such business or\n\ncommercial situs; interest income from\n\ninvestments held to generate working capital for\n\na unitary business enterprise shall be included\n\nin apportionable income; a resident trust or\n\nresident estate shall be treated as having a\n\nseparate commercial or business situs insofar as\n\nundistributed income is concerned, but shall not\n\nbe treated as having a separate commercial or\n\nbusiness situs insofar as distributed income is\n\nconcerned,\n\n(2) for taxable years beginning after December 31,\n\n2003, capital or ordinary gains or losses from\n\nthe sale of an ownership interest in a publicly\n\ntraded partnership, as defined by Section 7704(b)\n\nof the Internal Revenue Code, shall be allocated\n\nto this state in the ratio of the original cost\n\nof such partnership’s tangible property in this\n\nstate to the original cost of such partnership’s\n\ntangible property everywhere, as determined at\n\nthe time of the sale; if more than fifty percent\n\n(50%) of the value of the partnership’s assets\n\nconsists of intangible assets, capital or\n\nordinary gains or losses from the sale of an\n\nownership interest in the partnership shall be\n\nallocated to this state in accordance with the\n\nsales factor of the partnership for its first\n\nfull tax period immediately preceding its tax\n\nperiod during which the ownership interest in the\n\npartnership was sold; the provisions of this\n\ndivision shall only apply if the capital or\n\nordinary gains or losses from the sale of an\n\nownership interest in a partnership do not\n\nconstitute qualifying gain receiving capital\n\ntreatment as defined in subparagraph a of\n\nparagraph 2 of subsection F of this section,\n\n(3) income from such property which is required to be\n\nallocated pursuant to the provisions of paragraph\n\n5 of this subsection shall be allocated as herein\n\nprovided;\n\nc. Net income or loss from a business activity which is\n\nnot a part of business carried on within or without\n\nthe state of a unitary character shall be separately\n\nallocated to the state in which such activity is\n\nconducted;\n\nd. In the case of a manufacturing or processing\n\nenterprise the business of which in this state\n\nconsists solely of marketing its products by:\n\n(1) sales having a situs without this state, shipped\n\ndirectly to a point from without the state to a\n\npurchaser within the state, commonly known as\n\ninterstate sales,\n\n(2) sales of the product stored in public warehouses\n\nwithin the state pursuant to “in transit”\n\ntariffs, as prescribed and allowed by the\n\nInterstate Commerce Commission, to a purchaser\n\nwithin the state,\nrketing its products by:\n\n(1) sales having a situs without this state, shipped\n\ndirectly to a point from without the state to a\n\npurchaser within the state, commonly known as\n\ninterstate sales,\n\n(2) sales of the product stored in public warehouses\n\nwithin the state pursuant to “in transit”\n\ntariffs, as prescribed and allowed by the\n\nInterstate Commerce Commission, to a purchaser\n\nwithin the state,\n\n(3) sales of the product stored in public warehouses\n\nwithin the state where the shipment to such\n\nwarehouses is not covered by “in transit”\n\ntariffs, as prescribed and allowed by the\n\nInterstate Commerce Commission, to a purchaser\n\nwithin or without the state,\n\nthe Oklahoma net income shall, at the option of the\n\ntaxpayer, be that portion of the total net income of\n\nthe taxpayer for federal income tax purposes derived\n\nfrom the manufacture and/or processing and sales\n\neverywhere as determined by the ratio of the sales\n\ndefined in this section made to the purchaser within\n\nthe state to the total sales everywhere. The term\n\n“public warehouse” as used in this subparagraph means\n\na licensed public warehouse, the principal business of\n\nwhich is warehousing merchandise for the public;\n\ne. In the case of insurance companies, Oklahoma taxable\n\nincome shall be taxable income of the taxpayer for\n\nfederal tax purposes, as adjusted for the adjustments\n\nprovided pursuant to the provisions of paragraphs 1\n\nand 2 of this subsection, apportioned as follows:\n\n(1) except as otherwise provided by division (2) of\n\nthis subparagraph, taxable income of an insurance\n\ncompany for a taxable year shall be apportioned\n\nto this state by multiplying such income by a\n\nfraction, the numerator of which is the direct\n\npremiums written for insurance on property or\n\nrisks in this state, and the denominator of which\n\nis the direct premiums written for insurance on\n\nproperty or risks everywhere. For purposes of\n\nthis subsection, the term “direct premiums\n\nwritten” means the total amount of direct\n\npremiums written, assessments and annuity\n\nconsiderations as reported for the taxable year\n\non the annual statement filed by the company with\n\nthe Insurance Commissioner in the form approved\n\nby the National Association of Insurance\n\nCommissioners, or such other form as may be\n\nprescribed in lieu thereof,\n\n(2) if the principal source of premiums written by an\n\ninsurance company consists of premiums for\n\nreinsurance accepted by it, the taxable income of\n\nsuch company shall be apportioned to this state\n\nby multiplying such income by a fraction, the\n\nnumerator of which is the sum of (a) direct\n\npremiums written for insurance on property or\n\nrisks in this state, plus (b) premiums written\n\nfor reinsurance accepted in respect of property\n\nor risks in this state, and the denominator of\n\nwhich is the sum of (c) direct premiums written\n\nfor insurance on property or risks everywhere,\n\nplus (d) premiums written for reinsurance\n\naccepted in respect of property or risks\n\neverywhere. For purposes of this paragraph,\n\npremiums written for reinsurance accepted in\n\nrespect of property or risks in this state,\n\nwhether or not otherwise determinable, may at the\n\nelection of the company be determined on the\n\nbasis of the proportion which premiums written\n\nfor insurance accepted from companies\n\ncommercially domiciled in this state bears to\n\npremiums written for reinsurance accepted from\n\nall sources, or alternatively in the proportion\n\nwhich the sum of the direct premiums written for\n\ninsurance on property or risks in this state by\n\neach ceding company from which reinsurance is\n\naccepted bears to the sum of the total direct\n\npremiums written by each such ceding company for\n\nthe taxable year.\n\n5. The net income or loss remaining after the separate\n\nallocation in paragraph 4 of this subsection, being that which is\nthe proportion\n\nwhich the sum of the direct premiums written for\n\ninsurance on property or risks in this state by\n\neach ceding company from which reinsurance is\n\naccepted bears to the sum of the total direct\n\npremiums written by each such ceding company for\n\nthe taxable year.\n\n5. The net income or loss remaining after the separate\n\nallocation in paragraph 4 of this subsection, being that which is\n\nderived from a unitary business enterprise, shall be apportioned to\n\nthis state on the basis of the arithmetical average of three factors\n\nconsisting of property, payroll and sales or gross revenue\n\nenumerated as subparagraphs a, b and c of this paragraph. Net\n\nincome or loss as used in this paragraph includes that derived from\n\npatent or copyright royalties, purchase discounts, and interest on\n\naccounts receivable relating to or arising from a business activity,\n\nthe income from which is apportioned pursuant to this subsection,\n\nincluding the sale or other disposition of such property and any\n\nother property used in the unitary enterprise. Deductions used in\n\ncomputing such net income or loss shall not include taxes based on\n\nor measured by income. Provided, for corporations whose property\n\nfor purposes of the tax imposed by Section 2355 of this title has an\n\ninitial investment cost equaling or exceeding Two Hundred Million\n\nDollars ($200,000,000.00) and such investment is made on or after\n\nJuly 1, 1997, or for corporations which expand their property or\n\nfacilities in this state and such expansion has an investment cost\n\nequaling or exceeding Two Hundred Million Dollars ($200,000,000.00)\n\nover a period not to exceed three (3) years, and such expansion is\n\ncommenced on or after January 1, 2000, the three factors shall be\n\napportioned with property and payroll, each comprising twenty-five\n\npercent (25%) of the apportionment factor and sales comprising fifty\n\npercent (50%) of the apportionment factor. The apportionment\n\nfactors shall be computed as follows:\n\na. The property factor is a fraction, the numerator of\n\nwhich is the average value of the taxpayer’s real and\n\ntangible personal property owned or rented and used in\n\nthis state during the tax period and the denominator\n\nof which is the average value of all the taxpayer’s\n\nreal and tangible personal property everywhere owned\n\nor rented and used during the tax period.\n\n(1) Property, the income from which is separately\n\nallocated in paragraph 4 of this subsection,\n\nshall not be included in determining this\n\nfraction. The numerator of the fraction shall\n\ninclude a portion of the investment in\n\ntransportation and other equipment having no\n\nfixed situs, such as rolling stock, buses, trucks\n\nand trailers, including machinery and equipment\n\ncarried thereon, airplanes, salespersons’\n\nautomobiles and other similar equipment, in the\n\nproportion that miles traveled in this state by\n\nsuch equipment bears to total miles traveled,\n\n(2) Property owned by the taxpayer is valued at its\n\noriginal cost. Property rented by the taxpayer\n\nis valued at eight times the net annual rental\n\nrate. Net annual rental rate is the annual\n\nrental rate paid by the taxpayer, less any annual\n\nrental rate received by the taxpayer from\n\nsubrentals,\nthe\n\nproportion that miles traveled in this state by\n\nsuch equipment bears to total miles traveled,\n\n(2) Property owned by the taxpayer is valued at its\n\noriginal cost. Property rented by the taxpayer\n\nis valued at eight times the net annual rental\n\nrate. Net annual rental rate is the annual\n\nrental rate paid by the taxpayer, less any annual\n\nrental rate received by the taxpayer from\n\nsubrentals,\n\n(3) The average value of property shall be determined\n\nby averaging the values at the beginning and\n\nending of the tax period but the Oklahoma Tax\n\nCommission may require the averaging of monthly\n\nvalues during the tax period if reasonably\n\nrequired to reflect properly the average value of\n\nthe taxpayer’s property;\n\nb. The payroll factor is a fraction, the numerator of\n\nwhich is the total compensation for services rendered\n\nin the state during the tax period, and the\n\ndenominator of which is the total compensation for\n\nservices rendered everywhere during the tax period.