Bill Text: OH HB239 | 2011-2012 | 129th General Assembly | Comm Sub
Bill Title: To exempt retirement pay related to service in the Commissioned Corps of the National Oceanic and Atmospheric Administration and the Commissioned Corps of the Public Health Service.
Spectrum: Slight Partisan Bill (Republican 35-19)
Status: (Engrossed - Dead) 2012-12-05 - Committee Report - S [HB239 Detail]
Download: Ohio-2011-HB239-Comm_Sub.html
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Representative Stautberg
Cosponsors:
Representatives Balderson, Blair, Blessing, Coley, Combs, Derickson, Dovilla, Gardner, Grossman, Letson, Maag, McClain, Pillich, Ruhl, Sears, Szollosi, Uecker, Weddington, Wachtmann, Fende, Antonio, Boyd, Carney, Garland, Hackett, Johnson, Pelanda, Smith, Amstutz, Anielski, Baker, Beck, Bubp, Celeste, DeVitis, Gerberry, Hagan, C., Hall, Heard, Hill, Luckie, Lynch, Mallory, McGregor, Milkovich, Newbold, O'Brien, Stinziano, Terhar, Winburn, Yuko Speaker Batchelder
Senator Beagle
To amend section 5747.01 of the Revised Code to | 1 |
exempt retirement pay related to service in the | 2 |
Commissioned Corps of the National Oceanic and | 3 |
Atmospheric Administration and the Commissioned | 4 |
Corps of the Public Health Service. | 5 |
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That section 5747.01 of the Revised Code be | 6 |
amended to read as follows: | 7 |
Sec. 5747.01. Except as otherwise expressly provided or | 8 |
clearly appearing from the context, any term used in this chapter | 9 |
that is not otherwise defined in this section has the same meaning | 10 |
as when used in a comparable context in the laws of the United | 11 |
States relating to federal income taxes or if not used in a | 12 |
comparable context in those laws, has the same meaning as in | 13 |
section 5733.40 of the Revised Code. Any reference in this chapter | 14 |
to the Internal Revenue Code includes other laws of the United | 15 |
States relating to federal income taxes. | 16 |
As used in this chapter: | 17 |
(A) "Adjusted gross income" or "Ohio adjusted gross income" | 18 |
means federal adjusted gross income, as defined and used in the | 19 |
Internal Revenue Code, adjusted as provided in this section: | 20 |
(1) Add interest or dividends on obligations or securities of | 21 |
any state or of any political subdivision or authority of any | 22 |
state, other than this state and its subdivisions and authorities. | 23 |
(2) Add interest or dividends on obligations of any | 24 |
authority, commission, instrumentality, territory, or possession | 25 |
of the United States to the extent that the interest or dividends | 26 |
are exempt from federal income taxes but not from state income | 27 |
taxes. | 28 |
(3) Deduct interest or dividends on obligations of the United | 29 |
States and its territories and possessions or of any authority, | 30 |
commission, or instrumentality of the United States to the extent | 31 |
that the interest or dividends are included in federal adjusted | 32 |
gross income but exempt from state income taxes under the laws of | 33 |
the United States. | 34 |
(4) Deduct disability and survivor's benefits to the extent | 35 |
included in federal adjusted gross income. | 36 |
(5) Deduct benefits under Title II of the Social Security Act | 37 |
and tier 1 railroad retirement benefits to the extent included in | 38 |
federal adjusted gross income under section 86 of the Internal | 39 |
Revenue Code. | 40 |
(6) In the case of a taxpayer who is a beneficiary of a trust | 41 |
that makes an accumulation distribution as defined in section 665 | 42 |
of the Internal Revenue Code, add, for the beneficiary's taxable | 43 |
years beginning before 2002, the portion, if any, of such | 44 |
distribution that does not exceed the undistributed net income of | 45 |
the trust for the three taxable years preceding the taxable year | 46 |
in which the distribution is made to the extent that the portion | 47 |
was not included in the trust's taxable income for any of the | 48 |
trust's taxable years beginning in 2002 or thereafter. | 49 |
"Undistributed net income of a trust" means the taxable income of | 50 |
the trust increased by (a)(i) the additions to adjusted gross | 51 |
income required under division (A) of this section and (ii) the | 52 |
personal exemptions allowed to the trust pursuant to section | 53 |
642(b) of the Internal Revenue Code, and decreased by (b)(i) the | 54 |
deductions to adjusted gross income required under division (A) of | 55 |
this section, (ii) the amount of federal income taxes attributable | 56 |
to such income, and (iii) the amount of taxable income that has | 57 |
been included in the adjusted gross income of a beneficiary by | 58 |
reason of a prior accumulation distribution. Any undistributed net | 59 |
income included in the adjusted gross income of a beneficiary | 60 |
shall reduce the undistributed net income of the trust commencing | 61 |
with the earliest years of the accumulation period. | 62 |
(7) Deduct the amount of wages and salaries, if any, not | 63 |
otherwise allowable as a deduction but that would have been | 64 |
allowable as a deduction in computing federal adjusted gross | 65 |
income for the taxable year, had the targeted jobs credit allowed | 66 |
and determined under sections 38, 51, and 52 of the Internal | 67 |
Revenue Code not been in effect. | 68 |
(8) Deduct any interest or interest equivalent on public | 69 |
obligations and purchase obligations to the extent that the | 70 |
interest or interest equivalent is included in federal adjusted | 71 |
gross income. | 72 |
(9) Add any loss or deduct any gain resulting from the sale, | 73 |
exchange, or other disposition of public obligations to the extent | 74 |
that the loss has been deducted or the gain has been included in | 75 |
computing federal adjusted gross income. | 76 |
(10) Deduct or add amounts, as provided under section 5747.70 | 77 |
of the Revised Code, related to contributions to variable college | 78 |
savings program accounts made or tuition units purchased pursuant | 79 |
to Chapter 3334. of the Revised Code. | 80 |
(11)(a) Deduct, to the extent not otherwise allowable as a | 81 |
deduction or exclusion in computing federal or Ohio adjusted gross | 82 |
income for the taxable year, the amount the taxpayer paid during | 83 |
the taxable year for medical care insurance and qualified | 84 |
long-term care insurance for the taxpayer, the taxpayer's spouse, | 85 |
and dependents. No deduction for medical care insurance under | 86 |
division (A)(11) of this section shall be allowed either to any | 87 |
taxpayer who is eligible to participate in any subsidized health | 88 |
plan maintained by any employer of the taxpayer or of the | 89 |
taxpayer's spouse, or to any taxpayer who is entitled to, or on | 90 |
application would be entitled to, benefits under part A of Title | 91 |
XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C. | 92 |
301, as amended. For the purposes of division (A)(11)(a) of this | 93 |
section, "subsidized health plan" means a health plan for which | 94 |
the employer pays any portion of the plan's cost. The deduction | 95 |
allowed under division (A)(11)(a) of this section shall be the net | 96 |
of any related premium refunds, related premium reimbursements, or | 97 |
related insurance premium dividends received during the taxable | 98 |
year. | 99 |
(b) Deduct, to the extent not otherwise deducted or excluded | 100 |
in computing federal or Ohio adjusted gross income during the | 101 |
taxable year, the amount the taxpayer paid during the taxable | 102 |
