REPRESENTATIVES Clancy, Young, Schmidt, Otterman, Latell, Willamowski, Allen, Coates, Britton, Hoops

To amend sections 3770.07, 3770.072, 5733.051,

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5733.98, 5747.062, 5747.20, and 5747.98 and to

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enact sections 3770.10 to 3770.14 of the Revised

3

Code to permit the transfer of a lottery prize

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award upon the prior approval of a court and to

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establish procedures for application for such

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approval.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 3770.07, 3770.072, 5733.051,	8
5733.98, 5747.062, 5747.20, and 5747.98 be amended and sections	9
3770.10, 3770.11, 3770.12, 3770.13, and 3770.14 of the Revised	10
Code be enacted to read as follows:	11

Sec. 3770.07.  (A)(1) Lottery prize awards shall be claimed	12
by the holder of the winning lottery ticket, or by the executor or	13
administrator, or the trustee of a trust, of the estate of a	14
deceased holder of a winning ticket, in a manner to be determined	15
by the state lottery commission, within one hundred eighty days	16
after the date on which such prize award was announced if the	17
lottery game is an on-line game, and within one hundred eighty	18
days after the close of the game if the lottery game is an instant	19
game. Except as otherwise provided in division (B) of this	20
section, if no valid claim to the prize award is made within the	21
prescribed period, the prize money or the cost of goods and	22
services awarded as prizes, or if such goods or services are	23
resold by the commission, the proceeds from such sale, shall be	24
returned to the state lottery fund and distributed in accordance	25
with section 3770.06 of the Revised Code.	26

(2) If a person entitled to a prize awardprize winner, as	27
defined in section 3770.10 of the Revised Code, is under eighteen	28
years of age, or is under some other legal disability, and the	29
prize money or the cost of goods or services awarded as a prize	30
exceeds one thousand dollars, the director shall order that	31
payment be made to the order of the legal guardian of such winning	32
ticket holderthat prize winner. If the amount of the prize money	33
or the cost of goods or services awarded as a prize is one	34
thousand dollars or less, the director may order that payment be	35
made to the order of the adult member, if any, of such winning	36
ticket holder'sthat prize winner's family legally responsible for	37
the care of such winning personthat prize winner.	38

(3) No right of any personprize winner, as defined in	39
section 3770.10 of the Revised Code, to a prize award shall be the	40
subject of a security interest or used as collateral.	41

(4)(a) No right of any personprize winner, as defined in	42
section 3770.10 of the Revised Code, to a prize award shall be	43
assignable, or subject to garnishment, attachment, execution,	44
withholding, or deduction, except as follows: as provided in	45
sections 3119.80, 3119.81, 3121.02, 3121.03, and 3123.06 of the	46
Revised Code; when the payment is to be made to the executor or	47
administrator or the trustee of a trust of the estate of a winning	48
ticket holder; when the award of a prize is disputed, any person	49
may be awarded a prize award to which another has claimed title,	50
pursuant to the order of a court of competent jurisdiction; or	51
when the director is to make a payment pursuant to section	52
3770.071 of the Revised Code; or as provided in sections 3770.10	53
to 3770.14 of the Revised Code.	54

(b) The commission shall adopt rules pursuant to section	55
3770.03 of the Revised Code concerning the payment of prize awards	56
upon the death of a prize winner. Upon the death of a prize	57
winner, as defined in section 3770.10 of the Revised Code, the	58
remainder of the prize winner's prize award, to the extent it is	59
not subject to a transfer agreement under sections 3770.10 to	60
3770.14 of the Revised Code, may be paid to the executor,	61
administrator, or trustee in the form of a discounted lump sum	62
cash settlement.	63

(5) No lottery prize award shall be awarded to or for any	64
officer or employee of the state lottery commission, any officer	65
or employee of the auditor of state actively coordinating and	66
certifying commission drawings, or any blood relative or spouse of	67
such officer or employee of the commission or auditor of state	68
living as a member of such officer's or employee's household, nor	69
shall any such employee, blood relative, or spouse attempt to	70
claim a lottery prize award.	71

(6) The director may prohibit vendors to the commission and	72
their employees from being awarded a lottery prize award.	73

(7) Upon the payment of prize awards pursuant to this	74
section, the director and the commission are discharged from all	75
further liability therefor.	76

(B) The commission may adopt rules governing the	77
disbursement of unclaimed prize awards as all or part of the prize	78
award in a lottery and may, pursuant to those rules, conduct the	79
lottery and disburse any such unclaimed prize awards. Any lottery	80
in which all or any part of the prize award is paid from unclaimed	81
prize awards shall be conducted in accordance with all of the	82
other requirements of this chapter, including, but not limited to,	83
the time and proof requirements for claiming awards and the	84
disposition of unclaimed prize awards when the prescribed period	85
for claiming the award has passed. A prize award or any part of a	86
prize award that is paid from an unclaimed prize award shall not	87
be reapplied toward the satisfaction of the requirement of	88
division (A) of section 3770.06 of the Revised Code that at least	89
fifty per cent of the total revenues from ticket sales be	90
disbursed for monetary prize awards, if such unclaimed prize award	91
was previously applied toward the satisfaction of that	92
requirement. On or before the last day of January and July each	93
year, the commission shall report to the general assembly the	94
gross sales and net profits the commission obtained from the	95
unclaimed prize awards in lotteries conducted pursuant to this	96
division during the preceding two calendar quarters, including the	97
amount of money produced by the games funded by the unclaimed	98
prize awards and the total revenue accruing to the state from the	99
prize award lotteries conducted pursuant to this division.	100