\n\n“Compensation”, as used in this subsection, means\n\nthose paid-for services to the extent related to the\n\nunitary business but does not include officers’\n\nsalaries, wages and other compensation.\n\n(1) In the case of a transportation enterprise, the\n\nnumerator of the fraction shall include a portion\n\nof such expenditure in connection with employees\n\noperating equipment over a fixed route, such as\n\nrailroad employees, airline pilots, or bus\n\ndrivers, in this state only a part of the time,\n\nin the proportion that mileage traveled in this\n\nstate bears to total mileage traveled by such\n\nemployees,\n\n(2) In any case the numerator of the fraction shall\n\ninclude a portion of such expenditures in\n\nconnection with itinerant employees, such as\n\ntraveling salespersons, in this state only a part\n\nof the time, in the proportion that time spent in\n\nthis state bears to total time spent in\n\nfurtherance of the enterprise by such employees;\n\nc. The sales factor is a fraction, the numerator of which\n\nis the total sales or gross revenue of the taxpayer in\n\nthis state during the tax period, and the denominator\n\nof which is the total sales or gross revenue of the\n\ntaxpayer everywhere during the tax period. “Sales”,\n\nas used in this subsection, does not include sales or\n\ngross revenue which are separately allocated in\n\nparagraph 4 of this subsection.\n\n(1) Sales of tangible personal property have a situs\n\nin this state if the property is delivered or\n\nshipped to a purchaser other than the United\n\nStates government, within this state regardless\n\nof the FOB point or other conditions of the sale;\n\nor the property is shipped from an office, store,\n\nwarehouse, factory or other place of storage in\n\nthis state and (a) the purchaser is the United\n\nStates government or (b) the taxpayer is not\n\ndoing business in the state of the destination of\n\nthe shipment.\n\n(2) In the case of a railroad or interurban railway\n\nenterprise, the numerator of the fraction shall\n\nnot be less than the allocation of revenues to\n\nthis state as shown in its annual report to the\n\nCorporation Commission.\n\n(3) In the case of an airline, truck or bus\n\nenterprise or freight car, tank car, refrigerator\n\ncar or other railroad equipment enterprise, the\n\nnumerator of the fraction shall include a portion\n\nof revenue from interstate transportation in the\n\nproportion that interstate mileage traveled in\n\nthis state bears to total interstate mileage\n\ntraveled.\nits annual report to the\n\nCorporation Commission.\n\n(3) In the case of an airline, truck or bus\n\nenterprise or freight car, tank car, refrigerator\n\ncar or other railroad equipment enterprise, the\n\nnumerator of the fraction shall include a portion\n\nof revenue from interstate transportation in the\n\nproportion that interstate mileage traveled in\n\nthis state bears to total interstate mileage\n\ntraveled.\n\n(4) In the case of an oil, gasoline or gas pipeline\n\nenterprise, the numerator of the fraction shall\n\nbe either the total of traffic units of the\n\nenterprise within this state or the revenue\n\nallocated to this state based upon miles moved,\n\nat the option of the taxpayer, and the\n\ndenominator of which shall be the total of\n\ntraffic units of the enterprise or the revenue of\n\nthe enterprise everywhere as appropriate to the\n\nnumerator. A “traffic unit” is hereby defined as\n\nthe transportation for a distance of one (1) mile\n\nof one (1) barrel of oil, one (1) gallon of\n\ngasoline or one thousand (1,000) cubic feet of\n\nnatural or casinghead gas, as the case may be.\n\n(5) In the case of a telephone or telegraph or other\n\ncommunication enterprise, the numerator of the\n\nfraction shall include that portion of the\n\ninterstate revenue as is allocated pursuant to\n\nthe accounting procedures prescribed by the\n\nFederal Communications Commission; provided that\n\nin respect to each corporation or business entity\n\nrequired by the Federal Communications Commission\n\nto keep its books and records in accordance with\n\na uniform system of accounts prescribed by such\n\nCommission, the intrastate net income shall be\n\ndetermined separately in the manner provided by\n\nsuch uniform system of accounts and only the\n\ninterstate income shall be subject to allocation\n\npursuant to the provisions of this subsection.\n\nProvided further, that the gross revenue factors\n\nshall be those as are determined pursuant to the\n\naccounting procedures prescribed by the Federal\n\nCommunications Commission.\n\nIn any case where the apportionment of the three factors\n\nprescribed in this paragraph attributes to this state a portion of\n\nnet income of the enterprise out of all appropriate proportion to\n\nthe property owned and/or business transacted within this state,\n\nbecause of the fact that one or more of the factors so prescribed\n\nare not employed to any appreciable extent in furtherance of the\n\nenterprise; or because one or more factors not so prescribed are\n\nemployed to a considerable extent in furtherance of the enterprise;\n\nor because of other reasons, the Tax Commission is empowered to\n\npermit, after a showing by taxpayer that an excessive portion of net\n\nincome has been attributed to this state, or require, when in its\n\njudgment an insufficient portion of net income has been attributed\n\nto this state, the elimination, substitution, or use of additional\n\nfactors, or reduction or increase in the weight of such prescribed\n\nfactors. Provided, however, that any such variance from such\n\nprescribed factors which has the effect of increasing the portion of\n\nnet income attributable to this state must not be inherently\n\narbitrary, and application of the recomputed final apportionment to\n\nthe net income of the enterprise must attribute to this state only a\n\nreasonable portion thereof.\n\n6. For calendar years 1997 and 1998, the owner of a new or\n\nexpanded agricultural commodity processing facility in this state\n\nmay exclude from Oklahoma taxable income, or in the case of an\n\nindividual, the Oklahoma adjusted gross income, fifteen percent\n\n(15%) of the investment by the owner in the new or expanded\n\nagricultural commodity processing facility. For calendar year 1999,\n\nand all subsequent years, the percentage, not to exceed fifteen\n\npercent (15%), available to the owner of a new or expanded\n\nagricultural commodity processing facility in this state claiming\n, fifteen percent\n\n(15%) of the investment by the owner in the new or expanded\n\nagricultural commodity processing facility. For calendar year 1999,\n\nand all subsequent years, the percentage, not to exceed fifteen\n\npercent (15%), available to the owner of a new or expanded\n\nagricultural commodity processing facility in this state claiming\n\nthe exemption shall be adjusted annually so that the total estimated\n\nreduction in tax liability does not exceed One Million Dollars\n\n($1,000,000.00) annually. The Tax Commission shall promulgate rules\n\nfor determining the percentage of the investment which each eligible\n\ntaxpayer may exclude. The exclusion provided by this paragraph\n\nshall be taken in the taxable year when the investment is made. In\n\nthe event the total reduction in tax liability authorized by this\n\nparagraph exceeds One Million Dollars ($1,000,000.00) in any\n\ncalendar year, the Tax Commission shall permit any excess over One\n\nMillion Dollars ($1,000,000.00) and shall factor such excess into\n\nthe percentage for subsequent years. Any amount of the exemption\n\npermitted to be excluded pursuant to the provisions of this\n\nparagraph but not used in any year may be carried forward as an\n\nexemption from income pursuant to the provisions of this paragraph\n\nfor a period not exceeding six (6) years following the year in which\n\nthe investment was originally made.\n\nFor purposes of this paragraph:\n\na. “Agricultural commodity processing facility” means\n\nbuildings, structures, fixtures and improvements used\n\nor operated primarily for the processing or production\n\nof marketable products from agricultural commodities.\n\nThe term shall also mean a dairy operation that\n\nrequires a depreciable investment of at least Two\n\nHundred Fifty Thousand Dollars ($250,000.00) and which\n\nproduces milk from dairy cows. The term does not\n\ninclude a facility that provides only, and nothing\n\nmore than, storage, cleaning, drying or transportation\n\nof agricultural commodities, and\n\nb. “Facility” means each part of the facility which is\n\nused in a process primarily for:\n\n(1) the processing of agricultural commodities,\n\nincluding receiving or storing agricultural\n\ncommodities, or the production of milk at a dairy\n\noperation,\n\n(2) transporting the agricultural commodities or\n\nproduct before, during or after the processing,\n\nor\n\n(3) packaging or otherwise preparing the product for\n\nsale or shipment.\n\n7. Despite any provision to the contrary in paragraph 3 of this\n\nsubsection, for taxable years beginning after December 31, 1999, in\n\nthe case of a taxpayer which has a farming loss, such farming loss\n\nshall be considered a net operating loss carryback in accordance\n\nwith and to the extent of the Internal Revenue Code, 26 U.S.C.,\n\nSection 172(b)(G). However, the amount of the net operating loss\n\ncarryback shall not exceed the lesser of:\n\na. Sixty Thousand Dollars ($60,000.00), or\n\nb. the loss properly shown on Schedule F of the Internal\n\nRevenue Service Form 1040 reduced by one-half (1/2) of\n\nthe income from all other sources other than reflected\n\non Schedule F.\n\n8. In taxable years beginning after December 31, 1995, all\n\nqualified wages equal to the federal income tax credit set forth in\n\n26 U.S.C.A., Section 45A, shall be deducted from taxable income.