HB 4432 — Revenue and taxation; adjustments; eliminating limitation on itemization of wagering losses for certain tax years; effective date.

Deductions used in computing such net income or loss shall not include taxes based on orENR. measured by income.

Provided, for corporations whose property for purposes of the tax imposed by Section 2355 of this title has an initial investment cost equaling or exceeding Two Hundred Million Dollars ($200,000,000.00) and such investment is made on or after July 1, 1997, or for corporations which expand their property or ENGR.

4432 Page 106 facilities in this state and such expansion has an investment cost equaling or exceedingmeasured Twoby Hundredincome. Million Dollars ($200,000,000.00) over a period not to exceed three (3) years, and such expansion is commenced on or after January 1, 2000, the three factors shall be apportioned with property and payroll, each comprising twenty-five percent (25%) of the apportionment factor and sales comprising fifty percent (50%) of the apportionment factor.

Provided, for corporations whose property for purposes of the tax imposed by Section 2355 of this title has an initial investment cost equaling or exceeding Two Hundred Million Dollars ($200,000,000.00) and such investment is made on or after July 1, 1997, or for corporations which expand their property or facilities in this state and such expansion has an investment cost equaling or exceeding Two Hundred Million Dollars ($200,000,000.00) over a period not to exceed three (3) years, and such expansion is commenced on or after January 1, 2000, the three factors shall be apportioned with property and payroll, each comprising twenty-five percent (25%) of the apportionment factor and sales comprising fifty percent (50%) of the apportionment factor.

The numerator of the fraction shall include a portion of the investment in transportation and other equipment having no fixed situs, such as rolling stock, buses, trucks and trailers, including machinery and equipment carried thereon, airplanes, salespersons' ENGR.automobiles and other similar equipment, in the proportion that miles traveled in Oklahoma this state by such equipment bears to total miles traveled, (2) Property owned by the taxpayer is valued at its original cost.

Property rented by the taxpayer is valued at eight times the net annual rental rate.

Net annual rental rate is the annual rental rate paid by the taxpayer, less any annual rental rate received by the taxpayer from subrentals, ENR.

4432 Page 117 automobiles(3) andThe otheraverage similarvalue equipment,of inproperty shall be determined by averaging the proportionvalues thatat milesthe traveledbeginning inand Oklahomaending thisof statethe bytax suchperiod equipmentbut bearsthe toOklahoma totalTax milesCommission traveled,may (2)require Propertythe ownedaveraging byof monthly values during the taxpayertax isperiod valuedif atreasonably itsrequired originalto cost.reflect properly the average value of the taxpayer's property;

Property rented by the taxpayer is valued at eight times the net annual rental rate.

Net annual rental rate is the annual rental rate paid by the taxpayer, less any annual rental rate received by the taxpayer from subrentals, (3) The average value of property shall be determined by averaging the values at the beginning and ending of the tax period but the Oklahoma Tax Commission may require the averaging of monthly values during the tax period if reasonably required to reflect properly the average value of the taxpayer's property;

"Compensation", as used in this subsection, means ENGR.those paid-for services to the extent related to the unitary business but does not include officers' salaries, wages and other compensation.

H.

B.

NO.

4432 Page 12 those paid-for services to the extent related to the unitary business but does not include officers' salaries, wages and other compensation.

"Sales", ENGR.as used in this subsection, does not include sales or gross revenue which are separately allocated in paragraph 4 of this subsection.

ENR.

4432 Page 138 as(1) usedSales of tangible personal property have a situs in this subsection,state doesif notthe includeproperty salesis delivered or grossshipped revenueto whicha arepurchaser separatelyother allocatedthan inthe paragraphUnited 4States ofgovernment, within this subsection.state regardless of the FOB Freight on Board (FOB) point or other conditions of the sale;

(1) Sales of tangible personal property have a situs in this state if the property is delivered or shipped to a purchaser other than the United States government, within this state regardless of the FOB Freight on Board (FOB) point or other conditions of the sale;

(3) In the case of an airline, truck or bus enterprise or freight car, tank car, refrigerator car or other railroad equipment enterprise, the numerator of the fraction shall include a portion of revenue from interstate transportation in the ENGR.proportion that interstate mileage traveled in Oklahoma this state bears to total interstate mileage traveled.

H.

B.

NO.

4432 Page 14 proportion that interstate mileage traveled in Oklahoma this state bears to total interstate mileage traveled.

(5) In the case of a telephone or telegraph or other communication enterprise, the numerator of the fractionENR. shall include that portion of the interstate revenue as is allocated pursuant to the accounting procedures prescribed by the Federal Communications Commission;

provided that ENGR.

4432 Page 159 infraction respectshall toinclude eachthat corporationportion orof businessthe entityinterstate requiredrevenue byas theis Federalallocated Communicationspursuant Commission to keepthe itsaccounting booksprocedures and records in accordance with a uniform system of accounts prescribed by such Commission, the intrastateFederal netCommunications incomeCommission; shall be determined separately in the manner provided by such uniform system of accounts and only the interstate income shall be subject to allocation pursuant to the provisions of this subsection.

provided that in respect to each corporation or business entity required by the Federal Communications Commission to keep its books and records in accordance with a uniform system of accounts prescribed by such Commission, the intrastate net income shall be determined separately in the manner provided by such uniform system of accounts and only the interstate income shall be subject to allocation pursuant to the provisions of this subsection.

or because of other reasons, the Tax Commission is empowered to permit, after a showing by taxpayer that an excessive portion of net income has been attributed to Oklahoma this state, or ENGR.require, when in its judgment an insufficient portion of net income has been attributed to Oklahoma this state, the elimination, substitution, or use of additional factors, or reduction or increase in the weight of such prescribed factors.