There is hereby established in the state treasury the	101
unclaimed lottery prizes fund, to which all unclaimed prize awards	102
shall be transferred. Any interest whichthat accrues on the	103
amounts in the fund shall become a part of the fund and shall be	104
subject to any rules adopted by the commission governing the	105
disbursement of unclaimed prize awards.	106

Sec. 3770.072. (A) As used in this section, "prize winner,"	107
"transferee," and "transferor" have the same meanings as in	108
section 3770.10 of the Revised Code.	109

(B) The state lottery commission shall deduct amounts from	110
lottery prize awards and file returns in accordance with section	111
5747.062 of the Revised Code and any rules adopted by the tax	112
commissioner pursuant to that section. This division also applies	113
to lottery prize award payments the commission remits to	114
transferees.	115

(C)(1) Each transferee shall deduct and withhold from each	116
gross amount payable to each prize winner three and one-half per	117
cent of the gross amount payable prior to making any other	118
reduction required by this chapter.	119

(2) With respect to amounts deducted and withheld pursuant to	120
division (C)(1) of this section, each transferee shall comply with	121
divisions (A)(2) to (4) of section 5747.062 of the Revised Code.	122

(3) An employee of a corporation, limited liability company,	123
or business trust having control or supervision of or charged with	124
the responsibility of filing the report and making the payment	125
required by division (C) of this section and section 5747.062 of	126
the Revised Code, or an officer, member, manager, or trustee of a	127
corporation, limited liability company, or business trust who is	128
responsible for the execution of the corporation's, limited	129
liability company's, or business trust's fiscal responsibilities,	130
shall be personally liable for failure to file the report or pay	131
the amount due as required by division (C) of this section and	132
section 5747.062 of the Revised Code. The dissolution,	133
termination, or bankruptcy of a corporation, limited liability	134
company, or business trust does not discharge a responsible	135
officer's, member's, manager's, employee's, or trustee's liability	136
for a failure of the corporation, limited liability company, or	137
business trust to file returns or pay the amount due.	138

(4)(a) The tax commissioner may make an assessment against	139
any person listed in division (C)(1) or (3) of this section for	140
any deficiency for any period. Section 5747.13 of the Revised Code	141
shall apply with respect to issuing assessments, filing petitions	142
for reassessments, conducting hearings, issuing final	143
determinations, making the assessment final, and filing the entry	144
that makes the assessment final. Section 5717.02 of the Revised	145
Code shall apply to appeals of the commissioner's final decision	146
in connection with assessments issued pursuant to division (C)(4)	147
of this section.	148

(b) An assessment issued against any person listed in	149
division (C)(1) or (3) of this section shall not be considered an	150
election of remedies or a bar to an assessment against any other	151
person for the failure to comply with division (C)(1) of this	152
section. No assessment shall be issued against any person who is	153
so listed if the amount required to be withheld has been paid by	154
another.	155

(c) The assessment shall include interest at the rate per	156
annum prescribed by section 5703.47 of the Revised Code on	157
liability from the time the payment is due until the date of	158
assessment. Interest shall continue to accrue from the date of	159
assessment until the date the assessment is paid in full. Any	160
interest accruing subsequent to the date of the issuance of the	161
assessment shall be considered to be an additional deficiency for	162
which the tax commissioner may issue subsequent assessments. The	163
initial assessment and any subsequent assessments may include a	164
penalty in an amount not to exceed twice the applicable interest	165
charged under this division.	166

Sec. 3770.10. As used in sections 3770.07 and 3770.10 to	167
3770.14 of the Revised Code:	168

(A) "Court of competent jurisdiction" means the probate	169
court of the county in which the prize winner resides, or, if the	170
prize winner is not a resident of this state, the probate court of	171
Franklin county or a federal court having jurisdiction over the	172
lottery prize award.	173

(B) "Discounted present value" means the present value of	174
the future payments of a lottery prize award that is determined by	175
discounting those payments to the present, using the most recently	176
published applicable federal rate for determining the present	177
value of an annuity as issued by the United States internal	178
revenue service and assuming daily compounding.	179

(C) "Independent professional advice" means the advice of an	180
attorney, a certified public accountant, an actuary, or any other	181
licensed professional adviser if all of the following apply:	182

(1) The prize winner has engaged the services of the	183
licensed professional adviser to render advice concerning the	184
legal and other implications of a transfer of the lottery prize	185
award.	186

(2) The licensed professional adviser is not affiliated in	187
any manner with or compensated in any manner by the transferee of	188
the lottery prize award.	189

(3) The compensation of the licensed professional adviser is	190
not affected by whether or not a transfer of a lottery prize award	191
occurs.	192