year, not compensated for by any insurance or otherwise, for | 103 |
medical care of the taxpayer, the taxpayer's spouse, and | 104 |
dependents, to the extent the expenses exceed seven and one-half | 105 |
per cent of the taxpayer's federal adjusted gross income. | 106 |
(c) Deduct, to the extent not otherwise deducted or excluded | 107 |
in computing federal or Ohio adjusted gross income, any amount | 108 |
included in federal adjusted gross income under section 105 or not | 109 |
excluded under section 106 of the Internal Revenue Code solely | 110 |
because it relates to an accident and health plan for a person who | 111 |
otherwise would be a "qualifying relative" and thus a "dependent" | 112 |
under section 152 of the Internal Revenue Code but for the fact | 113 |
that the person fails to meet the income and support limitations | 114 |
under section 152(d)(1)(B) and (C) of the Internal Revenue Code. | 115 |
(d) For purposes of division (A)(11) of this section, | 116 |
"medical care" has the meaning given in section 213 of the | 117 |
Internal Revenue Code, subject to the special rules, limitations, | 118 |
and exclusions set forth therein, and "qualified long-term care" | 119 |
has the same meaning given in section 7702B(c) of the Internal | 120 |
Revenue Code. Solely for purposes of divisions (A)(11)(a) and (c) | 121 |
of this section, "dependent" includes a person who otherwise would | 122 |
be a "qualifying relative" and thus a "dependent" under section | 123 |
152 of the Internal Revenue Code but for the fact that the person | 124 |
fails to meet the income and support limitations under section | 125 |
152(d)(1)(B) and (C) of the Internal Revenue Code. | 126 |
(12)(a) Deduct any amount included in federal adjusted gross | 127 |
income solely because the amount represents a reimbursement or | 128 |
refund of expenses that in any year the taxpayer had deducted as | 129 |
an itemized deduction pursuant to section 63 of the Internal | 130 |
Revenue Code and applicable United States department of the | 131 |
treasury regulations. The deduction otherwise allowed under | 132 |
division (A)(12)(a) of this section shall be reduced to the extent | 133 |
the reimbursement is attributable to an amount the taxpayer | 134 |
deducted under this section in any taxable year. | 135 |
(b) Add any amount not otherwise included in Ohio adjusted | 136 |
gross income for any taxable year to the extent that the amount is | 137 |
attributable to the recovery during the taxable year of any amount | 138 |
deducted or excluded in computing federal or Ohio adjusted gross | 139 |
income in any taxable year. | 140 |
(13) Deduct any portion of the deduction described in section | 141 |
1341(a)(2) of the Internal Revenue Code, for repaying previously | 142 |
reported income received under a claim of right, that meets both | 143 |
of the following requirements: | 144 |
(a) It is allowable for repayment of an item that was | 145 |
included in the taxpayer's adjusted gross income for a prior | 146 |
taxable year and did not qualify for a credit under division (A) | 147 |
or (B) of section 5747.05 of the Revised Code for that year; | 148 |
(b) It does not otherwise reduce the taxpayer's adjusted | 149 |
gross income for the current or any other taxable year. | 150 |
(14) Deduct an amount equal to the deposits made to, and net | 151 |
investment earnings of, a medical savings account during the | 152 |
taxable year, in accordance with section 3924.66 of the Revised | 153 |
Code. The deduction allowed by division (A)(14) of this section | 154 |
does not apply to medical savings account deposits and earnings | 155 |
otherwise deducted or excluded for the current or any other | 156 |
taxable year from the taxpayer's federal adjusted gross income. | 157 |
(15)(a) Add an amount equal to the funds withdrawn from a | 158 |
medical savings account during the taxable year, and the net | 159 |
investment earnings on those funds, when the funds withdrawn were | 160 |
used for any purpose other than to reimburse an account holder | 161 |
for, or to pay, eligible medical expenses, in accordance with | 162 |
section 3924.66 of the Revised Code; | 163 |
(b) Add the amounts distributed from a medical savings | 164 |
account under division (A)(2) of section 3924.68 of the Revised | 165 |
Code during the taxable year. | 166 |
(16) Add any amount claimed as a credit under section | 167 |
5747.059 of the Revised Code to the extent that such amount | 168 |
satisfies either of the following: | 169 |
(a) The amount was deducted or excluded from the computation | 170 |
of the taxpayer's federal adjusted gross income as required to be | 171 |
reported for the taxpayer's taxable year under the Internal | 172 |
Revenue Code; | 173 |
(b) The amount resulted in a reduction of the taxpayer's | 174 |
federal adjusted gross income as required to be reported for any | 175 |
of the taxpayer's taxable years under the Internal Revenue Code. | 176 |
(17) Deduct the amount contributed by the taxpayer to an | 177 |
individual development account program established by a county | 178 |
department of job and family services pursuant to sections 329.11 | 179 |
to 329.14 of the Revised Code for the purpose of matching funds | 180 |
deposited by program participants. On request of the tax | 181 |
commissioner, the taxpayer shall provide any information that, in | 182 |
the tax commissioner's opinion, is necessary to establish the | 183 |
amount deducted under division (A)(17) of this section. | 184 |
(18) Beginning in taxable year 2001 but not for any taxable | 185 |
year beginning after December 31, 2005, if the taxpayer is married | 186 |
and files a joint return and the combined federal adjusted gross | 187 |
income of the taxpayer and the taxpayer's spouse for the taxable | 188 |
year does not exceed one hundred thousand dollars, or if the | 189 |
taxpayer is single and has a federal adjusted gross income for the | 190 |
taxable year not exceeding fifty thousand dollars, deduct amounts | 191 |
paid during the taxable year for qualified tuition and fees paid | 192 |
to an eligible institution for the taxpayer, the taxpayer's | 193 |
spouse, or any dependent of the taxpayer, who is a resident of | 194 |
this state and is enrolled in or attending a program that | 195 |
culminates in a degree or diploma at an eligible institution. The | 196 |
deduction may be claimed only to the extent that qualified tuition | 197 |
and fees are not otherwise deducted or excluded for any taxable | 198 |
year from federal or Ohio adjusted gross income. The deduction may | 199 |
not be claimed for educational expenses for which the taxpayer | 200 |
claims a credit under section 5747.27 of the Revised Code. | 201 |
(19) Add any reimbursement received during the taxable year | 202 |
of any amount the taxpayer deducted under division (A)(18) of this | 203 |
section in any previous taxable year to the extent the amount is | 204 |
not otherwise included in Ohio adjusted gross income. | 205 |
(20)(a)(i) Add five-sixths of the amount of depreciation | 206 |
expense allowed by subsection (k) of section 168 of the Internal | 207 |
Revenue Code, including the taxpayer's proportionate or | 208 |
distributive share of the amount of depreciation expense allowed | 209 |
by that subsection to a pass-through entity in which the taxpayer | 210 |
has a direct or indirect ownership interest. | 211 |
(ii) Add five-sixths of the amount of qualifying section 179 | 212 |
depreciation expense, including a person's proportionate or | 213 |