H.

B.

NO.

4432 Page 16 require, when in its judgment an insufficient portion of net income has been attributed to Oklahoma this state, the elimination, substitution, or use of additional factors, or reduction or increase in the weight of such prescribed factors.

For calendar years 1997 and 1998, the owner of a new or expanded agricultural commodity processing facility in this state may exclude from Oklahoma taxable income, or in the case of an individual, the Oklahoma adjusted gross income, fifteen percent (15%) of the investment by the owner in the new or expanded agriculturalENR. commodity processing facility.

For calendar year 1999, and all subsequent years, the percentage, not to exceed fifteen percent (15%), available to the owner of a new or expanded agricultural commodity processing facility in this state claiming the exemption shall be adjusted annually so that the total estimated reduction in tax liability does not exceed One Million Dollars ($1,000,000.00) annually.

The Tax Commission shall promulgate rules for determining the percentage of the investment which each eligible taxpayer may exclude.

The exclusion provided by this paragraph ENGR.

4432 Page 1710 shallagricultural becommodity takenprocessing infacility. the taxable year when the investment is made.

For calendar year 1999, and all subsequent years, the percentage, not to exceed fifteen percent (15%), available to the owner of a new or expanded agricultural commodity processing facility in this state claiming the exemption shall be adjusted annually so that the total estimated reduction in tax liability does not exceed One Million Dollars ($1,000,000.00) annually.

The Tax Commission shall promulgate rules for determining the percentage of the investment which each eligible taxpayer may exclude.

The exclusion provided by this paragraph shall be taken in the taxable year when the investment is made.

The term does not include a facility that provides only, and nothing more than, storage, cleaning, drying or transportation of agricultural commodities, and ENGR.b.

"Facility" means each part of the facility which is used in a process primarily for:

(1) the processing of agricultural commodities, including receiving or storing agricultural commodities, or the production of milk at a dairy operation, ENR.

4432 Page 1811 b.(2) transporting the agricultural commodities or product before, during or after the processing, or (3) packaging or otherwise preparing the product for sale or shipment.

"Facility" means each part of the facility which is used in a process primarily for:

(1) the processing of agricultural commodities, including receiving or storing agricultural commodities, or the production of milk at a dairy operation, (2) transporting the agricultural commodities or product before, during or after the processing, or (3) packaging or otherwise preparing the product for sale or shipment.

ENGR.8.

H.In taxable years beginning after December 31, 1995, all qualified wages equal to the federal income tax credit set forth in U.S.C.A., Section 45A, shall be deducted from taxable income.

B.

NO.

4432 Page 19 8.

In taxable years beginning after December 31, 1995, all qualified wages equal to the federal income tax credit set forth in 26 U.S.C.A., Section 45A, shall be deducted from taxable income.

There shall be subtracted from OklahomaENR. taxable income an amount equal to the amount of deferred income included in such taxable income pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986 as amended by Section 1231 of the American Recovery and Reinvestment Act of 2009 (P.L.

No.

111-5).

ENGR.

4432 Page 2012 11.Oklahoma taxable income an amount equal to the amount of deferred income included in such taxable income pursuant to Section 108(i)(1) of the Internal Revenue Code of 1986, as amended, by Section 1231 of the American Recovery and Reinvestment Act of 2009 (P.L.

No.

111-5).

11.

The taxable income of any corporation shall be further adjusted to arrive at Oklahoma taxable income, except those ENGR.corporations electing treatment as provided in subchapter S of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1361 et seq., and Section 2365 of this title, deductions pursuant to the provisions of the Accelerated Cost Recovery System as defined provided and allowed in the Economic Recovery Tax Act of 1981, Public Law 97-34, 26 U.S.C., Section 168, for depreciation of assets placed into service after December 31, 1981, shall not be allowed in calculating Oklahoma taxable income.

Such corporations shall be allowed a deduction for depreciation of assets placed into service after December 31, 1981, in accordance with provisions of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1 et seq., in effect immediately prior to the enactment of the Accelerated Cost Recovery System.

The Oklahoma tax basis for all such assets placed into service after December 31, 1981, calculated ENR.

4432 Page 2113 corporations electing treatment as provided in subchapterthis Ssection ofshall thebe Internalretained Revenue Code of 1986, as amended, 26 U.S.C., Section 1361 et seq., and Sectionutilized 2365for ofall thisOklahoma title,income deductionstax pursuantpurposes tothrough the provisionsfinal ofdisposition the Accelerated Cost Recovery System as defined provided and allowed in the Economic Recovery Tax Act of 1981,such Publicassets. Law 97-34, 26 U.S.C., Section 168, for depreciation of assets placed into service after December 31, 1981, shall not be allowed in calculating Oklahoma taxable income.

Such corporations shall be allowed a deduction for depreciation of assets placed into service after December 31, 1981, in accordance with provisions of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 1 et seq., in effect immediately prior to the enactment of the Accelerated Cost Recovery System.

The Oklahoma tax basis for all such assets placed into service after December 31, 1981, calculated in this section shall be retained and utilized for all Oklahoma income tax purposes through the final disposition of such assets.

For assets placed in service and held by a corporation in which accelerated cost recovery system the Accelerated Cost Recovery System was previously disallowed, an adjustment to taxable income is ENGR.required in the first taxable year beginning after December 31, 1982, to reconcile the basis of such assets to the basis allowed in the Internal Revenue Code of 1986, as amended.