(D) "Prize winner" means any person that holds the right to	193
receive all or any part of a lottery prize award as a result of	194
being any of the following:	195

(1) A person who is a claimant under division (A)(1) of	196
section 3770.07 of the Revised Code;	197

(2) A person who is entitled to a prize award and who is	198
under a legal disability as described in division (A)(2) of	199
section 3770.07 of the Revised Code;	200

(3) A person who was awarded a prize award to which another	201
has claimed title by a court order under division (A)(4)(a) of	202
section 3770.07 of the Revised Code;	203

(4) A person who is receiving payments upon the death of a	204
prize winner as provided in division (A)(4)(b) of section 3770.07	205
of the Revised Code.	206

(E) "Transfer" means any form of sale, assignment, or	207
redirection of payment of all or any part of a lottery prize award	208
for consideration.	209

(F) "Transfer agreement" means an agreement that is complete	210
and valid, and that provides for the transfer of all or any part	211
of a lottery prize award from a transferor to a transferee. A	212
transfer agreement is incomplete and invalid unless the agreement	213
contains both of the following:	214

(1) A statement, signed by the transferor under penalties of	215
perjury, that the transferor irrevocably agrees that the	216
transferor is subject to the tax imposed by Chapter 5733. or 5747.	217
of the Revised Code with respect to gain or income which the	218
transferor will recognize in connection with the transfer. If the	219
transferor is a pass-through entity, as defined in section 5733.04	220
of the Revised Code, each investor in the pass-through entity	221
shall also sign under penalties of perjury a statement that the	222
investor irrevocably agrees that the investor is subject to the	223
tax imposed by Chapter 5733. or 5747. of the Revised Code with	224
respect to gain or income which the transferor and the investor	225
will recognize in connection with the transfer.	226

(2) A statement, signed by the transferee, that the	227
transferee irrevocably agrees that the transferee is subject to	228
the withholding requirements imposed by division (C) of section	229
3770.072 of the Revised Code and is subject to the tax imposed by	230
Chapter 5733. or 5747. of the Revised Code with respect to gain or	231
income which the transferee will recognize in connection with	232
lottery prize awards to be received as a result of the transfer.	233
If the transferee is a pass-through entity, as defined in section	234
5733.04 of the Revised Code, each investor in the pass-through	235
entity shall also sign under penalties of perjury a statement	236
setting forth that the investor irrevocably agrees that the	237
investor is subject to the withholding requirements imposed by	238
division (C) of section 3770.072 of the Revised Code and is	239
subject to the tax imposed by Chapter 5733. or 5747. of the	240
Revised Code with respect to gain or income which the transferee	241
and the investor will recognize in connection with lottery prize	242
awards to be received as a result of the transfer.	243

(G) "Transferee" means a party acquiring or proposing to	244
acquire all or any part of a lottery prize award through a	245
transfer.	246

(H) "Transferor" means either a prize winner or a transferee	247
in an earlier transfer whose interest is acquired by or is sought	248
to be acquired by a transferee or a new transferee through a	249
transfer.	250

Sec. 3770.11. Prior to the date on which a prize winner	252
becomes obligated under a transfer agreement, the transferee shall	253
provide to the prize winner a disclosure statement, in boldface	254
type of the minimum size of fourteen points, setting forth all of	255
the following:	256

(A) The amounts and due dates of the lottery prize award	257
payments that would be transferred under the transfer agreement;	258

(B) The aggregate amount of the lottery prize award payments	259
described in division (A) of this section;	260

(C) The discounted present value of the lottery prize award	261
payments described in division (A) of this section, calculated as	262
of the date the disclosure statement is provided to the prize	263
winner, and the amount of the applicable federal rate used in	264
determining the discounted present value;	265

(D) The gross amount payable to the prize winner in exchange	266
for or as consideration for the transfer of the lottery prize	267
award payments described in division (A) of this section,	268
including the annual rate of discount to present value used to	269
determine the gross amount payable to the prize winner, assuming	270
daily compounding and funding on the date of the transfer	271
agreement;	272

(E) An itemized listing of all brokers' commissions, service	273
charges, application fees, processing fees, closing costs, filing	274
fees, administrative fees, legal fees, notary fees, and other	275
commissions, fees, costs, expenses, and charges payable by the	276
prize winner or deductible from the gross amount otherwise payable	277
to the prize winner as described in division (D) of this section;	278

(F) The net amount payable to the prize winner after	279
deduction from the gross amount payable to the prize winner as	280
described in division (D) of this section of all commissions,	281
fees, costs, expenses, and charges described in division (E) of	282
this section;	283

(G)(1) The quotient, expressed as a percentage, obtained by	284
dividing the net amount payable to the prize winner as described	285
in division (F) of this section by the discounted present value of	286
the payments described in division (C) of this section.	287

(2) Solely for purposes of division (G)(1) of this section,	288
"net amount payable" does not include taxes required to be	289
withheld under division (C)(1) of section 3770.072 of the Revised	290
Code.	291

Sec. 3770.12.  A court of competent jurisdiction may approve	293
a transfer of a lottery prize award only in a final order that is	294
based on the express findings of the court, and the express	295
findings shall include all of the following:	296