distributive share of the amount of qualifying section 179 | 214 |
depreciation expense allowed to any pass-through entity in which | 215 |
the person has a direct or indirect ownership. For the purposes of | 216 |
this division, "qualifying section 179 depreciation expense" means | 217 |
the difference between (I) the amount of depreciation expense | 218 |
directly or indirectly allowed to the taxpayer under section 179 | 219 |
of the Internal Revenue Code, and (II) the amount of depreciation | 220 |
expense directly or indirectly allowed to the taxpayer under | 221 |
section 179 of the Internal Revenue Code as that section existed | 222 |
on December 31, 2002. | 223 |
The tax commissioner, under procedures established by the | 224 |
commissioner, may waive the add-backs related to a pass-through | 225 |
entity if the taxpayer owns, directly or indirectly, less than | 226 |
five per cent of the pass-through entity. | 227 |
(b) Nothing in division (A)(20) of this section shall be | 228 |
construed to adjust or modify the adjusted basis of any asset. | 229 |
(c) To the extent the add-back required under division | 230 |
(A)(20)(a) of this section is attributable to property generating | 231 |
nonbusiness income or loss allocated under section 5747.20 of the | 232 |
Revised Code, the add-back shall be sitused to the same location | 233 |
as the nonbusiness income or loss generated by the property for | 234 |
the purpose of determining the credit under division (A) of | 235 |
section 5747.05 of the Revised Code. Otherwise, the add-back shall | 236 |
be apportioned, subject to one or more of the four alternative | 237 |
methods of apportionment enumerated in section 5747.21 of the | 238 |
Revised Code. | 239 |
(d) For the purposes of division (A) of this section, net | 240 |
operating loss carryback and carryforward shall not include | 241 |
five-sixths of the allowance of any net operating loss deduction | 242 |
carryback or carryforward to the taxable year to the extent such | 243 |
loss resulted from depreciation allowed by section 168(k) of the | 244 |
Internal Revenue Code and by the qualifying section 179 | 245 |
depreciation expense amount. | 246 |
(21)(a) If the taxpayer was required to add an amount under | 247 |
division (A)(20)(a) of this section for a taxable year, deduct | 248 |
one-fifth of the amount so added for each of the five succeeding | 249 |
taxable years. | 250 |
(b) If the amount deducted under division (A)(21)(a) of this | 251 |
section is attributable to an add-back allocated under division | 252 |
(A)(20)(c) of this section, the amount deducted shall be sitused | 253 |
to the same location. Otherwise, the add-back shall be apportioned | 254 |
using the apportionment factors for the taxable year in which the | 255 |
deduction is taken, subject to one or more of the four alternative | 256 |
methods of apportionment enumerated in section 5747.21 of the | 257 |
Revised Code. | 258 |
(c) No deduction is available under division (A)(21)(a) of | 259 |
this section with regard to any depreciation allowed by section | 260 |
168(k) of the Internal Revenue Code and by the qualifying section | 261 |
179 depreciation expense amount to the extent that such | 262 |
depreciation resulted in or increased a federal net operating loss | 263 |
carryback or carryforward to a taxable year to which division | 264 |
(A)(20)(d) of this section does not apply. | 265 |
(22) Deduct, to the extent not otherwise deducted or excluded | 266 |
in computing federal or Ohio adjusted gross income for the taxable | 267 |
year, the amount the taxpayer received during the taxable year as | 268 |
reimbursement for life insurance premiums under section 5919.31 of | 269 |
the Revised Code. | 270 |
(23) Deduct, to the extent not otherwise deducted or excluded | 271 |
in computing federal or Ohio adjusted gross income for the taxable | 272 |
year, the amount the taxpayer received during the taxable year as | 273 |
a death benefit paid by the adjutant general under section 5919.33 | 274 |
of the Revised Code. | 275 |
(24) Deduct, to the extent included in federal adjusted gross | 276 |
income and not otherwise allowable as a deduction or exclusion in | 277 |
computing federal or Ohio adjusted gross income for the taxable | 278 |
year, military pay and allowances received by the taxpayer during | 279 |
the taxable year for active duty service in the United States | 280 |
army, air force, navy, marine corps, or coast guard or reserve | 281 |
components thereof or the national guard. The deduction may not be | 282 |
claimed for military pay and allowances received by the taxpayer | 283 |
while the taxpayer is stationed in this state. | 284 |
(25) Deduct, to the extent not otherwise allowable as a | 285 |
deduction or exclusion in computing federal or Ohio adjusted gross | 286 |
income for the taxable year and not otherwise compensated for by | 287 |
any other source, the amount of qualified organ donation expenses | 288 |
incurred by the taxpayer during the taxable year, not to exceed | 289 |
ten thousand dollars. A taxpayer may deduct qualified organ | 290 |
donation expenses only once for all taxable years beginning with | 291 |
taxable years beginning in 2007. | 292 |
For the purposes of division (A)(25) of this section: | 293 |
(a) "Human organ" means all or any portion of a human liver, | 294 |
pancreas, kidney, intestine, or lung, and any portion of human | 295 |
bone marrow. | 296 |
(b) "Qualified organ donation expenses" means travel | 297 |
expenses, lodging expenses, and wages and salary forgone by a | 298 |
taxpayer in connection with the taxpayer's donation, while living, | 299 |
of one or more of the taxpayer's human organs to another human | 300 |
being. | 301 |
(26) Deduct, to the extent not otherwise deducted or excluded | 302 |
in computing federal or Ohio adjusted gross income for the taxable | 303 |
year, amounts received by the taxpayer as retired | 304 |
personnel pay for service in the | 305 |
306 | |
components thereof, or the national guard, or received by the | 307 |
surviving spouse or former spouse of such a taxpayer under the | 308 |
survivor benefit plan on account of such a taxpayer's death. If | 309 |
the taxpayer receives income on account of retirement paid under | 310 |
the federal civil service retirement system or federal employees | 311 |
retirement system, or under any successor retirement program | 312 |
enacted by the congress of the United States that is established | 313 |
and maintained for retired employees of the United States | 314 |
government, and such retirement income is based, in whole or in | 315 |
part, on credit for the taxpayer's | 316 |
deduction allowed under this division shall include only that | 317 |
portion of such retirement income that is attributable to the | 318 |
taxpayer's | 319 |
of such retirement income is otherwise included in federal | 320 |
adjusted gross income and is not otherwise deducted under this | 321 |
section. Any amount deducted under division (A)(26) of this | 322 |
section is not included in a taxpayer's adjusted gross income for | 323 |
the purposes of section 5747.055 of the Revised Code. No amount | 324 |
may be deducted under division (A)(26) of this section on the | 325 |
basis of which a credit was claimed under section 5747.055 of the | 326 |
Revised Code. | 327 |
(27) Deduct, to the extent not otherwise deducted or excluded | 328 |
in computing federal or Ohio adjusted gross income for the taxable | 329 |
year, the amount the taxpayer received during the taxable year | 330 |
from the military injury relief fund created in section 5101.98 of | 331 |