H.

B.

NO.

4432 Page 22 required in the first taxable year beginning after December 31, 1982, to reconcile the basis of such assets to the basis allowed in the Internal Revenue Code of 1986, as amended.

Such exemption shall be allowed for a period not to exceed ten (10) years from the date of receipt of the first ENGR.royalty payment accruing from such transfer.

H.

B.

NO.

4432 Page 23 royalty payment accruing from such transfer.

a.ENR.

H.

B.

NO.

4432 Page 14 a.

and ENGR.d.

H.

B.

NO.

4432 Page 24 d.

(1)ENR. the sale of real property or tangible personal property located within Oklahoma this state that has been directly or indirectly owned by the corporation, estate or trust for a holding period of at least five (5) years prior to the date of the transaction from which such net capital gains arise, ENGR.

4432 Page 2515 (1) the sale of real property or tangible personal property located within Oklahoma this state that has been directly or indirectly owned by the corporation, estate or trust for a holding period of at least five (5) years prior to the date of the transaction from which such net capital gains arise, (2) the sale of stock or on the sale of an ownership interest in an Oklahoma company, limited liability company, or partnership where such stock or ownership interest has been directly or indirectly owned by the corporation, estate or trust for a holding period of at least three (3) years prior to the date of the transaction from which the net capital gains arise, or (3) the sale of real property, tangible personal property or intangible personal property located within Oklahoma this state as part of the sale of all or substantially all of the assets of an Oklahoma company, limited liability company, or partnership where such property has been directly or indirectly owned by such entity owned by the owners of such entity, and used in or derived from such entity for a period of at least three (3) years prior to the date of the transaction from which the net capital gains arise, b.

The holding period shall include any additional period when the property was held by another individual or entity, if such additional period is included in the taxpayer's holding period for the ENGR.asset pursuant to the Internal Revenue Code of 1986, as amended, c.

"Oklahoma company", "limited liability company", or "partnership" means an entity whose primary headquarters have been located in Oklahoma this state for at least three (3) uninterrupted years prior to the date of the transaction from which the net capital gains arise, ENR.

4432 Page 2616 assetd. pursuant to the Internal Revenue Code of 1986, as amended, c.

"Oklahoma company", "limited liability company", or "partnership" means an entity whose primary headquarters have been located in Oklahoma this state for at least three (3) uninterrupted years prior to the date of the transaction from which the net capital gains arise, d.

(1) With respect to sales of real property or tangible personal property located within Oklahoma this state, the deduction described in this subsection shall not apply unless the pass- through entity that makes the sale has held the property for not less than five (5) uninterrupted years prior to the date of the transaction that created the capital gain, and each pass-through entity included in the chain of ownership has been a member, partner, or shareholder of the ENGR.pass-through entity in the tier immediately below it for an uninterrupted period of not less than five (5) years.

H.

B.

NO.

4432 Page 27 pass-through entity in the tier immediately below it for an uninterrupted period of not less than five (5) years.

In the case of individuals, there shall be added or deducted, as the case may be, the difference necessary to allow personal exemptions of One Thousand Dollars ENGR.ENR.

4432 Page 2817 ($1,000.00) in lieu of the personal exemptions allowed by the Internal Revenue Code of 1986, as amended.

(1) Twenty-five Thousand Dollars ($25,000.00) if married and filing jointly, ENGR.(2) Twelve Thousand Five Hundred Dollars ($12,500.00) if married and filing separately, (3) Fifteen Thousand Dollars ($15,000.00) if single, and (4) Nineteen Thousand Dollars ($19,000.00) if a qualifying head of household.

H.

B.

NO.

4432 Page 29 (2) Twelve Thousand Five Hundred Dollars ($12,500.00) if married and filing separately, (3) Fifteen Thousand Dollars ($15,000.00) if single, and (4) Nineteen Thousand Dollars ($19,000.00) if a qualifying head of household.

2.ENR.

a.

For taxable years beginning on or before December 31, 2005, in the case of individuals who use the standard deduction in determining taxable income, there shall be added or deducted, as the case may be, the difference necessary to allow a standard deduction in lieu of the standard deduction allowed by the Internal Revenue Code of 1986, as amended, in an amount equal to the larger of fifteen percent (15%) of the Oklahoma adjusted gross income or One Thousand Dollars ($1,000.00), but not to exceed Two Thousand Dollars ENGR.

4432 Page 3018 ($2,000.00),2. except that in the case of a married individual filing a separate return such deduction shall be the larger of fifteen percent (15%) of such Oklahoma adjusted gross income or Five Hundred Dollars ($500.00), but not to exceed the maximum amount of One Thousand Dollars ($1,000.00).

a.

For taxable years beginning on or before December 31, 2005, in the case of individuals who use the standard deduction in determining taxable income, there shall be added or deducted, as the case may be, the difference necessary to allow a standard deduction in lieu of the standard deduction allowed by the Internal Revenue Code of 1986, as amended, in an amount equal to the larger of fifteen percent (15%) of the Oklahoma adjusted gross income or One Thousand Dollars ($1,000.00), but not to exceed Two Thousand Dollars ($2,000.00), except that in the case of a married individual filing a separate return such deduction shall be the larger of fifteen percent (15%) of such Oklahoma adjusted gross income or Five Hundred Dollars ($500.00), but not to exceed the maximum amount of One Thousand Dollars ($1,000.00).