\n\nThe deduction allowed pursuant to this paragraph shall only be\n\npermitted for the tax years in which the federal tax credit pursuant\n\nto 26 U.S.C.A., Section 45A, is allowed. For purposes of this\n\nparagraph, “qualified wages” means those wages used to calculate the\n\nfederal credit pursuant to 26 U.S.C.A., Section 45A.\n\n9. In taxable years beginning after December 31, 2005, an\n\nemployer that is eligible for and utilizes the Safety Pays OSHA\n\nConsultation Service provided by the Oklahoma Department of Labor\n\nshall receive an exemption from taxable income in the amount of One\npurposes of this\n\nparagraph, “qualified wages” means those wages used to calculate the\n\nfederal credit pursuant to 26 U.S.C.A., Section 45A.\n\n9. In taxable years beginning after December 31, 2005, an\n\nemployer that is eligible for and utilizes the Safety Pays OSHA\n\nConsultation Service provided by the Oklahoma Department of Labor\n\nshall receive an exemption from taxable income in the amount of One\n\nThousand Dollars ($1,000.00) for the tax year that the service is\n\nutilized.\n\n10. For taxable years beginning on or after January 1, 2010,\n\nthere shall be added to Oklahoma taxable income an amount equal to\n\nthe amount of deferred income not included in such taxable income\n\npursuant to Section 108(i)(1) of the Internal Revenue Code of 1986\n\nas amended by Section 1231 of the American Recovery and Reinvestment\n\nAct of 2009 (P.L. No. 111-5). There shall be subtracted from\n\nOklahoma taxable income an amount equal to the amount of deferred\n\nincome included in such taxable income pursuant to Section 108(i)(1)\n\nof the Internal Revenue Code by Section 1231 of the American\n\nRecovery and Reinvestment Act of 2009 (P.L. No. 111-5).\n\n11. For taxable years beginning on or after January 1, 2019,\n\nthere shall be subtracted from Oklahoma taxable income or adjusted\n\ngross income any item of income or gain, and there shall be added to\n\nOklahoma taxable income or adjusted gross income any item of loss or\n\ndeduction that in the absence of an election pursuant to the\n\nprovisions of the Pass-Through Entity Tax Equity Act of 2019 would\n\nbe allocated to a member or to an indirect member of an electing\n\npass-through entity pursuant to Section 2351 et seq. of this title,\n\nif (i) the electing pass-through entity has accounted for such item\n\nin computing its Oklahoma net entity income or loss pursuant to the\n\nprovisions of the Pass-Through Entity Tax Equity Act of 2019, and\n\n(ii) the total amount of tax attributable to any resulting Oklahoma\n\nnet entity income has been paid. The Oklahoma Tax Commission shall\n\npromulgate rules for the reporting of such exclusion to direct and\n\nindirect members of the electing pass-through entity. As used in\n\nthis paragraph, “electing pass-through entity”, “indirect member”,\n\nand “member” shall be defined in the same manner as prescribed by\n\nSection 2355.1P-2 of this title. Notwithstanding the application of\n\nthis paragraph, the adjusted tax basis of any ownership interest in\n\na pass-through entity for purposes of Section 2351 et seq. of this\n\ntitle shall be equal to its adjusted tax basis for federal income\n\ntax purposes.\n\nB. 1. The taxable income of any corporation shall be further\n\nadjusted to arrive at Oklahoma taxable income, except those\n\ncorporations electing treatment as provided in subchapter S of the\n\nInternal Revenue Code, 26 U.S.C., Section 1361 et seq., and Section\n\n2365 of this title, deductions pursuant to the provisions of the\n\nAccelerated Cost Recovery System as defined and allowed in the\n\nEconomic Recovery Tax Act of 1981, Public Law 97-34, 26 U.S.C.,\n\nSection 168, for depreciation of assets placed into service after\n\nDecember 31, 1981, shall not be allowed in calculating Oklahoma\n\ntaxable income. Such corporations shall be allowed a deduction for\n\ndepreciation of assets placed into service after December 31, 1981,\n\nin accordance with provisions of the Internal Revenue Code, 26\n\nU.S.C., Section 1 et seq., in effect immediately prior to the\n\nenactment of the Accelerated Cost Recovery System. The Oklahoma tax\n\nbasis for all such assets placed into service after December 31,\n\n1981, calculated in this section shall be retained and utilized for\n\nall Oklahoma income tax purposes through the final disposition of\n\nsuch assets.\n\nNotwithstanding any other provisions of the Oklahoma Income Tax\n\nAct, Section 2351 et seq. of this title, or of the Internal Revenue\n\nCode to the contrary, this subsection shall control calculation of\nch assets placed into service after December 31,\n\n1981, calculated in this section shall be retained and utilized for\n\nall Oklahoma income tax purposes through the final disposition of\n\nsuch assets.\n\nNotwithstanding any other provisions of the Oklahoma Income Tax\n\nAct, Section 2351 et seq. of this title, or of the Internal Revenue\n\nCode to the contrary, this subsection shall control calculation of\n\ndepreciation of assets placed into service after December 31, 1981,\n\nand before January 1, 1983.\n\nFor assets placed in service and held by a corporation in which\n\nthe Accelerated Cost Recovery System was previously disallowed, an\n\nadjustment to taxable income is required in the first taxable year\n\nbeginning after December 31, 1982, to reconcile the basis of such\n\nassets to the basis allowed in the Internal Revenue Code. The\n\npurpose of this adjustment is to equalize the basis and allowance\n\nfor depreciation accounts between that reported to the Internal\n\nRevenue Service and that reported to this state.\n\n2. For tax years beginning on or after January 1, 2009, and\n\nending on or before December 31, 2009, there shall be added to\n\nOklahoma taxable income any amount in excess of One Hundred Seventy-\n\nfive Thousand Dollars ($175,000.00) which has been deducted as a\n\nsmall business expense under Internal Revenue Code, Section 179 as\n\nprovided in the American Recovery and Reinvestment Act of 2009.\n\nC. 1. For taxable years beginning after December 31, 1987, the\n\ntaxable income of any corporation shall be further adjusted to\n\narrive at Oklahoma taxable income for transfers of technology to\n\nqualified small businesses located in this state. Such transferor\n\ncorporation shall be allowed an exemption from taxable income of an\n\namount equal to the amount of royalty payment received as a result\n\nof such transfer; provided, however, such amount shall not exceed\n\nten percent (10%) of the amount of gross proceeds received by such\n\ntransferor corporation as a result of the technology transfer. Such\n\nexemption shall be allowed for a period not to exceed ten (10) years\n\nfrom the date of receipt of the first royalty payment accruing from\n\nsuch transfer. No exemption may be claimed for transfers of\n\ntechnology to qualified small businesses made prior to January 1,\n\n1988.\n\n2. For purposes of this subsection:\n\na. “Qualified small business” means an entity, whether\n\norganized as a corporation, partnership, or\n\nproprietorship, organized for profit with its\n\nprincipal place of business located within this state\n\nand which meets the following criteria:\n\n(1) Capitalization of not more than Two Hundred Fifty\n\nThousand Dollars ($250,000.00),\n\n(2) Having at least fifty percent (50%) of its\n\nemployees and assets located in this state at the\n\ntime of the transfer, and\norganized as a corporation, partnership, or\n\nproprietorship, organized for profit with its\n\nprincipal place of business located within this state\n\nand which meets the following criteria:\n\n(1) Capitalization of not more than Two Hundred Fifty\n\nThousand Dollars ($250,000.00),\n\n(2) Having at least fifty percent (50%) of its\n\nemployees and assets located in this state at the\n\ntime of the transfer, and\n\n(3) Not a subsidiary or affiliate of the transferor\n\ncorporation;\n\nb. “Technology” means a proprietary process, formula,\n\npattern, device or compilation of scientific or\n\ntechnical information which is not in the public\n\ndomain;\n\nc. “Transferor corporation” means a corporation which is\n\nthe exclusive and undisputed owner of the technology\n\nat the time the transfer is made; and\n\nd. “Gross proceeds” means the total amount of\n\nconsideration for the transfer of technology, whether\n\nthe consideration is in money or otherwise.\n\nD. 1. For taxable years beginning after December 31, 2005, the\n\ntaxable income of any corporation, estate or trust, shall be further\n\nadjusted for qualifying gains receiving capital treatment. Such\n\ncorporations, estates or trusts shall be allowed a deduction from\n\nOklahoma taxable income for the amount of qualifying gains receiving\n\ncapital treatment earned by the corporation, estate or trust during\n\nthe taxable year and included in the federal taxable income of such\n\ncorporation, estate or trust.\n\n2. As used in this subsection:\n\na. “qualifying gains receiving capital treatment” means\n\nthe amount of net capital gains, as defined in Section\n\n1222(11) of the Internal Revenue Code, included in the\n\nfederal income tax return of the corporation, estate\n\nor trust that result from:\n\n(1) the sale of real property or tangible personal\n\nproperty located within this state that has been\n\ndirectly or indirectly owned by the corporation,\n\nestate or trust for a holding period of at least\n\nfive (5) years prior to the date of the\n\ntransaction from which such net capital gains\n\narise,\n\n(2) the sale of stock or on the sale of an ownership\n\ninterest in an Oklahoma company, limited\n\nliability company, or partnership where such\n\nstock or ownership interest has been directly or\n\nindirectly owned by the corporation, estate or\n\ntrust for a holding period of at least three (3)\n\nyears prior to the date of the transaction from\n\nwhich the net capital gains arise, or\n\n(3) the sale of real property, tangible personal\n\nproperty or intangible personal property located\n\nwithin this state as part of the sale of all or\n\nsubstantially all of the assets of an Oklahoma\n\ncompany, limited liability company, or\n\npartnership where such property has been directly\n\nor indirectly owned by such entity owned by the\n\nowners of such entity, and used in or derived\n\nfrom such entity for a period of at least three\n\n(3) years prior to the date of the transaction\n\nfrom which the net capital gains arise,\n\nb. “holding period” means an uninterrupted period of\n\ntime. The holding period shall include any additional\n\nperiod when the property was held by another\n\nindividual or entity, if such additional period is\n\nincluded in the taxpayer’s holding period for the\n\nasset pursuant to the Internal Revenue Code,\n\nc. “Oklahoma company”, “limited liability company”, or\n\n“partnership” means an entity whose primary\n\nheadquarters have been located in this state for at\n\nleast three (3) uninterrupted years prior to the date\n\nof the transaction from which the net capital gains\n\narise,\n\nd. “direct” means the taxpayer directly owns the asset,\n\nand\n\ne. “indirect” means the taxpayer owns an interest in a\n\npass-through entity (or chain of pass-through\n\nentities) that sells the asset that gives rise to the\n\nqualifying gains receiving capital treatment.