Oklahoma § 68-2358.6 - Bonus depreciation received under federal law Addition to federal taxable income - Subtraction in later years

§ 68-2358.6. Bonus depreciation received under federal law Addition to federal taxable income - Subtraction in later years

A. For income tax returns filed after September 10, 2001, by

corporations and fiduciaries, federal taxable income shall be

increased by eighty percent (80%) of any amount of bonus

depreciation received under the federal Job Creation and Worker

Assistance Act of 2002, under Section 168(k) or Section 1400L of the

Oklahoma Statutes - Title 68. Revenue and Taxation

Internal Revenue Code of 1986, as amended, for assets placed in

service after September 10, 2001, and before September 11, 2004.

B. For income tax returns filed after December 31, 2007, by

corporations and fiduciaries, federal taxable income shall be

increased by eighty percent (80%) of any amount of bonus

depreciation received under the federal Economic Stimulus Act of

2008, or under the American Recovery and Reinvestment Act of 2009,

under Section 168(k) or Section 1400L of the Internal Revenue Code

of 1986, as amended, for assets placed in service after December 31,

2007, and before January 1, 2010.

C. For a corporation with a unitary business having activity

both inside and outside the state, the increase shall be apportioned

to Oklahoma in the same manner as income is apportioned to the state

under Section 2358 and Section 2362 of this title.

D. The amount of bonus depreciation added to federal taxable

income by this section shall be subtracted in a later taxable year

as herein provided. Twenty-five percent (25%) of the total amount

of bonus depreciation added back may be subtracted in the first

taxable year following the year of the addition and twenty-five

percent (25%) may be subtracted in each of the next three following

taxable years.

E. A corporation or fiduciary filing a return for which federal

taxable income is not increased as provided in subsection A of this

section prior to October 1, 2002, shall file an amended return

reflecting such increase not later than June 30, 2003. The Oklahoma

Tax Commission shall not assess penalties or interest with respect

to the failure to reflect such increase if a correct amended return

is filed as required herein. A corporation or fiduciary filing a

return for which federal taxable income is not increased as provided

for in subsection B of this section prior to October 1, 2008, shall

file an amended return reflecting such increase not later than June

30, 2009. The Tax Commission shall not assess penalties or interest

with respect to the failure to reflect such increase if a correct

amended return is filed as required herein.

Added by Laws 2002, c. 503, § 3, emerg. eff. June 7, 2002. Amended

by Laws 2008, c. 395, § 2, emerg. eff. June 3, 2008; Laws 2009, c.

426, § 11, emerg. eff. June 1, 2009.

§68-2358.6A. Expensing for qualified property and qualified

improvement property.

A. As used in this section:

1. "Internal Revenue Code" means Title 26 of the United States

Code also known as the federal Internal Revenue Code of 1986, as

amended;

2. "Tax Cuts and Jobs Act" means Public Law No. 115-97 (115th

Congress Public Law 97);

Oklahoma Statutes - Title 68. Revenue and Taxation

3. "Qualified property" shall have the same meaning as in

Internal Revenue Code Section 168(k) as the Code existed on January

1, 2021, and shall apply to property placed in service after

December 31, 2021;

4. "Qualified improvement property" shall have the same meaning

as in Internal Revenue Code Section 168(e)(6) as the Code existed on

January 1, 2021, and shall apply to property placed in service after

December 31, 2021; and

5. "Full expensing" or "one hundred percent (100%) bonus

depreciation" means a method for taxpayers to recover costs for

certain expenditures in research and experimentation and depreciable

business assets by immediately deducting the full cost of such

expenditures in the tax year in which the cost is incurred or the

property is placed in service.

B. Taxpayers shall have the option for immediate and full

expensing for qualified property and qualified improvement property

as follows:

1. For purposes of computing income tax for taxable years

beginning after December 31, 2021, the cost of expenditures for

business assets that are qualified property or qualified improvement

property covered under Section 168 of the Internal Revenue Code

shall be eligible for one hundred percent (100%) bonus depreciation

and may be deducted as an expense incurred by the taxpayer during

the taxable year during which the property is placed in service,

notwithstanding any changes to federal law related to amortization

of cost recovery beginning on or after January 1, 2023, and shall

permanently remain fully and immediately deductible as an expense in

the tax year in which the property is placed in service for purposes

of calculating the taxpayer's income;

2. If a taxpayer elects immediate and full expensing of

qualified property or qualified improvement property, any

depreciation calculated and claimed pursuant to this section shall

in no event be a duplication of any depreciation or bonus

depreciation allowed or permitted on the federal income tax return

of the taxpayer. For income tax returns filed on or after January

1, 2023, federal taxable income shall be increased by the amount of

depreciation received under the Internal Revenue Code for the

qualified property or qualified improvement property for which the

election has been made to immediately and fully expense the asset on

the Oklahoma income tax return for the year in which the property

was placed in service. A taxpayer filing a return for which federal

taxable income is not increased as provided for in this section

prior to October 1, 2023, shall file an amended return reflecting

such increase not later than June 30, 2024. The Tax Commission

shall not assess penalties or interest with respect to the failure

to reflect such increase if a correct amended return is filed as

required herein; and

Oklahoma Statutes - Title 68. Revenue and Taxation

3. The taxpayer's decision to recover investment costs through

immediate expensing in the year the investment cost is incurred, or

amortized over an amortization schedule, is irrevocable unless

specifically allowed for by the Oklahoma Tax Commission.

C. 1. To conform to Section 179 of the Internal Revenue Code,

taxpayers shall be allowed to immediately deduct as an expense the

cost of certain depreciable business assets in the tax year in which

the property is placed in service.

2. For purposes of computing income tax for taxable years

beginning after December 31, 2021, taxpayers may elect to treat the

cost of any Section 179 of the Internal Revenue Code property as an

expense which is not chargeable to the capital account. Any cost so

treated shall be allowed as a deduction for the taxable year in

which the Section 179 Internal Revenue Code property is placed in

service.

D. The Oklahoma Tax Commission shall, within sixty (60) days of

the effective date of this act, promulgate rules for implementation

of this act which shall conform to the Internal Revenue Code of 1986

and must be consistent with the Internal Revenue Service's rules.

The provisions of this section shall supersede to the extent of any

inconsistency with any administrative rule.

Added by Laws 2022, c. 343, § 1, emerg. eff. May 26, 2022. Amended

by Laws 2023, c. 286, § 1, eff. Nov. 1, 2023.