the Revised Code. | 332 |
(28) Deduct, to the extent not otherwise deducted or excluded | 333 |
in computing federal or Ohio adjusted gross income for the taxable | 334 |
year, the amount the taxpayer received as a veterans bonus during | 335 |
the taxable year from the Ohio department of veterans services as | 336 |
authorized by Section 2r of Article VIII, Ohio Constitution. | 337 |
(29) Deduct, to the extent not otherwise deducted or excluded | 338 |
in computing federal or Ohio adjusted gross income for the taxable | 339 |
year, any loss from wagering transactions that is allowed as an | 340 |
itemized deduction under section 165 of the Internal Revenue Code | 341 |
and that the taxpayer deducted in computing federal taxable | 342 |
income. | 343 |
(B) "Business income" means income, including gain or loss, | 344 |
arising from transactions, activities, and sources in the regular | 345 |
course of a trade or business and includes income, gain, or loss | 346 |
from real property, tangible property, and intangible property if | 347 |
the acquisition, rental, management, and disposition of the | 348 |
property constitute integral parts of the regular course of a | 349 |
trade or business operation. "Business income" includes income, | 350 |
including gain or loss, from a partial or complete liquidation of | 351 |
a business, including, but not limited to, gain or loss from the | 352 |
sale or other disposition of goodwill. | 353 |
(C) "Nonbusiness income" means all income other than business | 354 |
income and may include, but is not limited to, compensation, rents | 355 |
and royalties from real or tangible personal property, capital | 356 |
gains, interest, dividends and distributions, patent or copyright | 357 |
royalties, or lottery winnings, prizes, and awards. | 358 |
(D) "Compensation" means any form of remuneration paid to an | 359 |
employee for personal services. | 360 |
(E) "Fiduciary" means a guardian, trustee, executor, | 361 |
administrator, receiver, conservator, or any other person acting | 362 |
in any fiduciary capacity for any individual, trust, or estate. | 363 |
(F) "Fiscal year" means an accounting period of twelve months | 364 |
ending on the last day of any month other than December. | 365 |
(G) "Individual" means any natural person. | 366 |
(H) "Internal Revenue Code" means the "Internal Revenue Code | 367 |
of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended. | 368 |
(I) "Resident" means any of the following, provided that | 369 |
division (I)(3) of this section applies only to taxable years of a | 370 |
trust beginning in 2002 or thereafter: | 371 |
(1) An individual who is domiciled in this state, subject to | 372 |
section 5747.24 of the Revised Code; | 373 |
(2) The estate of a decedent who at the time of death was | 374 |
domiciled in this state. The domicile tests of section 5747.24 of | 375 |
the Revised Code are not controlling for purposes of division | 376 |
(I)(2) of this section. | 377 |
(3) A trust that, in whole or part, resides in this state. If | 378 |
only part of a trust resides in this state, the trust is a | 379 |
resident only with respect to that part. | 380 |
For the purposes of division (I)(3) of this section: | 381 |
(a) A trust resides in this state for the trust's current | 382 |
taxable year to the extent, as described in division (I)(3)(d) of | 383 |
this section, that the trust consists directly or indirectly, in | 384 |
whole or in part, of assets, net of any related liabilities, that | 385 |
were transferred, or caused to be transferred, directly or | 386 |
indirectly, to the trust by any of the following: | 387 |
(i) A person, a court, or a governmental entity or | 388 |
instrumentality on account of the death of a decedent, but only if | 389 |
the trust is described in division (I)(3)(e)(i) or (ii) of this | 390 |
section; | 391 |
(ii) A person who was domiciled in this state for the | 392 |
purposes of this chapter when the person directly or indirectly | 393 |
transferred assets to an irrevocable trust, but only if at least | 394 |
one of the trust's qualifying beneficiaries is domiciled in this | 395 |
state for the purposes of this chapter during all or some portion | 396 |
of the trust's current taxable year; | 397 |
(iii) A person who was domiciled in this state for the | 398 |
purposes of this chapter when the trust document or instrument or | 399 |
part of the trust document or instrument became irrevocable, but | 400 |
only if at least one of the trust's qualifying beneficiaries is a | 401 |
resident domiciled in this state for the purposes of this chapter | 402 |
during all or some portion of the trust's current taxable year. If | 403 |
a trust document or instrument became irrevocable upon the death | 404 |
of a person who at the time of death was domiciled in this state | 405 |
for purposes of this chapter, that person is a person described in | 406 |
division (I)(3)(a)(iii) of this section. | 407 |
(b) A trust is irrevocable to the extent that the transferor | 408 |
is not considered to be the owner of the net assets of the trust | 409 |
under sections 671 to 678 of the Internal Revenue Code. | 410 |
(c) With respect to a trust other than a charitable lead | 411 |
trust, "qualifying beneficiary" has the same meaning as "potential | 412 |
current beneficiary" as defined in section 1361(e)(2) of the | 413 |
Internal Revenue Code, and with respect to a charitable lead trust | 414 |
"qualifying beneficiary" is any current, future, or contingent | 415 |
beneficiary, but with respect to any trust "qualifying | 416 |
beneficiary" excludes a person or a governmental entity or | 417 |
instrumentality to any of which a contribution would qualify for | 418 |
the charitable deduction under section 170 of the Internal Revenue | 419 |
Code. | 420 |
(d) For the purposes of division (I)(3)(a) of this section, | 421 |
the extent to which a trust consists directly or indirectly, in | 422 |
whole or in part, of assets, net of any related liabilities, that | 423 |
were transferred directly or indirectly, in whole or part, to the | 424 |
trust by any of the sources enumerated in that division shall be | 425 |
ascertained by multiplying the fair market value of the trust's | 426 |
assets, net of related liabilities, by the qualifying ratio, which | 427 |
shall be computed as follows: | 428 |
(i) The first time the trust receives assets, the numerator | 429 |
of the qualifying ratio is the fair market value of those assets | 430 |
at that time, net of any related liabilities, from sources | 431 |
enumerated in division (I)(3)(a) of this section. The denominator | 432 |
of the qualifying ratio is the fair market value of all the | 433 |
trust's assets at that time, net of any related liabilities. | 434 |
(ii) Each subsequent time the trust receives assets, a | 435 |
revised qualifying ratio shall be computed. The numerator of the | 436 |
revised qualifying ratio is the sum of (1) the fair market value | 437 |
of the trust's assets immediately prior to the subsequent | 438 |
transfer, net of any related liabilities, multiplied by the | 439 |
qualifying ratio last computed without regard to the subsequent | 440 |
transfer, and (2) the fair market value of the subsequently | 441 |
transferred assets at the time transferred, net of any related | 442 |
liabilities, from sources enumerated in division (I)(3)(a) of this | 443 |
section. The denominator of the revised qualifying ratio is the | 444 |
fair market value of all the trust's assets immediately after the | 445 |