For the taxable year beginning on January 1, 2007, and ending December 31, 2007, in the case of individuals who use the standard deduction in determining taxable income, there shall be added or deducted, as the case may be, the difference necessary to allow a standard ENGR.deduction in lieu of the standard deduction allowed by the Internal Revenue Code of 1986, as amended, in an amount equal to:

(1) Five Thousand Five Hundred Dollars ($5,500.00), if the filing status is married filing joint or qualifying widow, or ENR.

4432 Page 3119 deduction(2) inFour lieuThousand One Hundred Twenty-five Dollars ($4,125.00) for a head of thehousehold, standardor deduction(3) allowedTwo byThousand theSeven InternalHundred RevenueFifty CodeDollars of($2,750.00), 1986,if asthe amended,filing instatus anis amountsingle equalor to:married filing separate.

(1) Five Thousand Five Hundred Dollars ($5,500.00), if the filing status is married filing joint or qualifying widow, or (2) Four Thousand One Hundred Twenty-five Dollars ($4,125.00) for a head of household, or (3) Two Thousand Seven Hundred Fifty Dollars ($2,750.00), if the filing status is single or married filing separate.

(1) Six Thousand Five Hundred Dollars ($6,500.00), if the filing status is married filing joint or qualifying widow, (2) Four Thousand Eight Hundred Seventy-five Dollars ($4,875.00) for a head of household, or ENGR.(3) Three Thousand Two Hundred Fifty Dollars ($3,250.00), if the filing status is single or married filing separate.

H.

B.

NO.

4432 Page 32 (3) Three Thousand Two Hundred Fifty Dollars ($3,250.00), if the filing status is single or married filing separate.

(1) Eight Thousand Five Hundred Dollars ($8,500.00), if the filing status is married filing joint or qualifying widow, (2) Six Thousand Three Hundred Seventy-five Dollars ($6,375.00) for a head of household, or (3)ENR. Four Thousand Two Hundred Fifty Dollars ($4,250.00), if the filing status is single or married filing separate.

Oklahoma adjusted gross income shall be increased by any amounts paid for motor vehicle excise taxes which were deducted as allowed by the Internal Revenue Code of 1986, as amended.

ENGR.

4432 Page 3320 f.(3) Four Thousand Two Hundred Fifty Dollars ($4,250.00), if the filing status is single or married filing separate.

Oklahoma adjusted gross income shall be increased by any amounts paid for motor vehicle excise taxes which were deducted as allowed by the Internal Revenue Code of 1986, as amended.

f.

(1) Six Thousand Three Hundred Fifty Dollars ($6,350.00) for single or married filing separately, (2) Twelve Thousand Seven Hundred Dollars ($12,700.00) for married filing jointly or qualifying widower with dependent child, and ENGR.(3) Nine Thousand Three Hundred Fifty Dollars ($9,350.00) for head of household.

3.

a.

In the case of resident and part-year resident individuals having adjusted gross income from sources both within and without the state, the itemized or standard deductions and personal exemptions shall be reduced to an amount which is the same portion of the total thereof as Oklahoma adjusted gross income is of ENR.

4432 Page 3421 (3)adjusted Ninegross Thousandincome. Three Hundred Fifty Dollars ($9,350.00) for head of household.

3.

a.

In the case of resident and part-year resident individuals having adjusted gross income from sources both within and without the state, the itemized or standard deductions and personal exemptions shall be reduced to an amount which is the same portion of the total thereof as Oklahoma adjusted gross income is of adjusted gross income.

For purposes of this subparagraph, charitable ENGR.contributions and medical expenses deductible for federal income tax purposes shall be excluded from the amount of Seventeen Thousand Dollars ($17,000.00) as specified by this subparagraph.

H.

B.

NO.

4432 Page 35 contributions and medical expenses deductible for federal income tax purposes shall be excluded from the amount of Seventeen Thousand Dollars ($17,000.00) as specified by this subparagraph.

Before July 1, 2010, the first One Thousand Five Hundred Dollars ($1,500.00) received by any person ENGR.from the United States as salary or compensation in any form, other than retirement benefits, as a member ENR.

4432 Page 3622 from the United States as salary or compensation in any form, other than retirement benefits, as a member of any component of the Armed Forces of the United States shall be deducted from taxable income.

(1) absence from the United States, which term includes only the states and the District of Columbia, (2) absence from the State of Oklahoma this state while on active duty, or (3) confinement in a hospital within the United States for treatment of wounds, injuries or disease, the time for filing a return and paying an income tax shall be and is hereby extended without incurring ENGR.liability for interest or penalties, to the fifteenth day of the third month following the month in which:

(a) Such individual shall return to the United States if the extension is granted pursuant to subparagraph a division (1) of this paragraph subparagraph, return to the State of Oklahoma this state if the extension is granted pursuant to subparagraph b division (2) of this paragraph subparagraph or be discharged from such hospital if the extension is granted pursuant to subparagraph c division (3) of this paragraph subparagraph, or ENR.

4432 Page 3723 liability(b) forAn interestexecutor, administrator, or penalties,conservator toof the fifteenthestate day of the thirdtaxpayer monthis followingappointed, thewhichever monthevent inoccurs which:the earliest.

(a) Such individual shall return to the United States if the extension is granted pursuant to subparagraph a division (1) of this paragraph subparagraph, return to the State of Oklahoma this state if the extension is granted pursuant to subparagraph b division (2) of this paragraph subparagraph or be discharged from such hospital if the extension is granted pursuant to subparagraph c division (3) of this paragraph subparagraph, or (b) An executor, administrator, or conservator of the estate of the taxpayer is appointed, whichever event occurs the earliest.