(A) If the transferor is a prize winner, the transferee has	297
provided to the prize winner a disclosure statement that complies	298
with section 3770.11 of the Revised Code, and the prize winner has	299
confirmed the prize winner's receipt of the disclosure statement,	300
as evidenced by the prize winner's notarized signature on a copy	301
of the disclosure statement.	302

(B) If the transferor is a prize winner, the prize winner has	303
established that the transfer is fair and reasonable and in the	304
best interests of the prize winner.	305

(C) If the transferor is a prize winner, the prize winner	306
has received independent professional advice regarding the legal	307
and other implications of the transfer.	308

(D) The transferee has given written notice of the	309
transferee's name, address, and taxpayer identification number to	310
the state lottery commission and has filed a copy of that notice	311
with the court in which the application for approval of the	312
transfer was filed.	313

(E) The transferee is a trust, limited partnership, general	314
partnership, corporation, professional association, limited	315
liability company, or other entity that is qualified to do	316
business in this state and meets the registration requirements for	317
that type of entity under Title XVII of the Revised Code.	318

(F) The transfer complies with all applicable requirements	319
of the Revised Code and does not contravene any applicable law.	320

(G) The transfer does not include or cover the amounts of	321
the lottery prize award that are required to be withheld or	322
deducted pursuant to section 3119.80, 3119.81, 3121.02, 3121.03,	323
3123.06, 3770.071, or 3770.072 of the Revised Code.	324

(H) Any amounts described in division (G) of this section	325
that are required to be withheld or deducted, as of the date of	326
the court order, will be offset by the commission first against	327
remaining payments due the transferor and then against payments	328
due the transferee.	329

(I) Except as provided in divisions (G) and (H) of this	330
section, that the transferor's interest in each and all of the	331
future payments from a particular lottery prize award is to be	332
paid to a single transferee, or, if the payments from the lottery	333
prize award are to be directed from the state lottery commission	334
to multiple transferees, the commission has promulgated rules	335
under section 3770.03 of the Revised Code permitting transfers to	336
multiple transferees, and the transfer is consistent with those	337
rules.	338

(J) If the lottery prize award has been transferred within	339
twelve months immediately preceding the effective date of the	340
proposed transfer, the state lottery commission has not objected	341
to the proposed transfer. The court shall presume that the	342
requirements of this division are met unless the commission	343
notifies the court in writing before the hearing on the	344
application for transfer, or through counsel at that hearing, that	345
a transfer of the same lottery prize award has been made within	346
that twelve-month period and that the commission objects to a	347
subsequent transfer within that twelve-month period. The court	348
shall find that the requirements of this division are not met if	349
the commission provides notice of a prior transfer of the same	350
lottery prize award within that twelve-month period and its	351
objection to the proposed transfer, unless the transferor or	352
transferee shows by clear and convincing evidence that no previous	353
transfer of the same lottery prize award occurred within that	354
twelve-month period.	355

Sec. 3770.13.  (A) A transferee shall file an application	357
under sections 3770.10 to 3770.14 of the Revised Code for the	358
approval in advance of a transfer of a lottery prize award in a	359
court of competent jurisdiction.	360

(B) The following procedures shall apply to an application	361
for the approval in advance by a court of a transfer of a lottery	362
prize award under division (A) of this section:	363

(1) Upon the filing of the application, the court shall set	364
a date, time, and place for a hearing on the application and shall	365
notify the transferee and transferor of the date, time, and place	366
of the hearing.	367

(2) Not less than thirty days prior to the date set by the	368
court for the hearing on an application filed pursuant to this	369
section, the transferee shall file with the court and shall serve	370
on the state lottery commission, in the manner prescribed in the	371
Rules of Civil Procedure for the service of process, a notice of	372
the proposed transfer and the application for its approval in	373
advance. The notice shall include all of the following:	374

(a) A copy of the application;

375

(b) A copy of the transfer agreement or, if the transferor	376
is not a prize winner, a redacted copy of the transfer agreement	377
that discloses sufficient information to allow the commission and	378
the court to determine the validity of the transfer agreement;	379

(c) If the transferor is a prize winner, a copy of the	380
disclosure statement provided by the transferee pursuant to	381
section 3770.11 of the Revised Code and signed by the prize winner	382
pursuant to division (A) of section 3770.12 of the Revised Code;	383

(d) The amounts and due dates of the lottery prize award	384
payments that will be transferred under the transfer agreement;	385

(e) Notification of the date, time, and place of the hearing	386
on the application;	387

(f) The complete name, address, and taxpayer identification	388
number of the transferee.	389

(3) The commission shall not be required to appear in or be	390
named as a party to a hearing on the application, but may	391
intervene as of right in the proceeding.	392

(4) At the conclusion of the hearing on an application under	393
this section, the court may grant or deny the approval of the	394
transfer. The court shall enter its order accordingly. If the	395
court grants the approval of the transfer, it shall include in its	396
order all of the express findings specified in section 3770.12 of	397
the Revised Code. If the court denies the approval of the	398
transfer, it shall include in its order the reasons for the	399
denial.	400