subsequent transfer, net of any related liabilities. | 446 |
(iii) Whether a transfer to the trust is by or from any of | 447 |
the sources enumerated in division (I)(3)(a) of this section shall | 448 |
be ascertained without regard to the domicile of the trust's | 449 |
beneficiaries. | 450 |
(e) For the purposes of division (I)(3)(a)(i) of this | 451 |
section: | 452 |
(i) A trust is described in division (I)(3)(e)(i) of this | 453 |
section if the trust is a testamentary trust and the testator of | 454 |
that testamentary trust was domiciled in this state at the time of | 455 |
the testator's death for purposes of the taxes levied under | 456 |
Chapter 5731. of the Revised Code. | 457 |
(ii) A trust is described in division (I)(3)(e)(ii) of this | 458 |
section if the transfer is a qualifying transfer described in any | 459 |
of divisions (I)(3)(f)(i) to (vi) of this section, the trust is an | 460 |
irrevocable inter vivos trust, and at least one of the trust's | 461 |
qualifying beneficiaries is domiciled in this state for purposes | 462 |
of this chapter during all or some portion of the trust's current | 463 |
taxable year. | 464 |
(f) For the purposes of division (I)(3)(e)(ii) of this | 465 |
section, a "qualifying transfer" is a transfer of assets, net of | 466 |
any related liabilities, directly or indirectly to a trust, if the | 467 |
transfer is described in any of the following: | 468 |
(i) The transfer is made to a trust, created by the decedent | 469 |
before the decedent's death and while the decedent was domiciled | 470 |
in this state for the purposes of this chapter, and, prior to the | 471 |
death of the decedent, the trust became irrevocable while the | 472 |
decedent was domiciled in this state for the purposes of this | 473 |
chapter. | 474 |
(ii) The transfer is made to a trust to which the decedent, | 475 |
prior to the decedent's death, had directly or indirectly | 476 |
transferred assets, net of any related liabilities, while the | 477 |
decedent was domiciled in this state for the purposes of this | 478 |
chapter, and prior to the death of the decedent the trust became | 479 |
irrevocable while the decedent was domiciled in this state for the | 480 |
purposes of this chapter. | 481 |
(iii) The transfer is made on account of a contractual | 482 |
relationship existing directly or indirectly between the | 483 |
transferor and either the decedent or the estate of the decedent | 484 |
at any time prior to the date of the decedent's death, and the | 485 |
decedent was domiciled in this state at the time of death for | 486 |
purposes of the taxes levied under Chapter 5731. of the Revised | 487 |
Code. | 488 |
(iv) The transfer is made to a trust on account of a | 489 |
contractual relationship existing directly or indirectly between | 490 |
the transferor and another person who at the time of the | 491 |
decedent's death was domiciled in this state for purposes of this | 492 |
chapter. | 493 |
(v) The transfer is made to a trust on account of the will of | 494 |
a testator who was domiciled in this state at the time of the | 495 |
testator's death for purposes of the taxes levied under Chapter | 496 |
5731. of the Revised Code. | 497 |
(vi) The transfer is made to a trust created by or caused to | 498 |
be created by a court, and the trust was directly or indirectly | 499 |
created in connection with or as a result of the death of an | 500 |
individual who, for purposes of the taxes levied under Chapter | 501 |
5731. of the Revised Code, was domiciled in this state at the time | 502 |
of the individual's death. | 503 |
(g) The tax commissioner may adopt rules to ascertain the | 504 |
part of a trust residing in this state. | 505 |
(J) "Nonresident" means an individual or estate that is not a | 506 |
resident. An individual who is a resident for only part of a | 507 |
taxable year is a nonresident for the remainder of that taxable | 508 |
year. | 509 |
(K) "Pass-through entity" has the same meaning as in section | 510 |
5733.04 of the Revised Code. | 511 |
(L) "Return" means the notifications and reports required to | 512 |
be filed pursuant to this chapter for the purpose of reporting the | 513 |
tax due and includes declarations of estimated tax when so | 514 |
required. | 515 |
(M) "Taxable year" means the calendar year or the taxpayer's | 516 |
fiscal year ending during the calendar year, or fractional part | 517 |
thereof, upon which the adjusted gross income is calculated | 518 |
pursuant to this chapter. | 519 |
(N) "Taxpayer" means any person subject to the tax imposed by | 520 |
section 5747.02 of the Revised Code or any pass-through entity | 521 |
that makes the election under division (D) of section 5747.08 of | 522 |
the Revised Code. | 523 |
(O) "Dependents" means dependents as defined in the Internal | 524 |
Revenue Code and as claimed in the taxpayer's federal income tax | 525 |
return for the taxable year or which the taxpayer would have been | 526 |
permitted to claim had the taxpayer filed a federal income tax | 527 |
return. | 528 |
(P) "Principal county of employment" means, in the case of a | 529 |
nonresident, the county within the state in which a taxpayer | 530 |
performs services for an employer or, if those services are | 531 |
performed in more than one county, the county in which the major | 532 |
portion of the services are performed. | 533 |
(Q) As used in sections 5747.50 to 5747.55 of the Revised | 534 |
Code: | 535 |
(1) "Subdivision" means any county, municipal corporation, | 536 |
park district, or township. | 537 |
(2) "Essential local government purposes" includes all | 538 |
functions that any subdivision is required by general law to | 539 |
exercise, including like functions that are exercised under a | 540 |
charter adopted pursuant to the Ohio Constitution. | 541 |
(R) "Overpayment" means any amount already paid that exceeds | 542 |
the figure determined to be the correct amount of the tax. | 543 |
(S) "Taxable income" or "Ohio taxable income" applies only to | 544 |
estates and trusts, and means federal taxable income, as defined | 545 |
and used in the Internal Revenue Code, adjusted as follows: | 546 |
(1) Add interest or dividends, net of ordinary, necessary, | 547 |
and reasonable expenses not deducted in computing federal taxable | 548 |
income, on obligations or securities of any state or of any | 549 |
political subdivision or authority of any state, other than this | 550 |
state and its subdivisions and authorities, but only to the extent | 551 |
that such net amount is not otherwise includible in Ohio taxable | 552 |
income and is described in either division (S)(1)(a) or (b) of | 553 |
this section: | 554 |
(a) The net amount is not attributable to the S portion of an | 555 |
electing small business trust and has not been distributed to | 556 |
beneficiaries for the taxable year; | 557 |
(b) The net amount is attributable to the S portion of an | 558 |
electing small business trust for the taxable year. | 559 |
(2) Add interest or dividends, net of ordinary, necessary, | 560 |
and reasonable expenses not deducted in computing federal taxable | 561 |
income, on obligations of any authority, commission, | 562 |
instrumentality, territory, or possession of the United States to | 563 |
the extent that the interest or dividends are exempt from federal | 564 |
income taxes but not from state income taxes, but only to the | 565 |
extent that such net amount is not otherwise includible in Ohio | 566 |
taxable income and is described in either division (S)(1)(a) or | 567 |
(b) of this section; | 568 |