ENGR.6.

H.

B.

NO.

4432 Page 38 6.

For the purpose of this paragraph, "federal income taxes paid" shall mean federal income taxes, surtaxes imposed on incomes or excess profits taxes, as though ENGR.the taxpayer was on the accrual basis.

In determining the amount of deduction for federal income taxes for tax year 2001, the amount of the deduction shall not be adjusted by the amount of any accelerated ten percent (10%) tax rate bracket credit or advanced ENR.

4432 Page 3924 refund of the taxpayercredit wasreceived onduring the accrualtax basis.year provided pursuant to the federal Economic Growth and Tax Relief Reconciliation Act of 2001, P.L.

In determining the amount of deduction for federal income taxes for tax year 2001, the amount of the deduction shall not be adjusted by the amount of any accelerated ten percent (10%) tax rate bracket credit or advanced refund of the credit received during the tax year provided pursuant to the federal Economic Growth and Tax Relief Reconciliation Act of 2001, P.L.

of Title 19 of the Oklahoma Statutes, the ENGR.Uniform Retirement System for Justices and Judges, the Oklahoma Wildlife Conservation Department Retirement Fund, the Oklahoma Employment Security Commission Retirement Plan, or the employee retirement systems created by municipalities pursuant to Section 48- et seq.

H.

B.

NO.

4432 Page 40 Uniform Retirement System for Justices and Judges, the Oklahoma Wildlife Conservation Department Retirement Fund, the Oklahoma Employment Security Commission Retirement Plan, or the employee retirement systems created by municipalities pursuant to Section 48- 101 et seq.

In taxable years beginning after December 3l, 1984, Social Security benefits received by an individual shall be exempt from taxable income, to the extent such benefits are included in the federal adjusted gross income pursuant to the provisions of Section 86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 86.

For taxable years beginning after December 31, 1994, lump- sum distributions from employer plans of deferred compensation, which are not qualified plans within the meaning of Section 401(a) of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 401(a), and which are deposited in and accounted for within a separate bank account or brokerage account in a financial institution within this state, shall be excluded from taxable income in the same manner as a qualifying rollover contribution to an individual retirement account within the meaning of Section 408 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 408.ENR.

Amounts withdrawn from such bank or brokerage account, including any earnings thereon, shall be included in taxable income ENGR.

4432 Page 4125 when408. withdrawn in the same manner as withdrawals from individual retirement accounts within the meaning of Section 408 of the Internal Revenue Code of 1986, as amended.

Amounts withdrawn from such bank or brokerage account, including any earnings thereon, shall be included in taxable income when withdrawn in the same manner as withdrawals from individual retirement accounts within the meaning of Section 408 of the Internal Revenue Code of 1986, as amended.

In taxable years beginning after December 31, 1995, contributions made to and interest received from a medical savings account established pursuant to Sections 2621 through 2623 of Title 63 of the Oklahoma Statutes shall be exempt from taxable income.

In taxable years beginning before January 1, 2005, retirement benefits not to exceed the amounts specified in this paragraph, which are received by an individual sixty-five (65) years of age or older and whose Oklahoma adjusted gross income is Twenty-five ENGR.Thousand Dollars ($25,000.00) or less if the filing status is single, head of household, or married filing separate, or Fifty Thousand Dollars ($50,000.00) or less if the filing status is married filing joint or qualifying widow, shall be exempt from taxable income.

H.

B.

NO.

4432 Page 42 Thousand Dollars ($25,000.00) or less if the filing status is single, head of household, or married filing separate, or Fifty Thousand Dollars ($50,000.00) or less if the filing status is married filing joint or qualifying widow, shall be exempt from taxable income.

(1)ENR. in taxable years beginning after December 31, 2004, and prior to January 1, 2007, the qualifying amount shall be Thirty-seven Thousand Five Hundred Dollars ($37,500.00) or less if the filing status is single, head of household, or married filing separate, or Seventy-five Thousand Dollars ($75,000.00) or less if the filing status is married filing jointly or qualifying widow, (2) in the taxable year beginning January 1, 2007, the qualifying amount shall be Fifty Thousand Dollars ($50,000.00) or less if the filing status ENGR.

4432 Page 4326 (1) in taxable years beginning after December 31, 2004, and prior to January 1, 2007, the qualifying amount shall be Thirty-seven Thousand Five Hundred Dollars ($37,500.00) or less if the filing status is single, head of household, or married filing separate, or Seventy-five Thousand Dollars ($75,000.00) or less if the filing status is married filing jointly or qualifying widow, (2) in the taxable year beginning January 1, 2007, the qualifying amount shall be Fifty Thousand Dollars ($50,000.00) or less if the filing status is single, head of household, or married filing separate, or One Hundred Thousand Dollars ($100,000.00) or less if the filing status is married filing jointly or qualifying widow, (3) in the taxable year beginning January 1, 2008, the qualifying amount shall be Sixty-two Thousand Five Hundred Dollars ($62,500.00) or less if the filing status is single, head of household, or married filing separate, or One Hundred Twenty- five Thousand Dollars ($125,000.00) or less if the filing status is married filing jointly or qualifying widow, (4) in the taxable year beginning January 1, 2009, the qualifying amount shall be One Hundred Thousand Dollars ($100,000.00) or less if the filing status is single, head of household, or married filing separate, or Two Hundred Thousand Dollars ($200,000.00) or less if the filing status is married filing jointly or qualifying widow, and (5) in the taxable year beginning January 1, 2010, and subsequent taxable years, there shall be no limitation upon the qualifying amount.