(5) An order of the court made under division (B)(4) of this	401
section is a final and appealable order.	402

Sec. 3770.14. (A) Upon receipt of a court order issued under	404
section 3770.13 of the Revised Code, the transferee shall provide	405
a certified copy of the court order to the director of the state	406
lottery commission. Not later than ten days after receipt of the	407
certified copy of the court order, the director shall acknowledge	408
to the transferee in writing the commission's intent to comply	409
with the court order in making future payments.	410

(B) The director shall make payments of the lottery prize	411
award to the transferee designated in the certified copy of the	412
court order and in accordance with the prize payment schedule	413
established when the prize was claimed. The director may charge a	414
processing fee, in an amount determined by the commission by rule	415
pursuant to section 3770.03 of the Revised Code, to cover any	416
direct or indirect costs associated with making the prize award	417
payments in accordance with that prize payment schedule.	418

(C) Upon payment of the lottery prize award pursuant to	419
this section, the director and the commission are discharged from	420
all further liability therefor.	421

Sec. 5733.051.  Subject to section 5733.0510 of the Revised	422
Code, net income of a corporation subject to the tax imposed by	423
section 5733.06 of the Revised Code shall be allocated and	424
apportioned to this state as follows:	425

(A) Net rents and royalties from real property located in	426
this state are allocable to this state;.	427

(B) Net rents and royalties from tangible personal property,	428
to the extent such property is utilized in this state, are	429
allocable to this state if the taxpayer is otherwise subject to	430
the tax imposed by section 5733.06 of the Revised Code;.	431

(C) Capital gains and losses from the sale or other	432
disposition of real property located in this state are allocable	433
to this state;.	434

(D) Capital gains and losses from the sale or other	435
disposition of tangible personal property are allocable to this	436
state if the property had a situs in this state at the time of	437
sale and the taxpayer is otherwise subject to the tax imposed by	438
section 5733.06 of the Revised Code;.	439

(E) Capital gains and losses from the sale or other	440
disposition of intangible property which may produce income	441
enumerated in division (F) of this section are allocable on the	442
same basis as set forth in suchthat division. Capital gains and	443
losses from the sale or other disposition of all other intangible	444
property are apportionable under division (H)(I) of this section.	445

(F) Dividends or distributions which are not otherwise	446
deducted or excluded from net income, other than dividends or	447
distributions from a domestic international sales corporation, are	448
allocable to this state in accordance with the ratio of the book	449
value of the physical assets of the payor of the dividends or	450
distributions located in this state divided by the book value of	451
the total physical assets of the payor located everywhere.	452
Dividends or distributions received from a domestic international	453
sales corporation, or from a payor the location of whose physical	454
assets is unavailable to the taxpayer, are apportionable under	455
division (H)(I) of this section.	456

(G) Patent and copyright royalties and technical assistance	457
fees, not representing the principal source of gross receipts of	458
the taxpayer, are allocable to this state to the extent that the	459
activity of the payor thereof giving rise to the payment takes	460
place in this state. If the location of the payor's activity is	461
unavailable to the taxpayer, such royalties and fees are	462
apportionable under division (H)(I) of this section.	463

(H) The amounts described in division (B)(5) of section	464
5747.20 of the Revised Code are allocable to this state.	465

(I) Any other net income, from sources other than those	466
enumerated in divisions (A) to (G)(H) of this section, is	467
apportionable to this state on the basis of the mechanism provided	468
in division (B)(2) of section 5733.05 of the Revised Code.	469

Sec. 5733.98.  (A) To provide a uniform procedure for	470
calculating the amount of tax imposed by section 5733.06 of the	471
Revised Code that is due under this chapter, a taxpayer shall	472
claim any credits to which it is entitled in the following order,	473
except as otherwise provided in section 5733.058 of the Revised	474
Code:	475

(1) The credit for taxes paid by a qualifying pass-through	476
entity allowed under section 5733.0611 of the Revised Code;	477

(2) The credit allowed for financial institutions under	478
section 5733.45 of the Revised Code;	479

(3) The credit for qualifying affiliated groups under section	480
5733.068 of the Revised Code;	481

(4) The subsidiary corporation credit under section 5733.067	482
of the Revised Code;	483

(5) The savings and loan assessment credit under section	484
5733.063 of the Revised Code;	485

(6) The credit for recycling and litter prevention donations	486
under section 5733.064 of the Revised Code;	487

(7) The credit for employers that enter into agreements with	488
child day-care centers under section 5733.36 of the Revised Code;	489

(8) The credit for employers that reimburse employee child	490
day-care expenses under section 5733.38 of the Revised Code;	491

(9) The credit for maintaining railroad active grade crossing	492
warning devices under section 5733.43 of the Revised Code;	493

(10) The credit for purchases of lights and reflectors under	494
section 5733.44 of the Revised Code;	495

(11) The job retention credit under division (B) of section	496
5733.0610 of the Revised Code;	497

(12) The credit for manufacturing investments under section	498
5733.061 of the Revised Code;	499

(13) The credit for purchases of new manufacturing machinery	500
and equipment under section 5733.31 or section 5733.311 of the	501
Revised Code;	502