(3) Add the amount of personal exemption allowed to the | 569 |
estate pursuant to section 642(b) of the Internal Revenue Code; | 570 |
(4) Deduct interest or dividends, net of related expenses | 571 |
deducted in computing federal taxable income, on obligations of | 572 |
the United States and its territories and possessions or of any | 573 |
authority, commission, or instrumentality of the United States to | 574 |
the extent that the interest or dividends are exempt from state | 575 |
taxes under the laws of the United States, but only to the extent | 576 |
that such amount is included in federal taxable income and is | 577 |
described in either division (S)(1)(a) or (b) of this section; | 578 |
(5) Deduct the amount of wages and salaries, if any, not | 579 |
otherwise allowable as a deduction but that would have been | 580 |
allowable as a deduction in computing federal taxable income for | 581 |
the taxable year, had the targeted jobs credit allowed under | 582 |
sections 38, 51, and 52 of the Internal Revenue Code not been in | 583 |
effect, but only to the extent such amount relates either to | 584 |
income included in federal taxable income for the taxable year or | 585 |
to income of the S portion of an electing small business trust for | 586 |
the taxable year; | 587 |
(6) Deduct any interest or interest equivalent, net of | 588 |
related expenses deducted in computing federal taxable income, on | 589 |
public obligations and purchase obligations, but only to the | 590 |
extent that such net amount relates either to income included in | 591 |
federal taxable income for the taxable year or to income of the S | 592 |
portion of an electing small business trust for the taxable year; | 593 |
(7) Add any loss or deduct any gain resulting from sale, | 594 |
exchange, or other disposition of public obligations to the extent | 595 |
that such loss has been deducted or such gain has been included in | 596 |
computing either federal taxable income or income of the S portion | 597 |
of an electing small business trust for the taxable year; | 598 |
(8) Except in the case of the final return of an estate, add | 599 |
any amount deducted by the taxpayer on both its Ohio estate tax | 600 |
return pursuant to section 5731.14 of the Revised Code, and on its | 601 |
federal income tax return in determining federal taxable income; | 602 |
(9)(a) Deduct any amount included in federal taxable income | 603 |
solely because the amount represents a reimbursement or refund of | 604 |
expenses that in a previous year the decedent had deducted as an | 605 |
itemized deduction pursuant to section 63 of the Internal Revenue | 606 |
Code and applicable treasury regulations. The deduction otherwise | 607 |
allowed under division (S)(9)(a) of this section shall be reduced | 608 |
to the extent the reimbursement is attributable to an amount the | 609 |
taxpayer or decedent deducted under this section in any taxable | 610 |
year. | 611 |
(b) Add any amount not otherwise included in Ohio taxable | 612 |
income for any taxable year to the extent that the amount is | 613 |
attributable to the recovery during the taxable year of any amount | 614 |
deducted or excluded in computing federal or Ohio taxable income | 615 |
in any taxable year, but only to the extent such amount has not | 616 |
been distributed to beneficiaries for the taxable year. | 617 |
(10) Deduct any portion of the deduction described in section | 618 |
1341(a)(2) of the Internal Revenue Code, for repaying previously | 619 |
reported income received under a claim of right, that meets both | 620 |
of the following requirements: | 621 |
(a) It is allowable for repayment of an item that was | 622 |
included in the taxpayer's taxable income or the decedent's | 623 |
adjusted gross income for a prior taxable year and did not qualify | 624 |
for a credit under division (A) or (B) of section 5747.05 of the | 625 |
Revised Code for that year. | 626 |
(b) It does not otherwise reduce the taxpayer's taxable | 627 |
income or the decedent's adjusted gross income for the current or | 628 |
any other taxable year. | 629 |
(11) Add any amount claimed as a credit under section | 630 |
5747.059 of the Revised Code to the extent that the amount | 631 |
satisfies either of the following: | 632 |
(a) The amount was deducted or excluded from the computation | 633 |
of the taxpayer's federal taxable income as required to be | 634 |
reported for the taxpayer's taxable year under the Internal | 635 |
Revenue Code; | 636 |
(b) The amount resulted in a reduction in the taxpayer's | 637 |
federal taxable income as required to be reported for any of the | 638 |
taxpayer's taxable years under the Internal Revenue Code. | 639 |
(12) Deduct any amount, net of related expenses deducted in | 640 |
computing federal taxable income, that a trust is required to | 641 |
report as farm income on its federal income tax return, but only | 642 |
if the assets of the trust include at least ten acres of land | 643 |
satisfying the definition of "land devoted exclusively to | 644 |
agricultural use" under section 5713.30 of the Revised Code, | 645 |
regardless of whether the land is valued for tax purposes as such | 646 |
land under sections 5713.30 to 5713.38 of the Revised Code. If the | 647 |
trust is a pass-through entity investor, section 5747.231 of the | 648 |
Revised Code applies in ascertaining if the trust is eligible to | 649 |
claim the deduction provided by division (S)(12) of this section | 650 |
in connection with the pass-through entity's farm income. | 651 |
Except for farm income attributable to the S portion of an | 652 |
electing small business trust, the deduction provided by division | 653 |
(S)(12) of this section is allowed only to the extent that the | 654 |
trust has not distributed such farm income. Division (S)(12) of | 655 |
this section applies only to taxable years of a trust beginning in | 656 |
2002 or thereafter. | 657 |
(13) Add the net amount of income described in section 641(c) | 658 |
of the Internal Revenue Code to the extent that amount is not | 659 |
included in federal taxable income. | 660 |
(14) Add or deduct the amount the taxpayer would be required | 661 |
to add or deduct under division (A)(20) or (21) of this section if | 662 |
the taxpayer's Ohio taxable income were computed in the same | 663 |
manner as an individual's Ohio adjusted gross income is computed | 664 |
under this section. In the case of a trust, division (S)(14) of | 665 |
this section applies only to any of the trust's taxable years | 666 |
beginning in 2002 or thereafter. | 667 |
(T) "School district income" and "school district income tax" | 668 |
have the same meanings as in section 5748.01 of the Revised Code. | 669 |
(U) As used in divisions (A)(8), (A)(9), (S)(6), and (S)(7) | 670 |
of this section, "public obligations," "purchase obligations," and | 671 |
"interest or interest equivalent" have the same meanings as in | 672 |
section 5709.76 of the Revised Code. | 673 |
(V) "Limited liability company" means any limited liability | 674 |
company formed under Chapter 1705. of the Revised Code or under | 675 |
the laws of any other state. | 676 |
(W) "Pass-through entity investor" means any person who, | 677 |
during any portion of a taxable year of a pass-through entity, is | 678 |
a partner, member, shareholder, or equity investor in that | 679 |
pass-through entity. | 680 |
(X) "Banking day" has the same meaning as in section 1304.01 | 681 |
of the Revised Code. | 682 |
(Y) "Month" means a calendar month. | 683 |
(Z) "Quarter" means the first three months, the second three | 684 |