\nthis state for at\n\nleast three (3) uninterrupted years prior to the date\n\nof the transaction from which the net capital gains\n\narise,\n\nd. “direct” means the taxpayer directly owns the asset,\n\nand\n\ne. “indirect” means the taxpayer owns an interest in a\n\npass-through entity (or chain of pass-through\n\nentities) that sells the asset that gives rise to the\n\nqualifying gains receiving capital treatment.\n\n(1) With respect to sales of real property or\n\ntangible personal property located within this\n\nstate, the deduction described in this subsection\n\nshall not apply unless the pass-through entity\n\nthat makes the sale has held the property for not\n\nless than five (5) uninterrupted years prior to\n\nthe date of the transaction that created the\n\ncapital gain, and each pass-through entity\n\nincluded in the chain of ownership has been a\n\nmember, partner, or shareholder of the pass-\n\nthrough entity in the tier immediately below it\n\nfor an uninterrupted period of not less than five\n\n(5) years.\n\n(2) With respect to sales of stock or ownership\n\ninterest in or sales of all or substantially all\n\nof the assets of an Oklahoma company, limited\n\nliability company, or partnership, the deduction\n\ndescribed in this subsection shall not apply\n\nunless the pass-through entity that makes the\n\nsale has held the stock or ownership interest or\n\nthe assets for not less than three (3)\n\nuninterrupted years prior to the date of the\n\ntransaction that created the capital gain, and\n\neach pass-through entity included in the chain of\n\nownership has been a member, partner or\n\nshareholder of the pass-through entity in the\n\ntier immediately below it for an uninterrupted\n\nperiod of not less than three (3) years.\n\nE. The Oklahoma adjusted gross income of any individual\n\ntaxpayer shall be further adjusted as follows to arrive at Oklahoma\n\ntaxable income:\n\n1. a. In the case of individuals, there shall be added or\n\ndeducted, as the case may be, the difference necessary\n\nto allow personal exemptions of One Thousand Dollars\n\n($1,000.00) in lieu of the personal exemptions allowed\n\nby the Internal Revenue Code.\n\nb. There shall be allowed an additional exemption of One\n\nThousand Dollars ($1,000.00) for each taxpayer or\n\nspouse who is blind at the close of the tax year. For\n\npurposes of this subparagraph, an individual is blind\n\nonly if the central visual acuity of the individual\n\ndoes not exceed 20/200 in the better eye with\n\ncorrecting lenses, or if the visual acuity of the\n\nindividual is greater than 20/200, but is accompanied\n\nby a limitation in the fields of vision such that the\n\nwidest diameter of the visual field subtends an angle\n\nno greater than twenty (20) degrees.\n\nc. There shall be allowed an additional exemption of One\n\nThousand Dollars ($1,000.00) for each taxpayer or\n\nspouse who is sixty-five (65) years of age or older at\n\nthe close of the tax year based upon the filing status\n\nand federal adjusted gross income of the taxpayer.\n\nTaxpayers with the following filing status may claim\n\nthis exemption if the federal adjusted gross income\n\ndoes not exceed:\n\n(1) Twenty-five Thousand Dollars ($25,000.00) if\n\nmarried and filing jointly;\n\n(2) Twelve Thousand Five Hundred Dollars ($12,500.00)\n\nif married and filing separately;\n\n(3) Fifteen Thousand Dollars ($15,000.00) if single;\n\nand\nfederal adjusted gross income of the taxpayer.\n\nTaxpayers with the following filing status may claim\n\nthis exemption if the federal adjusted gross income\n\ndoes not exceed:\n\n(1) Twenty-five Thousand Dollars ($25,000.00) if\n\nmarried and filing jointly;\n\n(2) Twelve Thousand Five Hundred Dollars ($12,500.00)\n\nif married and filing separately;\n\n(3) Fifteen Thousand Dollars ($15,000.00) if single;\n\nand\n\n(4) Nineteen Thousand Dollars ($19,000.00) if a\n\nqualifying head of household.\n\nProvided, for taxable years beginning after December\n\n31, 1999, amounts included in the calculation of\n\nfederal adjusted gross income pursuant to the\n\nconversion of a traditional individual retirement\n\naccount to a Roth individual retirement account shall\n\nbe excluded from federal adjusted gross income for\n\npurposes of the income thresholds provided in this\n\nsubparagraph.\n\n2. a. For taxable years beginning on or before December 31,\n\n2005, in the case of individuals who use the standard\n\ndeduction in determining taxable income, there shall\n\nbe added or deducted, as the case may be, the\n\ndifference necessary to allow a standard deduction in\n\nlieu of the standard deduction allowed by the Internal\n\nRevenue Code, in an amount equal to the larger of\n\nfifteen percent (15%) of the Oklahoma adjusted gross\n\nincome or One Thousand Dollars ($1,000.00), but not to\n\nexceed Two Thousand Dollars ($2,000.00), except that\n\nin the case of a married individual filing a separate\n\nreturn such deduction shall be the larger of fifteen\n\npercent (15%) of such Oklahoma adjusted gross income\n\nor Five Hundred Dollars ($500.00), but not to exceed\n\nthe maximum amount of One Thousand Dollars\n\n($1,000.00).\n\nb. For taxable years beginning on or after January 1,\n\n2006, and before January 1, 2007, in the case of\n\nindividuals who use the standard deduction in\n\ndetermining taxable income, there shall be added or\n\ndeducted, as the case may be, the difference necessary\n\nto allow a standard deduction in lieu of the standard\n\ndeduction allowed by the Internal Revenue Code, in an\n\namount equal to:\n\n(1) Three Thousand Dollars ($3,000.00), if the filing\n\nstatus is married filing joint, head of household\n\nor qualifying widow; or\n\n(2) Two Thousand Dollars ($2,000.00), if the filing\n\nstatus is single or married filing separate.\n\nc. For the taxable year beginning on January 1, 2007, and\n\nending December 31, 2007, in the case of individuals\n\nwho use the standard deduction in determining taxable\n\nincome, there shall be added or deducted, as the case\n\nmay be, the difference necessary to allow a standard\n\ndeduction in lieu of the standard deduction allowed by\n\nthe Internal Revenue Code, in an amount equal to:\n\n(1) Five Thousand Five Hundred Dollars ($5,500.00),\n\nif the filing status is married filing joint or\n\nqualifying widow; or\n\n(2) Four Thousand One Hundred Twenty-five Dollars\n\n($4,125.00) for a head of household; or\n\n(3) Two Thousand Seven Hundred Fifty Dollars\n\n($2,750.00), if the filing status is single or\n\nmarried filing separate.\n\nd. For the taxable year beginning on January 1, 2008, and\n\nending December 31, 2008, in the case of individuals\n\nwho use the standard deduction in determining taxable\n\nincome, there shall be added or deducted, as the case\n\nmay be, the difference necessary to allow a standard\n\ndeduction in lieu of the standard deduction allowed by\n\nthe Internal Revenue Code, in an amount equal to:\n\n(1) Six Thousand Five Hundred Dollars ($6,500.00), if\n\nthe filing status is married filing joint or\n\nqualifying widow, or\n\n(2) Four Thousand Eight Hundred Seventy-five Dollars\n\n($4,875.00) for a head of household, or\ndeducted, as the case\n\nmay be, the difference necessary to allow a standard\n\ndeduction in lieu of the standard deduction allowed by\n\nthe Internal Revenue Code, in an amount equal to:\n\n(1) Six Thousand Five Hundred Dollars ($6,500.00), if\n\nthe filing status is married filing joint or\n\nqualifying widow, or\n\n(2) Four Thousand Eight Hundred Seventy-five Dollars\n\n($4,875.00) for a head of household, or\n\n(3) Three Thousand Two Hundred Fifty Dollars\n\n($3,250.00), if the filing status is single or\n\nmarried filing separate.\n\ne. For the taxable year beginning on January 1, 2009, and\n\nending December 31, 2009, in the case of individuals\n\nwho use the standard deduction in determining taxable\n\nincome, there shall be added or deducted, as the case\n\nmay be, the difference necessary to allow a standard\n\ndeduction in lieu of the standard deduction allowed by\n\nthe Internal Revenue Code, in an amount equal to:\n\n(1) Eight Thousand Five Hundred Dollars ($8,500.00),\n\nif the filing status is married filing joint or\n\nqualifying widow, or\n\n(2) Six Thousand Three Hundred Seventy-five Dollars\n\n($6,375.00) for a head of household, or\n\n(3) Four Thousand Two Hundred Fifty Dollars\n\n($4,250.00), if the filing status is single or\n\nmarried filing separate.\n\nOklahoma adjusted gross income shall be increased by\n\nany amounts paid for motor vehicle excise taxes which\n\nwere deducted as allowed by the Internal Revenue Code.\n\nf. For taxable years beginning on or after January 1,\n\n2010, and ending on December 31, 2016, in the case of\n\nindividuals who use the standard deduction in\n\ndetermining taxable income, there shall be added or\n\ndeducted, as the case may be, the difference necessary\n\nto allow a standard deduction equal to the standard\n\ndeduction allowed by the Internal Revenue Code, based\n\nupon the amount and filing status prescribed by such\n\nCode for purposes of filing federal individual income\n\ntax returns.\n\ng. For taxable years beginning on or after January 1,\n\n2017, in the case of individuals who use the standard\n\ndeduction in determining taxable income, there shall\n\nbe added or deducted, as the case may be, the\n\ndifference necessary to allow a standard deduction in\n\nlieu of the standard deduction allowed by the Internal\n\nRevenue Code, as follows:\n\n(1) Six Thousand Three Hundred Fifty Dollars\n\n($6,350.00) for single or married filing\n\nseparately,\n\n(2) Twelve Thousand Seven Hundred Dollars\n\n($12,700.00) for married filing jointly or\n\nqualifying widower with dependent child, and\n\n(3) Nine Thousand Three Hundred Fifty Dollars\n\n($9,350.00) for head of household.