Ohio § 5747.011

§ 5747.011.

(A) As used in this section: (1) “ Qualifying closely-held C corporation ” means a person classified for federal income tax purposes as an association taxed

as a corporation and that has more than fifty per cent of the value of its outstanding

stock or equity owned, directly or indirectly, by or for not more than five qualifying

persons.  For the purposes of this division, the ownership of stock shall be determined under

the rules set forth in section 544 of the Internal Revenue Code . (2) “ Qualifying person ” means an individual;  an organization described in section 401(a) , 501(c)(17) , or 509(a) of the Internal Revenue Code ;  or a portion of a trust permanently set aside or to be used exclusively for the

purposes described in section 642(c) of the Internal Revenue Code or a corresponding provision of a prior federal income tax law. (3) “ Qualifying limited liability company ” means a limited liability company that is not classified for federal income tax

purposes as an association taxed as a corporation. (4) “ Ownership interest ” means the equity or ownership interest in, or debt obligation of, a “qualifying

investee” as defined in section 5747.01 of the Revised Code . (5) “ Qualifying individual beneficiary ” has the same meaning as qualifying beneficiary as used in division (I)(3)(c) of section 5747.01 of the Revised Code , but is limited to individuals. (6) “ Family ” of an individual means only the individual's spouse;  the individual's ancestors,

limited to the individual's parents, grandparents, and great grandparents;  the siblings

of such ancestors, whether by the whole or half blood or by legal adoption;  the lineal

descendants of such ancestors and siblings;  persons legally adopted by such ancestors

or by such siblings;  and the spouses of such ancestors, siblings, legally adopted

persons, and lineal descendants. (B) The requirements of this division apply for purposes of division (AA)(2)(b) of section 5747.01 of the Revised Code and for the purposes of division (D) of section 5747.012 of the Revised Code .  Gain or loss included in a trust's Ohio taxable income is not a qualifying trust

amount unless the trust's ownership interest in the qualifying investee is at least

five per cent of the total outstanding ownership interests in such qualifying investee

at any time during the ten-year period ending on the last day of the trust's taxable

year in which the sale, exchange, or other disposition occurs.  Nothing in this section negates the requirements in division (AA)(2) of section 5747.01 of the Revised Code . For the purpose of ascertaining whether the trust's ownership interest in a qualifying

investee is at least five per cent of the total outstanding ownership interests in

such qualifying investee, the following apply: (1) On each day, an ownership interest owned, directly or indirectly, by or for a qualifying

closely-held C corporation, an S corporation, a partnership other than a publicly

traded partnership, a qualifying limited liability company, an estate, or a trust

that is irrevocable as defined in division (I)(3)(b) of section 5747.01 of the Revised Code is considered as being owned proportionately on the same day by the equity investors

of such qualifying closely-held C corporation, S corporation, partnership, or qualifying

limited liability company, or by the beneficiaries of such estate or trust, as the

case may be.  For the purposes of division (B)(1) of this section, a beneficiary's proportionate

share of an ownership interest held by a trust shall be ascertained in accordance

with section 544(a)(1) of the Internal Revenue Code . (2) On each day, a trust, hereinafter referred to as the first trust, is considered as

owning any ownership interest owned, directly or indirectly, by or for another trust,

hereinafter referred to as the second trust, if on the same day the second trust has

at least one individual trustee who is either (a) a trustee of the first trust, or

(b) a member of a family that includes at least one of the trustees of the first trust. (3) On each day, a trust, hereinafter referred to as the first trust, is considered as

owning any ownership interest owned, directly or indirectly, by or for another trust,

hereinafter referred to as the second trust, if on the same day the second trust has

at least one qualifying individual beneficiary who is either (a) a qualifying individual

beneficiary of the first trust or (b) a member of a family which includes a qualifying

individual beneficiary of the first trust. (4) An ownership interest constructively owned by a person by reason of the application

of division (B)(1) of this section shall, for the purpose of applying divisions (B)(1)

to (3) of this section, be treated as actually owned by that person. (5) An ownership interest constructively owned by a trust by reason of the application

of division (B)(2) or (3) of this section shall not be treated as actually owned by

that trust for purposes of applying divisions (B)(1) to (3) of this section. (6) If an ownership interest may be considered as owned by a trust under division (B)(1)

or (2) of this section, the ownership interest shall be considered owned by that trust

under division (B)(2) of this section. (7) If an ownership interest may be considered as owned by a trust under division (B)(1)

or (3) of this section, the ownership interest shall be considered owned by that trust

under division (B)(3) of this section.