months, the third three months, or the last three months of the | 685 |
taxpayer's taxable year. | 686 |
(AA)(1) "Eligible institution" means a state university or | 687 |
state institution of higher education as defined in section | 688 |
3345.011 of the Revised Code, or a private, nonprofit college, | 689 |
university, or other post-secondary institution located in this | 690 |
state that possesses a certificate of authorization issued by the | 691 |
Ohio board of regents pursuant to Chapter 1713. of the Revised | 692 |
Code or a certificate of registration issued by the state board of | 693 |
career colleges and schools under Chapter 3332. of the Revised | 694 |
Code. | 695 |
(2) "Qualified tuition and fees" means tuition and fees | 696 |
imposed by an eligible institution as a condition of enrollment or | 697 |
attendance, not exceeding two thousand five hundred dollars in | 698 |
each of the individual's first two years of post-secondary | 699 |
education. If the individual is a part-time student, "qualified | 700 |
tuition and fees" includes tuition and fees paid for the academic | 701 |
equivalent of the first two years of post-secondary education | 702 |
during a maximum of five taxable years, not exceeding a total of | 703 |
five thousand dollars. "Qualified tuition and fees" does not | 704 |
include: | 705 |
(a) Expenses for any course or activity involving sports, | 706 |
games, or hobbies unless the course or activity is part of the | 707 |
individual's degree or diploma program; | 708 |
(b) The cost of books, room and board, student activity fees, | 709 |
athletic fees, insurance expenses, or other expenses unrelated to | 710 |
the individual's academic course of instruction; | 711 |
(c) Tuition, fees, or other expenses paid or reimbursed | 712 |
through an employer, scholarship, grant in aid, or other | 713 |
educational benefit program. | 714 |
(BB)(1) "Modified business income" means the business income | 715 |
included in a trust's Ohio taxable income after such taxable | 716 |
income is first reduced by the qualifying trust amount, if any. | 717 |
(2) "Qualifying trust amount" of a trust means capital gains | 718 |
and losses from the sale, exchange, or other disposition of equity | 719 |
or ownership interests in, or debt obligations of, a qualifying | 720 |
investee to the extent included in the trust's Ohio taxable | 721 |
income, but only if the following requirements are satisfied: | 722 |
(a) The book value of the qualifying investee's physical | 723 |
assets in this state and everywhere, as of the last day of the | 724 |
qualifying investee's fiscal or calendar year ending immediately | 725 |
prior to the date on which the trust recognizes the gain or loss, | 726 |
is available to the trust. | 727 |
(b) The requirements of section 5747.011 of the Revised Code | 728 |
are satisfied for the trust's taxable year in which the trust | 729 |
recognizes the gain or loss. | 730 |
Any gain or loss that is not a qualifying trust amount is | 731 |
modified business income, qualifying investment income, or | 732 |
modified nonbusiness income, as the case may be. | 733 |
(3) "Modified nonbusiness income" means a trust's Ohio | 734 |
taxable income other than modified business income, other than the | 735 |
qualifying trust amount, and other than qualifying investment | 736 |
income, as defined in section 5747.012 of the Revised Code, to the | 737 |
extent such qualifying investment income is not otherwise part of | 738 |
modified business income. | 739 |
(4) "Modified Ohio taxable income" applies only to trusts, | 740 |
and means the sum of the amounts described in divisions (BB)(4)(a) | 741 |
to (c) of this section: | 742 |
(a) The fraction, calculated under section 5747.013, and | 743 |
applying section 5747.231 of the Revised Code, multiplied by the | 744 |
sum of the following amounts: | 745 |
(i) The trust's modified business income; | 746 |
(ii) The trust's qualifying investment income, as defined in | 747 |
section 5747.012 of the Revised Code, but only to the extent the | 748 |
qualifying investment income does not otherwise constitute | 749 |
modified business income and does not otherwise constitute a | 750 |
qualifying trust amount. | 751 |
(b) The qualifying trust amount multiplied by a fraction, the | 752 |
numerator of which is the sum of the book value of the qualifying | 753 |
investee's physical assets in this state on the last day of the | 754 |
qualifying investee's fiscal or calendar year ending immediately | 755 |
prior to the day on which the trust recognizes the qualifying | 756 |
trust amount, and the denominator of which is the sum of the book | 757 |
value of the qualifying investee's total physical assets | 758 |
everywhere on the last day of the qualifying investee's fiscal or | 759 |
calendar year ending immediately prior to the day on which the | 760 |
trust recognizes the qualifying trust amount. If, for a taxable | 761 |
year, the trust recognizes a qualifying trust amount with respect | 762 |
to more than one qualifying investee, the amount described in | 763 |
division (BB)(4)(b) of this section shall equal the sum of the | 764 |
products so computed for each such qualifying investee. | 765 |
(c)(i) With respect to a trust or portion of a trust that is | 766 |
a resident as ascertained in accordance with division (I)(3)(d) of | 767 |
this section, its modified nonbusiness income. | 768 |
(ii) With respect to a trust or portion of a trust that is | 769 |
not a resident as ascertained in accordance with division | 770 |
(I)(3)(d) of this section, the amount of its modified nonbusiness | 771 |
income satisfying the descriptions in divisions (B)(2) to (5) of | 772 |
section 5747.20 of the Revised Code, except as otherwise provided | 773 |
in division (BB)(4)(c)(ii) of this section. With respect to a | 774 |
trust or portion of a trust that is not a resident as ascertained | 775 |
in accordance with division (I)(3)(d) of this section, the trust's | 776 |
portion of modified nonbusiness income recognized from the sale, | 777 |
exchange, or other disposition of a debt interest in or equity | 778 |
interest in a section 5747.212 entity, as defined in section | 779 |
5747.212 of the Revised Code, without regard to division (A) of | 780 |
that section, shall not be allocated to this state in accordance | 781 |
with section 5747.20 of the Revised Code but shall be apportioned | 782 |
to this state in accordance with division (B) of section 5747.212 | 783 |
of the Revised Code without regard to division (A) of that | 784 |
section. | 785 |
If the allocation and apportionment of a trust's income under | 786 |
divisions (BB)(4)(a) and (c) of this section do not fairly | 787 |
represent the modified Ohio taxable income of the trust in this | 788 |
state, the alternative methods described in division (C) of | 789 |
section 5747.21 of the Revised Code may be applied in the manner | 790 |
and to the same extent provided in that section. | 791 |
(5)(a) Except as set forth in division (BB)(5)(b) of this | 792 |
section, "qualifying investee" means a person in which a trust has | 793 |
an equity or ownership interest, or a person or unit of government | 794 |
the debt obligations of either of which are owned by a trust. For | 795 |
the purposes of division (BB)(2)(a) of this section and for the | 796 |
purpose of computing the fraction described in division (BB)(4)(b) | 797 |
of this section, all of the following apply: | 798 |
(i) If the qualifying investee is a member of a qualifying | 799 |