ENGR.c.

H.

B.

NO.

4432 Page 44 c.

(1) an employee pension benefit plan which satisfies the requirements of Section 401 of the Internal RevenueENR. Code of 1986, as amended, 26 U.S.C., Section 401, (2) an eligible deferred compensation plan that satisfies the requirements of Section 457 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 457, (3) an individual retirement account, annuity or trust or simplified employee pension that satisfies the requirements of Section 408 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 408, (4) an employee annuity subject to the provisions of Section 403(a) or (b) of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 403(a) or (b), (5) United States Retirement Bonds which satisfy the requirements of Section 86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 86, or ENGR.

4432 Page 4527 Revenue Code of 1986, as amended, 26 U.S.C., Section 401, (2) an eligible deferred compensation plan that satisfies the requirements of Section 457 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 457, (3) an individual retirement account, annuity or trust or simplified employee pension that satisfies the requirements of Section 408 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 408, (4) an employee annuity subject to the provisions of Section 403(a) or (b) of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 403(a) or (b), (5) United States Retirement Bonds which satisfy the requirements of Section 86 of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 86, or (6) lump-sum distributions from a retirement plan which satisfies the requirements of Section 402(e) of the Internal Revenue Code of 1986, as amended, 26 U.S.C., Section 402(e).

The amount of the exemption provided by this paragraph shall be limited to Five Thousand Five Hundred Dollars ($5,500.00) for the 2004 tax year, Seven Thousand Five Hundred Dollars ($7,500.00) for the 2005 tax year and Ten Thousand Dollars ($10,000.00) for the tax year 2006 and for all subsequent tax years.

14.ENR.

In taxable years beginning after December 31, 1999, for an individual engaged in production agriculture who has filed a Schedule F form with the taxpayer's federal income tax return for such taxable year, there shall be excluded from taxable income any amount which was included as federal taxable income or federal ENGR.

4432 Page 4628 adjusted14. gross income and which consists of the discharge of an obligation by a creditor of the taxpayer incurred to finance the production of agricultural products.

In taxable years beginning after December 31, 1999, for an individual engaged in production agriculture who has filed a Schedule F form with the taxpayer's federal income tax return for such taxable year, there shall be excluded from taxable income any amount which was included as federal taxable income or federal adjusted gross income and which consists of the discharge of an obligation by a creditor of the taxpayer incurred to finance the production of agricultural products.

The maximum annual deduction shall equal the amount of contributions to all such accounts plus any contributions to such accounts by the taxpayer for prior taxable years after ENGR.December 31, 2004, which were not deducted, but in no event shall the deduction for each tax year exceed Ten Thousand Dollars ($10,000.00) for each individual taxpayer or Twenty Thousand Dollars ($20,000.00) for taxpayers filing a joint return.

Any amount of a contribution that is not deducted by the taxpayer in the year for which the contribution is made may be carried forward as a deduction from income for the succeeding five (5) years.

For taxable years beginning after December 31, 2005, deductions may be taken for contributions and rollovers made during a taxable year and up to April 15 of the succeeding year, or the due date of a taxpayer's state income tax ENR.

4432 Page 4729 Decemberreturn, 31,excluding 2004,extensions, whichwhichever wereis notlater. deducted, but in no event shall the deduction for each tax year exceed Ten Thousand Dollars ($10,000.00) for each individual taxpayer or Twenty Thousand Dollars ($20,000.00) for taxpayers filing a joint return.

Any amount of a contribution that is not deducted by the taxpayer in the year for which the contribution is made may be carried forward as a deduction from income for the succeeding five (5) years.

For taxable years beginning after December 31, 2005, deductions may be taken for contributions and rollovers made during a taxable year and up to April 15 of the succeeding year, or the due date of a taxpayer's state income tax return, excluding extensions, whichever is later.

(1) for a taxpayer who qualified for the five-year carryforward election and who takes a rollover or nonqualified withdrawal during that period, the tax deduction otherwise available pursuant to ENGR.subparagraph b of this paragraph shall be reduced by the amount which is equal to the rollover or nonqualified withdrawal, and (2) for a taxpayer who elects to take a rollover or nonqualified withdrawal within the same tax year in which a contribution was made to the taxpayer's account, the tax deduction otherwise available pursuant to subparagraph b of this paragraph shall be reduced by the amount of the contribution which is equal to the rollover or nonqualified withdrawal.

H.

B.

NO.

4432 Page 48 subparagraph b of this paragraph shall be reduced by the amount which is equal to the rollover or nonqualified withdrawal, and (2) for a taxpayer who elects to take a rollover or nonqualified withdrawal within the same tax year in which a contribution was made to the taxpayer's account, the tax deduction otherwise available pursuant to subparagraph b of this paragraph shall be reduced by the amount of the contribution which is equal to the rollover or nonqualified withdrawal.

ENGR.f.

H.

B.

NO.