(14) The second credit for purchases of new manufacturing	503
machinery and equipment under section 5733.33 of the Revised Code;	504

(15) The job training credit under section 5733.42 of the	505
Revised Code;	506

(16) The credit for qualified research expenses under	507
section 5733.351 of the Revised Code;	508

(17) The enterprise zone credit under section 5709.66 of the	509
Revised Code;	510

(18) The credit for the eligible costs associated with a	511
voluntary action under section 5733.34 of the Revised Code;	512

(19) The credit for employers that establish on-site child	513
day-care under section 5733.37 of the Revised Code;	514

(20) The ethanol plant investment credit under section	515
5733.46 of the Revised Code;	516

(21) The credit for purchases of qualifying grape production	517
property under section 5733.32 of the Revised Code;	518

(22) The export sales credit under section 5733.069 of the	519
Revised Code;	520

(23) The credit for research and development and technology	521
transfer investors under section 5733.35 of the Revised Code;	522

(24) The enterprise zone credits under section 5709.65 of the	523
Revised Code;	524

(25) The credit for using Ohio coal under section 5733.39 of	525
the Revised Code;	526

(26) The refundable jobs creation credit under division (A)	527
of section 5733.0610 of the Revised Code;	528

(27) The refundable credit for tax withheld under division	529
(B)(2) of section 5747.062 of the Revised Code.	530

(B) For any credit except the refundable jobs creation	531
creditcredits enumerated in this section, the amount of the	532
credit for a tax year shall not exceed the tax due after allowing	533
for any other credit that precedes it in the order required under	534
this section. Any excess amount of a particular credit may be	535
carried forward if authorized under the section creating that	536
credit.	537

Sec. 5747.062. As used in this section, "transferee" has the	538
same meaning as in section 3770.10 of the Revised Code, and	539
"recipient" includes a transferee.	540

(A)(1) The state lottery commission shall:

541

(1) Deductdeduct and withhold from each lottery prize award	542
payment that exceeds five thousand dollars an amount equal to	543
three and one-half per cent of the payment, prior to making any	544
other reduction required by Chapter 3770. of the Revised Code;.	545

(2) On or before the tenth banking day of each month, the	546
state lottery commission, and each transferee required to deduct	547
and withhold amounts pursuant to section 3770.072 of the Revised	548
Code, shall file a return and remit to the tax commissioner all	549
amounts deducted and withheld pursuant to this section during the	550
preceding month.	551

(3) On or before the thirty-first day of January of each	552
year, the state lottery commission, and each transferee required	553
to deduct and withhold amounts pursuant to section 3770.072 of the	554
Revised Code, shall file with the commissioner an annual return,	555
in the form prescribed by the tax commissioner, indicating the	556
total amount deducted and withheld pursuant to this section during	557
the preceding calendar year. At the time of filing that return,	558
the state lottery commission or transferee shall remit any amount	559
deducted and withheld during the preceding calendar year that was	560
not previously remitted.	561

(4) IssueThe state lottery commission, and each transferee	562
required to deduct and withhold amounts pursuant to section	563
3770.072 of the Revised Code, shall issue to each recipient of a	564
lottery prize award from which the commissionperson with respect	565
to whom tax has been deducted and withheld taxby the commission	566
or transferee pursuant to this section during the preceding	567
calendar year, an information return in the form prescribed by	568
rule of the commissioner.	569

(B) Amounts(1) Division (B)(1) of this section does not	570
apply to persons classified for federal income tax purposes as	571
associations taxable as corporations.	572

Amounts withheld pursuant to this section shall be treated as	573
a credit against anythe tax imposed upon the recipient of the	574
lottery prize award pursuant to section 5747.02 of the Revised	575
Code upon the lottery prize award recipient, upon a beneficiary of	576
such a recipient, or upon any investor in such a recipient if the	577
recipient is a pass-through entity or disregarded entity, and	578
shall be treated as paid by the recipient, beneficiary, or	579
investor on the date on which those amounts are deducted and	580
withheld by the commission. The credit shall beis a refundable	581
credit, applicable after subtracting all other credits to which	582
the recipient may be entitled pursuant to this chapterand shall	583
be claimed in the order required under section 5747.98 of the	584
Revised Code. The credit is available to the recipient,	585
beneficiary, or investor even if the commission or transferee does	586
not remit to the tax commissioner the amount withheld.	587

(2) Division (B)(2) of this section applies only to persons	588
classified for federal income tax purposes as associations taxable	589
as corporations.	590

Amount withheld pursuant to this section shall be treated as	591
a credit against the tax imposed pursuant to section 5733.06 of	592
the Revised Code for the tax year immediately following the date	593
on which those amounts are deducted and withheld, upon the lottery	594
prize award recipient, upon a beneficiary of such a recipient, or	595
upon an investor in such a recipient if the recipient is a	596
pass-through entity or disregarded entity, and shall be treated as	597
paid by the recipient, beneficiary, or investor on the date on	598
which those amounts are deducted and withheld. The credit is a	599
refundable credit and shall be claimed in the order required under	600
section 5733.98 of the Revised Code. The credit is available to	601
the recipient, beneficiary, or investor even if the commission or	602
transferee does not remit to the tax commissioner the amount	603
withheld.	604