controlled group on the last day of the qualifying investee's | 800 |
fiscal or calendar year ending immediately prior to the date on | 801 |
which the trust recognizes the gain or loss, then "qualifying | 802 |
investee" includes all persons in the qualifying controlled group | 803 |
on such last day. | 804 |
(ii) If the qualifying investee, or if the qualifying | 805 |
investee and any members of the qualifying controlled group of | 806 |
which the qualifying investee is a member on the last day of the | 807 |
qualifying investee's fiscal or calendar year ending immediately | 808 |
prior to the date on which the trust recognizes the gain or loss, | 809 |
separately or cumulatively own, directly or indirectly, on the | 810 |
last day of the qualifying investee's fiscal or calendar year | 811 |
ending immediately prior to the date on which the trust recognizes | 812 |
the qualifying trust amount, more than fifty per cent of the | 813 |
equity of a pass-through entity, then the qualifying investee and | 814 |
the other members are deemed to own the proportionate share of the | 815 |
pass-through entity's physical assets which the pass-through | 816 |
entity directly or indirectly owns on the last day of the | 817 |
pass-through entity's calendar or fiscal year ending within or | 818 |
with the last day of the qualifying investee's fiscal or calendar | 819 |
year ending immediately prior to the date on which the trust | 820 |
recognizes the qualifying trust amount. | 821 |
(iii) For the purposes of division (BB)(5)(a)(iii) of this | 822 |
section, "upper level pass-through entity" means a pass-through | 823 |
entity directly or indirectly owning any equity of another | 824 |
pass-through entity, and "lower level pass-through entity" means | 825 |
that other pass-through entity. | 826 |
An upper level pass-through entity, whether or not it is also | 827 |
a qualifying investee, is deemed to own, on the last day of the | 828 |
upper level pass-through entity's calendar or fiscal year, the | 829 |
proportionate share of the lower level pass-through entity's | 830 |
physical assets that the lower level pass-through entity directly | 831 |
or indirectly owns on the last day of the lower level pass-through | 832 |
entity's calendar or fiscal year ending within or with the last | 833 |
day of the upper level pass-through entity's fiscal or calendar | 834 |
year. If the upper level pass-through entity directly and | 835 |
indirectly owns less than fifty per cent of the equity of the | 836 |
lower level pass-through entity on each day of the upper level | 837 |
pass-through entity's calendar or fiscal year in which or with | 838 |
which ends the calendar or fiscal year of the lower level | 839 |
pass-through entity and if, based upon clear and convincing | 840 |
evidence, complete information about the location and cost of the | 841 |
physical assets of the lower pass-through entity is not available | 842 |
to the upper level pass-through entity, then solely for purposes | 843 |
of ascertaining if a gain or loss constitutes a qualifying trust | 844 |
amount, the upper level pass-through entity shall be deemed as | 845 |
owning no equity of the lower level pass-through entity for each | 846 |
day during the upper level pass-through entity's calendar or | 847 |
fiscal year in which or with which ends the lower level | 848 |
pass-through entity's calendar or fiscal year. Nothing in division | 849 |
(BB)(5)(a)(iii) of this section shall be construed to provide for | 850 |
any deduction or exclusion in computing any trust's Ohio taxable | 851 |
income. | 852 |
(b) With respect to a trust that is not a resident for the | 853 |
taxable year and with respect to a part of a trust that is not a | 854 |
resident for the taxable year, "qualifying investee" for that | 855 |
taxable year does not include a C corporation if both of the | 856 |
following apply: | 857 |
(i) During the taxable year the trust or part of the trust | 858 |
recognizes a gain or loss from the sale, exchange, or other | 859 |
disposition of equity or ownership interests in, or debt | 860 |
obligations of, the C corporation. | 861 |
(ii) Such gain or loss constitutes nonbusiness income. | 862 |
(6) "Available" means information is such that a person is | 863 |
able to learn of the information by the due date plus extensions, | 864 |
if any, for filing the return for the taxable year in which the | 865 |
trust recognizes the gain or loss. | 866 |
(CC) "Qualifying controlled group" has the same meaning as in | 867 |
section 5733.04 of the Revised Code. | 868 |
(DD) "Related member" has the same meaning as in section | 869 |
5733.042 of the Revised Code. | 870 |
(EE)(1) For the purposes of division (EE) of this section: | 871 |
(a) "Qualifying person" means any person other than a | 872 |
qualifying corporation. | 873 |
(b) "Qualifying corporation" means any person classified for | 874 |
federal income tax purposes as an association taxable as a | 875 |
corporation, except either of the following: | 876 |
(i) A corporation that has made an election under subchapter | 877 |
S, chapter one, subtitle A, of the Internal Revenue Code for its | 878 |
taxable year ending within, or on the last day of, the investor's | 879 |
taxable year; | 880 |
(ii) A subsidiary that is wholly owned by any corporation | 881 |
that has made an election under subchapter S, chapter one, | 882 |
subtitle A of the Internal Revenue Code for its taxable year | 883 |
ending within, or on the last day of, the investor's taxable year. | 884 |
(2) For the purposes of this chapter, unless expressly stated | 885 |
otherwise, no qualifying person indirectly owns any asset directly | 886 |
or indirectly owned by any qualifying corporation. | 887 |
(FF) For purposes of this chapter and Chapter 5751. of the | 888 |
Revised Code: | 889 |
(1) "Trust" does not include a qualified pre-income tax | 890 |
trust. | 891 |
(2) A "qualified pre-income tax trust" is any pre-income tax | 892 |
trust that makes a qualifying pre-income tax trust election as | 893 |
described in division (FF)(3) of this section. | 894 |
(3) A "qualifying pre-income tax trust election" is an | 895 |
election by a pre-income tax trust to subject to the tax imposed | 896 |
by section 5751.02 of the Revised Code the pre-income tax trust | 897 |
and all pass-through entities of which the trust owns or controls, | 898 |
directly, indirectly, or constructively through related interests, | 899 |
five per cent or more of the ownership or equity interests. The | 900 |
trustee shall notify the tax commissioner in writing of the | 901 |
election on or before April 15, 2006. The election, if timely | 902 |
made, shall be effective on and after January 1, 2006, and shall | 903 |
apply for all tax periods and tax years until revoked by the | 904 |
trustee of the trust. | 905 |
(4) A "pre-income tax trust" is a trust that satisfies all of | 906 |
the following requirements: | 907 |
(a) The document or instrument creating the trust was | 908 |
executed by the grantor before January 1, 1972; | 909 |
(b) The trust became irrevocable upon the creation of the | 910 |
trust; and | 911 |
(c) The grantor was domiciled in this state at the time the | 912 |
trust was created. | 913 |
(GG) "Uniformed services" has the same meaning as in 10 | 914 |
U.S.C. 101. | 915 |
Section 2. That existing section 5747.01 of the Revised Code | 916 |
is hereby repealed. | 917 |
Section 3. That the amendment by this act of section 5747.01 | 918 |
of the Revised Code applies to taxable years ending on or after | 919 |
the effective date of this act. | 920 |