4432 Page 49 f.

(1)ENR. "non-qualified withdrawal" means a withdrawal from an Oklahoma College Savings Plan account other than one of the following:

(a) a qualified withdrawal, (b) a withdrawal made as a result of the death or disability of the designated beneficiary of an account, (c) a withdrawal that is made on the account of a scholarship or the allowance or payment described in Section 135(d)(1)(B) or (C) or by the Internal Revenue Code of 1986, as amended, received by the designated beneficiary to the extent the amount of the refund does not exceed the amount of the scholarship, allowance, or payment, or (d) a rollover or change of designated beneficiary as permitted by subsection F of Section 3970.7 of Title 70 of the Oklahoma Statutes, and (2) "rollover" means the transfer of funds from the Oklahoma College Savings Plan to any other plan under Section 529 of the Internal Revenue Code of 1986, as amended.

ENGR.

4432 Page 5030 17.(1) "non-qualified withdrawal" means a withdrawal from an Oklahoma College Savings Plan account other than one of the following:

(a) a qualified withdrawal, (b) a withdrawal made as a result of the death or disability of the designated beneficiary of an account, (c) a withdrawal that is made on the account of a scholarship or the allowance or payment described in Section 135(d)(1)(B) or (C) or by the Internal Revenue Code of 1986, as amended, received by the designated beneficiary to the extent the amount of the refund does not exceed the amount of the scholarship, allowance, or payment, or (d) a rollover or change of designated beneficiary as permitted by subsection F of Section 3970.7 of Title 70 of the Oklahoma Statutes, and (2) "rollover" means the transfer of funds from the Oklahoma College Savings Plan to any other plan under Section 529 of the Internal Revenue Code of 1986, as amended.

17.

For taxable years beginning after December 31, 2006, retirement benefits received by federal civil service retirees, including survivor annuities, paid in lieu of Social Security benefits shall be exempt from taxable income to the extent such benefits are included in the federal adjusted gross income pursuant to the provisions of Section 86 of the Internal Revenue Code of 1986,ENR. as amended, 26 U.S.C., Section 86, according to the following schedule:

a.

in the taxable year beginning January 1, 2007, twenty percent (20%) of such benefits shall be exempt, b.

in the taxable year beginning January 1, 2008, forty percent (40%) of such benefits shall be exempt, c.

in the taxable year beginning January 1, 2009, sixty percent (60%) of such benefits shall be exempt, ENGR.

4432 Page 5131 d.1986, as amended, 26 U.S.C., Section 86, according to the following schedule:

a.

in the taxable year beginning January 1, 2007, twenty percent (20%) of such benefits shall be exempt, b.

in the taxable year beginning January 1, 2008, forty percent (40%) of such benefits shall be exempt, c.

in the taxable year beginning January 1, 2009, sixty percent (60%) of such benefits shall be exempt, d.

The Oklahoma Tax Commission shall promulgate rules to implement the provisions of this paragraph which shall contain a specific list of expenses which may be ENGR.presumed to qualify for the deduction.

The Tax Commission shall prescribe necessary requirements for verification.

ENR.

4432 Page 5232 presumed20. to qualify for the deduction.

The Tax Commission shall prescribe necessary requirements for verification.

20.

If the amount of state ENGR.and local taxes deducted on the federal return is limited, taxable income on the state return shall be increased only by the amount actually deducted after any such limitations are applied.

H.

B.

NO.

4432 Page 53 and local taxes deducted on the federal return is limited, taxable income on the state return shall be increased only by the amount actually deducted after any such limitations are applied.

F.ENR.

1.

For taxable years beginning after December 31, 2004, a deduction from the Oklahoma adjusted gross income of any individual taxpayer shall be allowed for qualifying gains receiving capital treatment that are included in the federal adjusted gross income of such individual taxpayer during the taxable year.

ENGR.

4432 Page 5433 2.F.

1.

For taxable years beginning after December 31, 2004, a deduction from the Oklahoma adjusted gross income of any individual taxpayer shall be allowed for qualifying gains receiving capital treatment that are included in the federal adjusted gross income of such individual taxpayer during the taxable year.

2.

(1) the sale of real property or tangible personal property located within Oklahoma this state that has been directly or indirectly owned by the individual taxpayer for a holding period of at least five (5) years prior to the date of the transaction from which such net capital gains arise, (2) the sale of stock or the sale of a direct or indirect ownership interest in an Oklahoma company, limited liability company, or partnership where such stock or ownership interest has been directly or indirectly owned by the individual taxpayer for a holding period of at least two (2) years prior to the date of the transaction from which the net capital gains arise, or (3) the sale of real property, tangible personal property or intangible personal property located ENGR.within Oklahoma this state as part of the sale of all or substantially all of the assets of an Oklahoma company, limited liability company, or partnership or an Oklahoma proprietorship business enterprise where such property has been directly or indirectly owned by such entity or business enterprise or owned by the owners of such entity or business enterprise for a period of at least two (2) years prior to the date of the transaction from which the net capital gains arise, ENR.

4432 Page 5534 within Oklahoma this state as part of the sale of all or substantially all of the assets of an Oklahoma company, limited liability company, or partnership or an Oklahoma proprietorship business enterprise where such property has been directly or indirectly owned by such entity or business enterprise or owned by the owners of such entity or business enterprise for a period of at least two (2) years prior to the date of the transaction from which the net capital gains arise, b.

"Oklahoma company," "limited liability company," or "partnership" means an entity whose primary headquarters have been located in Oklahoma this state for at least three (3) uninterrupted years prior to the date of the transaction from which the net capital gains arise, ENGR.d.

H.

B.

NO.

4432 Page 56 d.

(2) With respect to sales of stock or ownership interest in or sales of all or substantially all of the assets of an Oklahoma company, limited liability company, partnership or Oklahoma proprietorship business enterprise, the deduction ENGR.described in this subsection shall not apply unless the pass-through entity that makes the ENR.