(3) Nothing in division (B)(1) or (2) of this section shall	605
be construed to allow more than one person to claim the credit for	606
any portion of each amount deducted and withheld.	607

(C) Failure of the commission or any transferee to deduct	608
and withhold the required amounts from lottery prize awards or to	609
remit amounts withheld as required by this section and section	610
3770.072 of the Revised Code shall not relieve a recipient of a	611
lottery prize awardtaxpayer described in division (B) of this	612
section from liability for the tax imposed by section 5733.06 or	613
5747.02 of the Revised Code.	614

Sec. 5747.20.  This section applies solely for the purposes	615
of computing the credit allowed under division (A) of section	616
5747.05 of the Revised Code and computing income taxable in this	617
state under division (D) of section 5747.08 of the Revised Code.	618

All items of nonbusiness income or deduction shall be	619
allocated in this state as follows:	620

(A) All items of nonbusiness income or deduction taken into	621
account in the computation of adjusted gross income for the	622
taxable year by a resident shall be allocated to this state.	623

(B) All items of nonbusiness income or deduction taken into	624
account in the computation of adjusted gross income for the	625
taxable year by a nonresident shall be allocated to this state as	626
follows:	627

(1) All items of compensation paid to an individual for	628
personal services performed in this state who was a nonresident at	629
the time of payment and all items of deduction directly allocated	630
thereto shall be allocated to this state;.	631

(2) All gains or losses from the sale of real property,	632
tangible personal property, or intangible property shall be	633
allocated as follows:	634

(a) Capital gains or losses from the sale or other transfer	635
of real property are allocable to this state if the property is	636
located physically in this state.	637

(b) Capital gains or losses from the sale or other transfer	638
of tangible personal property are allocable to this state if, at	639
the time of such sale or other transfer, the property had its	640
physical location in this state.	641

(c) Capital gains or losses from the sale or other transfer	642
of intangible personal property are allocable to this state if the	643
taxpayer's domicile was in this state at the time of such sale or	644
other transfer.	645

(3) All rents and royalties of real or tangible personal	646
property shall be allocated to this state as follows:	647

(a) Rents and royalties derived from real property are	648
allocable to this state if the property is physically located in	649
this state.	650

(b) Rents and royalties derived from tangible personal	651
property are allocable to this state to the extent that such	652
property is utilized in this state.	653

The extent of utilization of tangible personal property in a	654
state is determined by multiplying the rents or royalties derived	655
from such property by a fraction, the numerator of which is the	656
number of days of physical location of the property in this state	657
during the rental or royalty period in the taxable year and the	658
denominator of which is the number of days of physical location of	659
the property everywhere during all rental or royalty periods in	660
the taxable year. If the physical location of the property during	661
the rental or royalty period is unknown or unascertainable by the	662
nonresident, tangible personal property is utilized in the state	663
in which the property was located at the time the rental or	664
royalty payor obtained possession.	665

(4) All patent and copyright royalties shall be allocated to	666
this state to the extent the patent or copyright was utilized by	667
the payor in this state.	668

A patent is utilized in a state to the extent that it is	669
employed in production, fabrication, manufacturing, or other	670
processing in the state, or to the extent that a patented product	671
is produced in the state. If the basis of receipts from patent	672
royalties does not permit allocation to states or if the	673
accounting procedures do not reflect states of utilization, the	674
patent is utilized in this state if the taxpayer's domicile was in	675
this state at the time such royalties were paid or accrued.	676

A copyright is utilized in a state to the extent that	677
printing or other publication originates in the state. If the	678
basis of receipts from copyright royalties does not permit	679
allocation to states or if the accounting procedures do not	680
reflect states of utilization, the copyright is utilized in this	681
state if the taxpayer's domicile was in this state at the time	682
such royalties were paid or accrued.	683

(5)(a) All lottery prize awards paid by the state lottery	684
commission pursuant to Chapter 3770. of the Revised Code shall be	685
allocated to this state.	686

(b) All earnings, profit, income, and gain from the sale,	687
exchange, or other disposition of lottery prize awards paid or to	688
be paid to any person by the state lottery commission pursuant to	689
Chapter 3770. of the Revised Code shall be allocated to this	690
state.	691

(c) All earnings, profit, income, and gain from the direct or	692
indirect ownership of lottery prize awards paid or to be paid to	693
any person by the state lottery commission pursuant to Chapter	694
3770. of the Revised Code shall be allocated to this state.	695

(d) All earnings, profit, income, and gain from the direct or	696
indirect interest in any right in or to any lottery prize awards	697
paid or to be paid to any person by the state lottery commission	698
pursuant to Chapter 3770. of the Revised Code shall be allocated	699
to this state.	700