\n\n3. a. In the case of resident and part-year resident\n\nindividuals having adjusted gross income from sources\n\nboth within and without the state, the itemized or\n\nstandard deductions and personal exemptions shall be\n\nreduced to an amount which is the same portion of the\n\ntotal thereof as Oklahoma adjusted gross income is of\n\nadjusted gross income. To the extent itemized\n\ndeductions include allowable moving expense, proration\n\nof moving expense shall not be required or permitted\n\nbut allowable moving expense shall be fully deductible\n\nfor those taxpayers moving within or into this state\n\nand no part of moving expense shall be deductible for\n\nthose taxpayers moving without or out of this state.\n\nAll other itemized or standard deductions and personal\n\nexemptions shall be subject to proration as provided\n\nby law.\n\nb. For taxable years beginning on or after January 1,\n\n2018, the net amount of itemized deductions allowable\n\non an Oklahoma income tax return, subject to the\n\nprovisions of paragraph 24 of this subsection, shall\n\nnot exceed Seventeen Thousand Dollars ($17,000.00).\n\nFor purposes of this subparagraph, charitable\n\ncontributions and medical expenses deductible for\n\nfederal income tax purposes shall be excluded from the\n\namount of Seventeen Thousand Dollars ($17,000.00) as\nnt of itemized deductions allowable\n\non an Oklahoma income tax return, subject to the\n\nprovisions of paragraph 24 of this subsection, shall\n\nnot exceed Seventeen Thousand Dollars ($17,000.00).\n\nFor purposes of this subparagraph, charitable\n\ncontributions and medical expenses deductible for\n\nfederal income tax purposes shall be excluded from the\n\namount of Seventeen Thousand Dollars ($17,000.00) as\n\nspecified by this subparagraph.\n\n4. A resident individual with a physical disability\n\nconstituting a substantial handicap to employment may deduct from\n\nOklahoma adjusted gross income such expenditures to modify a motor\n\nvehicle, home or workplace as are necessary to compensate for his or\n\nher handicap. A veteran certified by the Department of Veterans\n\nAffairs of the federal government as having a service-connected\n\ndisability shall be conclusively presumed to be an individual with a\n\nphysical disability constituting a substantial handicap to\n\nemployment. The Tax Commission shall promulgate rules containing a\n\nlist of combinations of common disabilities and modifications which\n\nmay be presumed to qualify for this deduction. The Tax Commission\n\nshall prescribe necessary requirements for verification.\n\n5. a. Before July 1, 2010, the first One Thousand Five\n\nHundred Dollars ($1,500.00) received by any person\n\nfrom the United States as salary or compensation in\n\nany form, other than retirement benefits, as a member\n\nof any component of the Armed Forces of the United\n\nStates shall be deducted from taxable income.\n\nb. On or after July 1, 2010, one hundred percent (100%)\n\nof the income received by any person from the United\n\nStates as salary or compensation in any form, other\n\nthan retirement benefits, as a member of any component\n\nof the Armed Forces of the United States shall be\n\ndeducted from taxable income.\n\nc. Whenever the filing of a timely income tax return by a\n\nmember of the Armed Forces of the United States is\n\nmade impracticable or impossible of accomplishment by\n\nreason of:\n\n(1) absence from the United States, which term\n\nincludes only the states and the District of\n\nColumbia;\n\n(2) absence from this state while on active duty; or\n\n(3) confinement in a hospital within the United\n\nStates for treatment of wounds, injuries or\n\ndisease,\n\nthe time for filing a return and paying an income tax\n\nshall be and is hereby extended without incurring\n\nliability for interest or penalties, to the fifteenth\n\nday of the third month following the month in which:\n\n(a) Such individual shall return to the United\n\nStates if the extension is granted pursuant\n\nto subparagraph a of this paragraph, return\n\nto this state if the extension is granted\n\npursuant to subparagraph b of this paragraph\n\nor be discharged from such hospital if the\n\nextension is granted pursuant to\n\nsubparagraph c of this paragraph; or\nnth\n\nday of the third month following the month in which:\n\n(a) Such individual shall return to the United\n\nStates if the extension is granted pursuant\n\nto subparagraph a of this paragraph, return\n\nto this state if the extension is granted\n\npursuant to subparagraph b of this paragraph\n\nor be discharged from such hospital if the\n\nextension is granted pursuant to\n\nsubparagraph c of this paragraph; or\n\n(b) An executor, administrator, or conservator\n\nof the estate of the taxpayer is appointed,\n\nwhichever event occurs the earliest.\n\nProvided, that the Tax Commission may, in its discretion, grant\n\nany member of the Armed Forces of the United States an extension of\n\ntime for filing of income tax returns and payment of income tax\n\nwithout incurring liabilities for interest or penalties. Such\n\nextension may be granted only when in the judgment of the Tax\n\nCommission a good cause exists therefor and may be for a period in\n\nexcess of six (6) months. A record of every such extension granted,\n\nand the reason therefor, shall be kept.\n\n6. Before July 1, 2010, the salary or any other form of\n\ncompensation, received from the United States by a member of any\n\ncomponent of the Armed Forces of the United States, shall be\n\ndeducted from taxable income during the time in which the person is\n\ndetained by the enemy in a conflict, is a prisoner of war or is\n\nmissing in action and not deceased; provided, after July 1, 2010,\n\nall such salary or compensation shall be subject to the deduction as\n\nprovided pursuant to paragraph 5 of this subsection.\n\n7. a. An individual taxpayer, whether resident or\n\nnonresident, may deduct an amount equal to the federal\n\nincome taxes paid by the taxpayer during the taxable\n\nyear.\n\nb. Federal taxes as described in subparagraph a of this\n\nparagraph shall be deductible by any individual\n\ntaxpayer, whether resident or nonresident, only to the\n\nextent they relate to income subject to taxation\n\npursuant to the provisions of the Oklahoma Income Tax\n\nAct. The maximum amount allowable in the preceding\n\nparagraph shall be prorated on the ratio of the\n\nOklahoma adjusted gross income to federal adjusted\n\ngross income.\n\nc. For the purpose of this paragraph, “federal income\n\ntaxes paid” shall mean federal income taxes, surtaxes\n\nimposed on incomes or excess profits taxes, as though\n\nthe taxpayer was on the accrual basis. In determining\n\nthe amount of deduction for federal income taxes for\n\ntax year 2001, the amount of the deduction shall not\n\nbe adjusted by the amount of any accelerated ten\n\npercent (10%) tax rate bracket credit or advanced\n\nrefund of the credit received during the tax year\n\nprovided pursuant to the federal Economic Growth and\n\nTax Relief Reconciliation Act of 2001, P.L. No. 107-\n\n16, and the advanced refund of such credit shall not\n\nbe subject to taxation.\n\nd. The provisions of this paragraph shall apply to all\n\ntaxable years ending after December 31, 1978, and\n\nbeginning before January 1, 2006.\n\n8. Retirement benefits not to exceed Five Thousand Five Hundred\n\nDollars ($5,500.00) for the 2004 tax year, Seven Thousand Five\n\nHundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand\n\nDollars ($10,000.00) for the 2006 tax year and all subsequent tax\n\nyears, which are received by an individual from the civil service of\n\nthe United States, the Oklahoma Public Employees Retirement System,\n\nthe Teachers’ Retirement System of Oklahoma, the Oklahoma Law\n\nEnforcement Retirement System, the Oklahoma Firefighters Pension and\n\nRetirement System, the Oklahoma Police Pension and Retirement\n\nSystem, the employee retirement systems created by counties pursuant\n\nto Section 951 et seq. of Title 19 of the Oklahoma Statutes, the\n\nUniform Retirement System for Justices and Judges, the Oklahoma\n\nWildlife Conservation Department Retirement Fund, the Oklahoma\n\nEmployment Security Commission Retirement Plan, or the employee\nion and\n\nRetirement System, the Oklahoma Police Pension and Retirement\n\nSystem, the employee retirement systems created by counties pursuant\n\nto Section 951 et seq. of Title 19 of the Oklahoma Statutes, the\n\nUniform Retirement System for Justices and Judges, the Oklahoma\n\nWildlife Conservation Department Retirement Fund, the Oklahoma\n\nEmployment Security Commission Retirement Plan, or the employee\n\nretirement systems created by municipalities pursuant to Section 48-\n\n101 et seq. of Title 11 of the Oklahoma Statutes shall be exempt\n\nfrom taxable income.\n\n9. In taxable years beginning after December 3l, 1984, Social\n\nSecurity benefits received by an individual shall be exempt from\n\ntaxable income, to the extent such benefits are included in the\n\nfederal adjusted gross income pursuant to the provisions of Section\n\n86 of the Internal Revenue Code, 26 U.S.C., Section 86.\n\n10. For taxable years beginning after December 31, 1994, lump-\n\nsum distributions from employer plans of deferred compensation,\n\nwhich are not qualified plans within the meaning of Section 401(a)\n\nof the Internal Revenue Code, 26 U.S.C., Section 401(a), and which\n\nare deposited in and accounted for within a separate bank account or\n\nbrokerage account in a financial institution within this state,\n\nshall be excluded from taxable income in the same manner as a\n\nqualifying rollover contribution to an individual retirement account\n\nwithin the meaning of Section 408 of the Internal Revenue Code, 26\n\nU.S.C., Section 408. Amounts withdrawn from such bank or brokerage\n\naccount, including any earnings thereon, shall be included in\n\ntaxable income when withdrawn in the same manner as withdrawals from\n\nindividual retirement accounts within the meaning of Section 408 of\n\nthe Internal Revenue Code.\n\n11. In taxable years beginning after December 31, 1995,\n\ncontributions made to and interest received from a medical savings\n\naccount established pursuant to Sections 2621 through 2623 of Title\n\n63 of the Oklahoma Statutes shall be exempt from taxable income.