4432 Page 5735 described in this subsection shall not apply unless the pass-through entity that makes the sale has held the stock or ownership interest for not less than two (2) uninterrupted years prior to the date of the transaction that created the capital gain, and each pass-through entity included in the chain of ownership has been a member, partner or shareholder of the pass- through entity in the tier immediately below it for an uninterrupted period of not less than two (2) years.

ENGR.G.

H.

B.

NO.

4432 Page 58 G.

the term "captive real estate investment trust" means a real estate investment trust, the shares or beneficial interests of which are not regularly traded on an established securities market and more than fiftyENR. percent (50%) of the voting power or value of the beneficial interests or shares of which are owned or controlled, directly or indirectly, or constructively, by a single entity that is:

ENGR.

4432 Page 5936 (1)fifty treatedpercent as(50%) anof associationthe taxablevoting aspower aor corporationvalue underof the Internalbeneficial Revenueinterests Codeor shares of 1986,which asare amended,owned andor (2)controlled, notdirectly exemptor fromindirectly, federalor incomeconstructively, taxby pursuanta tosingle theentity provisionsthat ofis: Section 501(a) of the Internal Revenue Code of 1986, as amended.

(1) treated as an association taxable as a corporation under the Internal Revenue Code of 1986, as amended, and (2) not exempt from federal income tax pursuant to the provisions of Section 501(a) of the Internal Revenue Code of 1986, as amended.

(1) any real estate investment trust as defined in paragraph subparagraph a of paragraph 2 of this subsection other than a "captive real estate investment trust" captive real estate investment trust, (2) any qualified real estate investment trust subsidiary under Section 856(i) of the Internal Revenue Code of 1986, as amended, other than a qualified REIT subsidiary of a "captive real ENGR.estate investment trust" captive real estate investment trust, (3) any Listed listed Australian Property Trust property trust (meaning an Australian unit trust registered as a "Managed Investment Scheme" "managed investment scheme" under the Australian Corporations Act 2001 in which the principal class of units is listed on a recognized stock exchange in Australia and is regularly traded on an established securities market), or an entity ENR.

4432 Page 6037 estate investment trust" captive real estate investment trust, (3) any Listed listed Australian Property Trust property trust (meaning an Australian unit trust registered as a "Managed Investment Scheme" "managed investment scheme" under the Australian Corporations Act 2001 in which the principal class of units is listed on a recognized stock exchange in Australia and is regularly traded on an established securities market), or an entity organized as a trust, provided that a Listed listed Australian Property Trust property trust owns or controls, directly or indirectly, seventy-five percent (75%) or more of the voting power or value of the beneficial interests or shares of such trust, or (4) any Qualified Foreign Entity qualified foreign entity, meaning a corporation, trust, association or partnership organized outside the laws of the United States and which satisfies the following criteria:

(a) at least seventy-five percent (75%) of the entity's total asset value at the close of its taxable year is represented by real ENGR.estate assets, as defined in Section 856(c)(5)(B) of the Internal Revenue Code of 1986, as amended, thereby including shares or certificates of beneficial interest in any real estate investment trust, cash and cash equivalents, and U.S.

Government securities, (b) the entity receives a dividend-paid deduction comparable to Section 561 of the Internal Revenue Code of 1986, as amended, or is exempt from entity level tax, (c) the entity is required to distribute at least eighty-five percent (85%) of its taxable income, as computed in the jurisdiction in which it is organized, to the holders of its shares or certificates of beneficial interest on an annual basis, (d) not more than ten percent (10%) of the voting power or value in such entity is held directly or indirectly or constructively by a single entity or individual, or the shares or beneficial interests of such entity are regularly traded on an established securities market, and ENR.

4432 Page 6138 estate(e) assets, as defined in Section 856(c)(5)(B) of the Internalentity Revenueis Codeorganized of 1986, as amended, thereby including shares or certificates of beneficial interest in anya realcountry estatewhich investmenthas trust,a cashtax andtreaty cashwith equivalents,the andUnited U.S.States.

Government securities, (b) the entity receives a dividend-paid deduction comparable to Section 561 of the Internal Revenue Code of 1986, as amended, or is exempt from entity level tax, (c) the entity is required to distribute at least eighty-five percent (85%) of its taxable income, as computed in the jurisdiction in which it is organized, to the holders of its shares or certificates of beneficial interest on an annual basis, (d) not more than ten percent (10%) of the voting power or value in such entity is held directly or indirectly or constructively by a single entity or individual, or the shares or beneficial interests of such entity are regularly traded on an established securities market, and ENGR.

H.

B.

NO.

4432 Page 62 (e) the entity is organized in a country which has a tax treaty with the United States.

ENGR.ENR.

4432 Page 6339 Passed the House of Representatives the 11th day of March, 2026.

3 Presiding Officer of the House of Representatives 6 Passed the Senate the ___28th day of __________,April, 2026.

8 Presiding Officer of the Senate ENGR.OFFICE OF THE GOVERNOR Received by the Office of the Governor this ____________________ day of ___________________, 20_______, at _______ o'clock _______ M.

By:

_________________________________ Approved by the Governor of the State of Oklahoma this _________ day of ___________________, 20_______, at _______ o'clock _______ M.

_________________________________ Governor of the State of Oklahoma OFFICE OF THE SECRETARY OF STATE Received by the Office of the Secretary of State this __________ day of ___________________, 20_______, at _______ o'clock _______ M.

By:

_________________________________ ENR.

4432 Page 6440