(6) Any item of income or deduction which has been taken	701
into account in the computation of adjusted gross income for the	702
taxable year by a nonresident and which is not otherwise	703
specifically allocated or apportioned pursuant to sections 5747.20	704
to 5747.23 of the Revised Code, including, without limitation,	705
interest, dividends and distributions, items of income taken into	706
account under the provisions of sections 401 to 425 of the	707
Internal Revenue Code, and benefit payments received by a	708
beneficiary of a supplemental unemployment trust which is referred	709
to in section 501(C)(c)(17) of the Internal Revenue Code, shall	710
not be allocated to this state unless the taxpayer's domicile was	711
in this state at the time such income was paid or accrued.	712

(C) If an individual is a resident for part of the taxable	713
year and a nonresident for the remainder of the taxable year, all	714
items of nonbusiness income or deduction shall be allocated under	715
division (A) of this section for the part of the taxable year that	716
the individual is a resident and under division (B) of this	717
section for the part of the taxable year that the individual is a	718
nonresident.	719

Sec. 5747.98.  (A) To provide a uniform procedure for	720
calculating the amount of tax due under section 5747.02 of the	721
Revised Code, a taxpayer shall claim any credits to which the	722
taxpayer is entitled in the following order:	723

(1) The retirement income credit under division (B) of	724
section 5747.055 of the Revised Code;	725

(2) The senior citizen credit under division (C) of section	726
5747.05 of the Revised Code;	727

(3) The lump sum distribution credit under division (D) of	728
section 5747.05 of the Revised Code;	729

(4) The dependent care credit under section 5747.054 of the	730
Revised Code;	731

(5) The lump sum retirement income credit under division (C)	732
of section 5747.055 of the Revised Code;	733

(6) The lump sum retirement income credit under division (D)	734
of section 5747.055 of the Revised Code;	735

(7) The lump sum retirement income credit under division (E)	736
of section 5747.055 of the Revised Code;	737

(8) The credit for displaced workers who pay for job	738
training under section 5747.27 of the Revised Code;	739

(9) The campaign contribution credit under section 5747.29	740
of the Revised Code;	741

(10) The twenty-dollar personal exemption credit under	742
section 5747.022 of the Revised Code;	743

(11) The joint filing credit under division (G) of section	744
5747.05 of the Revised Code;	745

(12) The nonresident credit under division (A) of section	746
5747.05 of the Revised Code;	747

(13) The credit for a resident's out-of-state income under	748
division (B) of section 5747.05 of the Revised Code;	749

(14) The credit for employers that enter into agreements	750
with child day-care centers under section 5747.34 of the Revised	751
Code;	752

(15) The credit for employers that reimburse employee child	753
day-care expenses under section 5747.36 of the Revised Code;	754

(16) The credit for adoption of a minor child under section	755
5747.37 of the Revised Code;	756

(17) The credit for purchases of lights and reflectors under	757
section 5747.38 of the Revised Code;	758

(18) The job retention credit under division (B) of section	759
5747.058 of the Revised Code;	760

(19) The credit for manufacturing investments under section	761
5747.051 of the Revised Code;	762

(20) The credit for purchases of new manufacturing machinery	763
and equipment under section 5747.26 or section 5747.261 of the	764
Revised Code;	765

(21) The second credit for purchases of new manufacturing	766
machinery and equipment and the credit for using Ohio coal under	767
section 5747.31 of the Revised Code;	768

(22) The job training credit under section 5747.39 of the	769
Revised Code;	770

(23) The enterprise zone credit under section 5709.66 of the	771
Revised Code;	772

(24) The credit for the eligible costs associated with a	773
voluntary action under section 5747.32 of the Revised Code;	774

(25) The credit for employers that establish on-site child	775
day-care centers under section 5747.35 of the Revised Code;	776

(26) The ethanol plant investment credit under section	777
5747.75 of the Revised Code;	778

(27) The credit for purchases of qualifying grape production	779
property under section 5747.28 of the Revised Code;	780

(28) The export sales credit under section 5747.057 of the	781
Revised Code;	782

(29) The credit for research and development and technology	783
transfer investors under section 5747.33 of the Revised Code;	784

(30) The enterprise zone credits under section 5709.65 of	785
the Revised Code;	786

(31) The refundable jobs creation credit under division (A)	787
of section 5747.058 of the Revised Code;	788

(32) The refundable credit for taxes paid by a qualifying	789
entity granted under section 5747.059 of the Revised Code;	790

(33) The refundable credits for taxes paid by a qualifying	791
pass-through entity granted under division (J) of section 5747.08	792
of the Revised Code;	793

(34) The refundable credit for tax withheld under division	794
(B)(1) of section 5747.062 of the Revised Code.	795

(B) For any credit, except the refundable credits enumerated	796
in divisions (A)(31), (32), and (33) of this section and the	797
credit granted under division (I) of section 5747.08 of the	798
Revised Code, the amount of the credit for a taxable year shall	799
not exceed the tax due after allowing for any other credit that	800
precedes it in the order required under this section. Any excess	801
amount of a particular credit may be carried forward if authorized	802
under the section creating that credit. Nothing in this chapter	803
shall be construed to allow a taxpayer to claim, directly or	804
indirectly, a credit more than once for a taxable year.	805

Section 2. That existing sections 3770.07, 3770.072,	806
5733.051, 5733.98, 5747.062, 5747.20, and 5747.98 of the Revised	807
Code are hereby repealed.	808