\n\n12. For taxable years beginning after December 31, 1996, the\n\nOklahoma adjusted gross income of any individual taxpayer who is a\n\nswine or poultry producer may be further adjusted for the deduction\n\nfor depreciation allowed for new construction or expansion costs\n\nwhich may be computed using the same depreciation method elected for\n\nfederal income tax purposes except that the useful life shall be\n\nseven (7) years for purposes of this paragraph. If depreciation is\n\nallowed as a deduction in determining the adjusted gross income of\n\nan individual, any depreciation calculated and claimed pursuant to\n\nthis section shall in no event be a duplication of any depreciation\n\nallowed or permitted on the federal income tax return of the\n\nindividual.\n\n13. a. In taxable years beginning after December 31, 2002,\n\nnonrecurring adoption expenses paid by a resident\n\nindividual taxpayer in connection with:\n\n(1) the adoption of a minor, or\nof\n\nan individual, any depreciation calculated and claimed pursuant to\n\nthis section shall in no event be a duplication of any depreciation\n\nallowed or permitted on the federal income tax return of the\n\nindividual.\n\n13. a. In taxable years beginning after December 31, 2002,\n\nnonrecurring adoption expenses paid by a resident\n\nindividual taxpayer in connection with:\n\n(1) the adoption of a minor, or\n\n(2) a proposed adoption of a minor which did not\n\nresult in a decreed adoption,\n\nmay be deducted from the Oklahoma adjusted gross\n\nincome.\n\nb. The deductions for adoptions and proposed adoptions\n\nauthorized by this paragraph shall not exceed Twenty\n\nThousand Dollars ($20,000.00) per calendar year.\n\nc. The Tax Commission shall promulgate rules to implement\n\nthe provisions of this paragraph which shall contain a\n\nspecific list of nonrecurring adoption expenses which\n\nmay be presumed to qualify for the deduction. The Tax\n\nCommission shall prescribe necessary requirements for\n\nverification.\n\nd. “Nonrecurring adoption expenses” means adoption fees,\n\ncourt costs, medical expenses, attorney fees and\n\nexpenses which are directly related to the legal\n\nprocess of adoption of a child including, but not\n\nlimited to, costs relating to the adoption study,\n\nhealth and psychological examinations, transportation\n\nand reasonable costs of lodging and food for the child\n\nor adoptive parents which are incurred to complete the\n\nadoption process and are not reimbursed by other\n\nsources. The term nonrecurring adoption expenses\n\nshall not include attorney fees incurred for the\n\npurpose of litigating a contested adoption, from and\n\nafter the point of the initiation of the contest,\n\ncosts associated with physical remodeling, renovation\n\nand alteration of the adoptive parents’ home or\n\nproperty, except for a special needs child as\n\nauthorized by the court.\n\n14. a. In taxable years beginning before January 1, 2005,\n\nretirement benefits not to exceed the amounts\n\nspecified in this paragraph, which are received by an\n\nindividual sixty-five (65) years of age or older and\n\nwhose Oklahoma adjusted gross income is Twenty-five\n\nThousand Dollars ($25,000.00) or less if the filing\n\nstatus is single, head of household, or married filing\n\nseparate, or Fifty Thousand Dollars ($50,000.00) or\n\nless if the filing status is married filing joint or\n\nqualifying widow, shall be exempt from taxable income.\n\nIn taxable years beginning after December 31, 2004,\n\nretirement benefits not to exceed the amounts\n\nspecified in this paragraph, which are received by an\n\nindividual whose Oklahoma adjusted gross income is\n\nless than the qualifying amount specified in this\n\nparagraph, shall be exempt from taxable income.\n\nb. For purposes of this paragraph, the qualifying amount\n\nshall be as follows:\n\n(1) in taxable years beginning after December 31,\n\n2004, and prior to January 1, 2007, the\n\nqualifying amount shall be Thirty-seven Thousand\n\nFive Hundred Dollars ($37,500.00) or less if the\n\nfiling status is single, head of household, or\n\nmarried filing separate, or Seventy-five Thousand\n\nDollars ($75,000.00) or less if the filing status\n\nis married filing jointly or qualifying widow,\n\n(2) in the taxable year beginning January 1, 2007,\n\nthe qualifying amount shall be Fifty Thousand\n\nDollars ($50,000.00) or less if the filing status\n\nis single, head of household, or married filing\n\nseparate, or One Hundred Thousand Dollars\n\n($100,000.00) or less if the filing status is\n\nmarried filing jointly or qualifying widow,\n\n(3) in the taxable year beginning January 1, 2008,\n\nthe qualifying amount shall be Sixty-two Thousand\n\nFive Hundred Dollars ($62,500.00) or less if the\n\nfiling status is single, head of household, or\n\nmarried filing separate, or One Hundred Twenty-\n\nfive Thousand Dollars ($125,000.00) or less if\n\nthe filing status is married filing jointly or\n\nqualifying widow,\nfiling jointly or qualifying widow,\n\n(3) in the taxable year beginning January 1, 2008,\n\nthe qualifying amount shall be Sixty-two Thousand\n\nFive Hundred Dollars ($62,500.00) or less if the\n\nfiling status is single, head of household, or\n\nmarried filing separate, or One Hundred Twenty-\n\nfive Thousand Dollars ($125,000.00) or less if\n\nthe filing status is married filing jointly or\n\nqualifying widow,\n\n(4) in the taxable year beginning January 1, 2009,\n\nthe qualifying amount shall be One Hundred\n\nThousand Dollars ($100,000.00) or less if the\n\nfiling status is single, head of household, or\n\nmarried filing separate, or Two Hundred Thousand\n\nDollars ($200,000.00) or less if the filing\n\nstatus is married filing jointly or qualifying\n\nwidow, and\n\n(5) in the taxable year beginning January 1, 2010,\n\nand subsequent taxable years, there shall be no\n\nlimitation upon the qualifying amount.\n\nc. For purposes of this paragraph, “retirement benefits”\n\nmeans the total distributions or withdrawals from the\n\nfollowing:\n\n(1) an employee pension benefit plan which satisfies\n\nthe requirements of Section 401 of the Internal\n\nRevenue Code, 26 U.S.C., Section 401,\n\n(2) an eligible deferred compensation plan that\n\nsatisfies the requirements of Section 457 of the\n\nInternal Revenue Code, 26 U.S.C., Section 457,\n\n(3) an individual retirement account, annuity or\n\ntrust or simplified employee pension that\n\nsatisfies the requirements of Section 408 of the\n\nInternal Revenue Code, 26 U.S.C., Section 408,\n\n(4) an employee annuity subject to the provisions of\n\nSection 403(a) or (b) of the Internal Revenue\n\nCode, 26 U.S.C., Section 403(a) or (b),\n\n(5) United States Retirement Bonds which satisfy the\n\nrequirements of Section 86 of the Internal\n\nRevenue Code, 26 U.S.C., Section 86, or\n\n(6) lump-sum distributions from a retirement plan\n\nwhich satisfies the requirements of Section\n\n402(e) of the Internal Revenue Code, 26 U.S.C.,\n\nSection 402(e).\n\nd. The amount of the exemption provided by this paragraph\n\nshall be limited to Five Thousand Five Hundred Dollars\n\n($5,500.00) for the 2004 tax year, Seven Thousand Five\n\nHundred Dollars ($7,500.00) for the 2005 tax year and\n\nTen Thousand Dollars ($10,000.00) for the tax year\n\n2006 and for all subsequent tax years. Any individual\n\nwho claims the exemption provided for in paragraph 8\n\nof this subsection shall not be permitted to claim a\n\ncombined total exemption pursuant to this paragraph\n\nand paragraph 8 of this subsection in an amount\n\nexceeding Five Thousand Five Hundred Dollars\n\n($5,500.00) for the 2004 tax year, Seven Thousand Five\n\nHundred Dollars ($7,500.00) for the 2005 tax year and\n\nTen Thousand Dollars ($10,000.00) for the 2006 tax\n\nyear and all subsequent tax years.\n\n15. In taxable years beginning after December 31, 1999, for an\n\nindividual engaged in production agriculture who has filed a\n\nSchedule F form with the taxpayer’s federal income tax return for\n\nsuch taxable year, there shall be excluded from taxable income any\n\namount which was included as federal taxable income or federal\n\nadjusted gross income and which consists of the discharge of an\n\nobligation by a creditor of the taxpayer incurred to finance the\n\nproduction of agricultural products.\n\n16. In taxable years beginning December 31, 2000, an amount\n\nequal to one hundred percent (100%) of the amount of any scholarship\n\nor stipend received from participation in the Oklahoma Police Corps\n\nProgram, as established in Section 2-140.3 of Title 47 of the\n\nOklahoma Statutes shall be exempt from taxable income.\n\n17. a. In taxable years beginning after December 31, 2001,\n\nand before January 1, 2005, there shall be allowed a\n\ndeduction in the amount of contributions to accounts\n\nestablished pursuant to the Oklahoma College Savings\n\nPlan Act. The deduction shall equal the amount of\n\ncontributions to accounts, but in no event shall the\nf Title 47 of the\n\nOklahoma Statutes shall be exempt from taxable income.\n\n17. a. In taxable years beginning after December 31, 2001,\n\nand before January 1, 2005, there shall be allowed a\n\ndeduction in the amount of contributions to accounts\n\nestablished pursuant to the Oklahoma College Savings\n\nPlan Act. The deduction shall equal the amount of\n\ncontributions to accounts, but in no event shall the\n\ndeduction for each contributor exceed Two Thousand\n\nFive Hundred Dollars ($2,500.00) each taxable year for\n\neach account.\n\nb. In taxable years beginning after December 31, 2004,\n\neach taxpayer shall be allowed a deduction for\n\ncontributions to accounts established pursuant to the\n\nOklahoma College Savings Plan Act. The maximum annual\n\ndeduction shall equal the amount of contributions to\n\nall such accounts plus any contributions to such\n\naccounts by the taxpayer for prior taxable years after\n\nDecember 31, 2004, which were not deducted, but in no\n\nevent shall the deduction for each tax year exceed Ten\n\nThousand Dollars ($10,000.00) for each individual\n\ntaxpayer or Twenty Thousand Dollars ($20,000.00) for\n\ntaxpayers filing a joint return. Any amount of a\n\ncontribution that is not deducted by the taxpayer in\n\nthe year for which the contribution is made may be\n\ncarried forward as a deduction from income for the\n\nsucceeding five (5) years. For taxable years\n\nbeginning after December 31, 2005, deductions may be\n\ntaken for contributions and rollovers made during a\n\ntaxable year and up to April 15 of the succeeding\n\nyear, or the due date of a taxpayer’s state income tax\n\nreturn, excluding extensions, whichever is later.\n\nProvided, a deduction for the same contribution may\n\nnot be taken for two (2) different taxable years.\n\nc. In taxable years beginning after December 31, 2006,\n\ndeductions for contributions made pursuant to\n\nsubparagraph b of this paragraph shall be limited as\n\nfollows:\n\n(1) for a taxpayer who qualified for the five-year\n\ncarryforward election and who takes a rollover or\n\nnonqualified withdrawal during that period, the\n\ntax deduction otherwise available pursuant to\n\nsubparagraph b of this paragraph shall be reduced\n\nby the amount which is equal to the rollover or\n\nnonqualified withdrawal, and\n\n(2) for a taxpayer who elects to take a rollover or\n\nnonqualified withdrawal within the same tax year\n\nin which a contribution was made to the\n\ntaxpayer’s account, the tax deduction otherwise\n\navailable pursuant to subparagraph b of this\n\nparagraph shall be reduced by the amount of the\n\ncontribution which is equal to the rollover or\n\nnonqualified withdrawal.\n\nd. If a taxpayer elects to take a rollover on a\n\ncontribution for which a deduction has been taken\n\npursuant to subparagraph b of this paragraph within\n\none (1) year of the date of contribution, the amount\n\nof such rollover shall be included in the adjusted\n\ngross income of the taxpayer in the taxable year of\n\nthe rollover.\n\ne. If a taxpayer makes a nonqualified withdrawal of\n\ncontributions for which a deduction was taken pursuant\n\nto subparagraph b of this paragraph, such nonqualified\n\nwithdrawal and any earnings thereon shall be included\n\nin the adjusted gross income of the taxpayer in the\n\ntaxable year of the nonqualified withdrawal.\n\nf. As used in this paragraph:\n\n(1) “non-qualified withdrawal” means a withdrawal\n\nfrom an Oklahoma College Savings Plan account\n\nother than one of the following:\n\n(a) a qualified withdrawal,\n\n(b) a withdrawal made as a result of the death\n\nor disability of the designated beneficiary\n\nof an account,\n\n(c) a withdrawal that is made on the account of\n\na scholarship or the allowance or payment\n\ndescribed in Section 135(d)(1)(B) or (C) or\n\nby the Internal Revenue Code, received by\n\nthe designated beneficiary to the extent the\n\namount of the refund does not exceed the\n\namount of the scholarship, allowance, or\n\npayment, or\n\nof an account,\n\n(c) a withdrawal that is made on the account of\n\na scholarship or the allowance or payment\n\ndescribed in Section 135(d)(1)(B) or (C) or\n\nby the Internal Revenue Code, received by\n\nthe designated beneficiary to the extent the\n\namount of the refund does not exceed the\n\namount of the scholarship, allowance, or\n\npayment, or\n\n(d) a rollover or change of designated\n\nbeneficiary as permitted by subsection F of\n\nSection 3970.7 of Title 70 of the Oklahoma\n\nStatutes, and\n\n(2) “rollover” means the transfer of funds from the\n\nOklahoma College Savings Plan to any other plan\n\nunder Section 529 of the Internal Revenue Code.\n\n18. For tax years 2006 through 2021, retirement benefits\n\nreceived by an individual from any component of the Armed Forces of\n\nthe United States in an amount not to exceed the greater of seventy-\n\nfive percent (75%) of such benefits or Ten Thousand Dollars\n\n($10,000.00) shall be exempt from taxable income but in no case less\n\nthan the amount of the exemption provided by paragraph 14 of this\n\nsubsection. For tax year 2022 and subsequent tax years, retirement\n\nbenefits received by an individual from any component of the Armed\n\nForces of the United States shall be exempt from taxable income.\n\n19. For taxable years beginning after December 31, 2006,\n\nretirement benefits received by federal civil service retirees,\n\nincluding survivor annuities, paid in lieu of Social Security\n\nbenefits shall be exempt from taxable income to the extent such\n\nbenefits are included in the federal adjusted gross income pursuant\n\nto the provisions of Section 86 of the Internal Revenue Code, 26\n\nU.S.C., Section 86, according to the following schedule:\n\na. in the taxable year beginning January 1, 2007, twenty\n\npercent (20%) of such benefits shall be exempt,\n\nb. in the taxable year beginning January 1, 2008, forty\n\npercent (40%) of such benefits shall be exempt,\n\nc. in the taxable year beginning January 1, 2009, sixty\n\npercent (60%) of such benefits shall be exempt,\n\nd. in the taxable year beginning January 1, 2010, eighty\n\npercent (80%) of such benefits shall be exempt, and\n\ne. in the taxable year beginning January 1, 2011, and\n\nsubsequent taxable years, one hundred percent (100%)\n\nof such benefits shall be exempt.\n\n20. a. For taxable years beginning after December 31, 2007, a\n\nresident individual may deduct up to Ten Thousand\n\nDollars ($10,000.00) from Oklahoma adjusted gross\n\nincome if the individual, or the dependent of the\n\nindividual, while living, donates one or more human\n\norgans of the individual to another human being for\n\nhuman organ transplantation. As used in this\n\nparagraph, “human organ” means all or part of a liver,\n\npancreas, kidney, intestine, lung, or bone marrow. A\n\ndeduction that is claimed under this paragraph may be\n\nclaimed in the taxable year in which the human organ\n\ntransplantation occurs.\n\nb. An individual may claim this deduction only once, and\n\nthe deduction may be claimed only for unreimbursed\n\nexpenses that are incurred by the individual and\n\nrelated to the organ donation of the individual.\n\nc. The Oklahoma Tax Commission shall promulgate rules to\n\nimplement the provisions of this paragraph which shall\n\ncontain a specific list of expenses which may be\n\npresumed to qualify for the deduction. The Tax\n\nCommission shall prescribe necessary requirements for\n\nverification.\n\n21. For taxable years beginning after December 31, 2009, there\n\nshall be exempt from taxable income any amount received by the\n\nbeneficiary of the death benefit for an emergency medical technician\n\nor a registered emergency medical responder provided by Section 1-\n\n2505.1 of Title 63 of the Oklahoma Statutes.\n\n22. For taxable years beginning after December 31, 2008,\n\ntaxable income shall be increased by any unemployment compensation\n\nexempted under Section 85(c) of the Internal Revenue Code, 26\nany amount received by the\n\nbeneficiary of the death benefit for an emergency medical technician\n\nor a registered emergency medical responder provided by Section 1-\n\n2505.1 of Title 63 of the Oklahoma Statutes.\n\n22. For taxable years beginning after December 31, 2008,\n\ntaxable income shall be increased by any unemployment compensation\n\nexempted under Section 85(c) of the Internal Revenue Code, 26\n\nU.S.C., Section 85(c)(2009).\n\n23. For taxable years beginning after December 31, 2008, there\n\nshall be exempt from taxable income any payment in an amount less\n\nthan Six Hundred Dollars ($600.00) received by a person as an award\n\nfor participation in a competitive livestock show event. For\n\npurposes of this paragraph, the payment shall be treated as a\n\nscholarship amount paid by the entity sponsoring the event and the\n\nsponsoring entity shall cause the payment to be categorized as a\n\nscholarship in its books and records.\n\n24. For taxable years beginning on or after January 1, 2016,\n\ntaxable income shall be increased by any amount of state and local\n\nsales or income taxes deducted under 26 U.S.C., Section 164 of the\n\nInternal Revenue Code. If the amount of state and local taxes\n\ndeducted on the federal return is limited, taxable income on the\n\nstate return shall be increased only by the amount actually deducted\n\nafter any such limitations are applied.\n\n25. For taxable years beginning after December 31, 2020, each\n\ntaxpayer shall be allowed a deduction for contributions to accounts\n\nestablished pursuant to the Achieving a Better Life Experience\n\n(ABLE) Program as established in Section 4001.1 et seq. of Title 56\n\nof the Oklahoma Statutes. For any tax year, the deduction provided\n\nfor in this paragraph shall not exceed Ten Thousand Dollars\n\n($10,000.00) for an individual taxpayer or Twenty Thousand Dollars\n\n($20,000.00) for taxpayers filing a joint return. Any amount of\n\ncontribution not deducted by the taxpayer in the tax year for which\n\nthe contribution is made may be carried forward as a deduction from\n\nincome for up to five (5) tax years. Deductions may be taken for\n\ncontributions made during the tax year and through April 15 of the\n\nsucceeding tax year, or through the due date of a taxpayer’s state\n\nincome tax return excluding extensions, whichever is later.\n\nProvided, a deduction for the same contribution may not be taken in\n\nmore than one (1) tax year.\n\n26. For tax year 2024 and subsequent tax years, tax credits\n\nreceived pursuant to the Oklahoma Parental Choice Tax Credit Act in\n\nSection 28-101 of Title 70 of the Oklahoma Statutes shall be exempt\n\nfrom taxable income.\n\nF. 1. For taxable years beginning after December 31, 2004, a\n\ndeduction from the Oklahoma adjusted gross income of any individual\n\ntaxpayer shall be allowed for qualifying gains receiving capital\n\ntreatment that are included in the federal adjusted gross income of\n\nsuch individual taxpayer during the taxable year.\n\n2. As used in this subsection:\n\na. “qualifying gains receiving capital treatment” means\n\nthe amount of net capital gains, as defined in Section\n\n1222(11) of the Internal Revenue Code, included in an\n\nindividual taxpayer’s federal income tax return that\n\nresult from:\n\n(1) the sale of real property or tangible personal\n\nproperty located within this state that has been\n\ndirectly or indirectly owned by the individual\n\ntaxpayer for a holding period of at least five\n\n(5) years prior to the date of the transaction\n\nfrom which such net capital gains arise,\n\n(2) the sale of stock or the sale of a direct or\n\nindirect ownership interest in an Oklahoma\n\ncompany, limited liability company, or\n\npartnership where such stock or ownership\n\ninterest has been directly or indirectly owned by\n\nthe individual taxpayer for a holding period of\n\nat least two (2) years prior to the date of the\n\ntransaction from which the net capital gains\n\narise, or\nital gains arise,\n\n(2) the sale of stock or the sale of a direct or\n\nindirect ownership interest in an Oklahoma\n\ncompany, limited liability company, or\n\npartnership where such stock or ownership\n\ninterest has been directly or indirectly owned by\n\nthe individual taxpayer for a holding period of\n\nat least two (2) years prior to the date of the\n\ntransaction from which the net capital gains\n\narise, or\n\n(3) the sale of real property, tangible personal\n\nproperty or intangible personal property located\n\nwithin this state as part of the sale of all or\n\nsubstantially all of the assets of an Oklahoma\n\ncompany, limited liability company, or\n\npartnership or an Oklahoma proprietorship\n\nbusiness enterprise where such property has been\n\ndirectly or indirectly owned by such entity or\n\nbusiness enterprise or owned by the owners of\n\nsuch entity or business enterprise for a period\n\nof at least two (2) years prior to the date of\n\nthe transaction from which the net capital gains\n\narise,\n\nb. “holding period” means an uninterrupted period of\n\ntime. The holding period shall include any additional\n\nperiod when the property was held by another\n\nindividual or entity, if such additional period is\n\nincluded in the taxpayer’s holding period for the\n\nasset pursuant to the Internal Revenue Code,\n\nc. “Oklahoma company,” “limited liability company,” or\n\n“partnership” means an entity whose primary\n\nheadquarters have been located in this state for at\n\nleast three (3) uninterrupted years prior to the date\n\nof the transaction from which the net capital gains\n\narise,\n\nd. “direct” means the individual taxpayer directly owns\n\nthe asset,\n\ne. “indirect” means the individual taxpayer owns an\n\ninterest in a pass-through entity (or chain of pass-\n\nthrough entities) that sells the asset that gives rise\n\nto the qualifying gains receiving capital treatment.\n\n(1) With respect to sales of real property or\n\ntangible personal property located within this\n\nstate, the deduction described in this subsection\n\nshall not apply unless the pass-through entity\n\nthat makes the sale has held the property for not\n\nless than five (5) uninterrupted years prior to\n\nthe date of the transaction that created the\n\ncapital gain, and each pass-through entity\n\nincluded in the chain of ownership has been a\n\nmember, partner, or shareholder of the pass-\n\nthrough entity in the tier immediately below it\n\nfor an uninterrupted period of not less than five\n\n(5) years.\n\n(2) With respect to sales of stock or ownership\n\ninterest in or sales of all or substantially all\n\nof the assets of an Oklahoma company, limited\n\nliability company, partnership or Oklahoma\n\nproprietorship business enterprise, the deduction\n\ndescribed in this subsection shall not apply\n\nunless the pass-through entity that makes the\n\nsale has held the stock or ownership interest for\n\nnot less than two (2) uninterrupted years prior\n\nto the date of the transaction that created the\n\ncapital gain, and each pass-through entity\n\nincluded in the chain of ownership has been a\n\nmember, partner or shareholder of the pass-\n\nthrough entity in the tier immediately below it\n\nfor an uninterrupted period of not less than two\ny that makes the\n\nsale has held the stock or ownership interest for\n\nnot less than two (2) uninterrupted years prior\n\nto the date of the transaction that created the\n\ncapital gain, and each pass-through entity\n\nincluded in the chain of ownership has been a\n\nmember, partner or shareholder of the pass-\n\nthrough entity in the tier immediately below it\n\nfor an uninterrupted period of not less than two\n\n(2) years. For purposes of this division,\n\nuninterrupted ownership prior to July 1, 2007,\n\nshall be included in the determination of the\n\nrequired holding period prescribed by this\n\ndivision, and\n\nf. “Oklahoma proprietorship business enterprise” means a\n\nbusiness enterprise whose income and expenses have\n\nbeen reported on Schedule C or F of an individual\n\ntaxpayer’s federal income tax return, or any similar\n\nsuccessor schedule published by the Internal Revenue\n\nService and whose primary headquarters have been\n\nlocated in this state for at least three (3)\n\nuninterrupted years prior to the date of the\n\ntransaction from which the net capital gains arise.\n\nG. 1. For purposes of computing its Oklahoma taxable income\n\nunder this section, the dividends-paid deduction otherwise allowed\n\nby federal law in computing net income of a real estate investment\n\ntrust that is subject to federal income tax shall be added back in\n\ncomputing the tax imposed by this state under this title if the real\n\nestate investment trust is a captive real estate investment trust.\n\n2. For purposes of computing its Oklahoma taxable income under\n\nthis section, a taxpayer shall add back otherwise deductible rents\n\nand interest expenses paid to a captive real estate investment trust\n\nthat is not subject to the provisions of paragraph 1 of this\n\nsubsection. As used in this subsection:\n\na. the term “real estate investment trust” or “REIT”\n\nmeans the meaning ascribed to such term in Section 856\n\nof the Internal Revenue Code,\n\nb. the term “captive real estate investment trust” means\n\na real estate investment trust, the shares or\n\nbeneficial interests of which are not regularly traded\n\non an established securities market and more than\n\nfifty percent (50%) of the voting power or value of\n\nthe beneficial interests or shares of which are owned\n\nor controlled, directly or indirectly, or\n\nconstructively, by a single entity that is:\n\n(1) treated as an association taxable as a\n\ncorporation under the Internal Revenue Code, and\n\n(2) not exempt from federal income tax pursuant to\n\nthe provisions of Section 501(a) of the Internal\n\nRevenue Code.\n\nThe term shall not include a real estate investment\n\ntrust that is intended to be regularly traded on an\n\nestablished securities market, and that satisfies the\n\nrequirements of Section 856(a)(5) and (6) of the U.S.\n\nInternal Revenue Code by reason of Section 856(h)(2)\n\nof the Internal Revenue Code,\n\nc. the term “association taxable as a corporation” shall\n\nnot include the following entities:\n\n(1) any real estate investment trust as defined in\n\nparagraph a of this subsection other than a\n\ncaptive real estate investment trust, or\n\n(2) any qualified real estate investment trust\n\nsubsidiary under Section 856(i) of the Internal\n\nRevenue Code, other than a qualified REIT\n\nsubsidiary of a captive real estate investment\n\ntrust, or\n\n(3) any listed Australian property trust (meaning an\n\nAustralian unit trust registered as a “managed\n\ninvestment scheme” under the Australian\n\nCorporations Act 2001 in which the principal\n\nclass of units is listed on a recognized stock\n\nexchange in Australia and is regularly traded on\n\nan established securities market), or an entity\n\norganized as a trust, provided that a listed\n\nAustralian property trust owns or controls,\n\ndirectly or indirectly, seventy-five percent\n\n(75%) or more of the voting power or value of the\n\nbeneficial interests or shares of such trust, or\nh the principal\n\nclass of units is listed on a recognized stock\n\nexchange in Australia and is regularly traded on\n\nan established securities market), or an entity\n\norganized as a trust, provided that a listed\n\nAustralian property trust owns or controls,\n\ndirectly or indirectly, seventy-five percent\n\n(75%) or more of the voting power or value of the\n\nbeneficial interests or shares of such trust, or\n\n(4) any qualified foreign entity, meaning a\n\ncorporation, trust, association or partnership\n\norganized outside the laws of the United States\n\nand which satisfies the following criteria:\n\n(a) at least seventy-five percent (75%) of the\n\nentity’s total asset value at the close of\n\nits taxable year is represented by real\n\nestate assets, as defined in Section\n\n856(c)(5)(B) of the Internal Revenue Code,\n\nthereby including shares or certificates of\n\nbeneficial interest in any real estate\n\ninvestment trust, cash and cash equivalents,\n\nand U.S. Government securities,\n\n(b) the entity receives a dividend-paid\n\ndeduction comparable to Section 561 of the\n\nInternal Revenue Code, or is exempt from\n\nentity level tax,\n\n(c) the entity is required to distribute at\n\nleast eighty-five percent (85%) of its\n\ntaxable income, as computed in the\n\njurisdiction in which it is organized, to\n\nthe holders of its shares or certificates of\n\nbeneficial interest on an annual basis,\n\n(d) not more than ten percent (10%) of the\n\nvoting power or value in such entity is held\n\ndirectly or indirectly or constructively by\n\na single entity or individual, or the shares\n\nor beneficial interests of such entity are\n\nregularly traded on an established\n\nsecurities market, and\n\n(e) the entity is organized in a country which\n\nhas a tax treaty with the United States.\n\n3. For purposes of this subsection, the constructive ownership\n\nrules of Section 318(a) of the Internal Revenue Code, as modified by\n\nSection 856(d)(5) of the Internal Revenue Code, shall apply in\n\ndetermining the ownership of stock, assets, or net profits of any\n\nperson.\n\n4. A real estate investment trust that does not become\n\nregularly traded on an established securities market within one (1)\n\nyear of the date on which it first becomes a real estate investment\n\ntrust shall be deemed not to have been regularly traded on an\n\nestablished securities market, retroactive to the date it first\n\nbecame a real estate investment trust, and shall file an amended\n\nreturn reflecting such retroactive designation for any tax year or\n\npart year occurring during its initial year of status as a real\n\nestate investment trust. For purposes of this subsection, a real\n\nestate investment trust becomes a real estate investment trust on\n\nthe first day it has both met the requirements of Section 856 of the\n\nInternal Revenue Code and has elected to be treated as a real estate\n\ninvestment trust pursuant to Section 856(c)(1) of the Internal\n\nRevenue Code.","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":"17a903409ffe0c3e792973b1a477084ab00a14be67bd029b4d2b3aa247cc3caa","source_id":"us-ok","stale":false,"prev":"us-ok/okla.-stat.-tit.-68-68-2358v1","next":"us-ok/okla.-stat.-tit.-68-68-2358v3"},"notice":"GroundRules: Original legal text. Not legal advice."}