As Introduced

127th General Assembly
Regular Session
2007-2008
H. B. No. 25


Representative Wagner 

Cosponsors: Representatives Wachtmann, Peterson, Combs, Ujvagi, Seitz, Yuko, Wagoner, Schindel, Garrison, Harwood, Uecker, Evans, Koziura, Dodd, Fende, Latta, Brown, DeBose, Stewart, D., Huffman, Bacon, Stewart, J., Okey, Webster, Gibbs, Collier, Aslanides 


A BILL
To amend sections 5747.01, 5747.08, and 5747.98 and 1
to enact section 5747.81 of the Revised Code to 2
create an income tax deduction for expenses 3
incurred by a taxpayer in making an organ donation 4
and to create an income tax credit for deceased 5
organ donors.6


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

       Section 1. That sections 5747.01, 5747.08, and 5747.98 be 7
amended and section 5747.81 of the Revised Code be enacted to read 8
as follows:9

       Sec. 5747.01.  Except as otherwise expressly provided or10
clearly appearing from the context, any term used in this chapter 11
that is not otherwise defined in this section has the same meaning 12
as when used in a comparable context in the laws of the United13
States relating to federal income taxes or if not used in a 14
comparable context in those laws, has the same meaning as in 15
section 5733.40 of the Revised Code. Any reference in this chapter 16
to the Internal Revenue Code includes other laws of the United 17
States relating to federal income taxes.18

       As used in this chapter:19

       (A) "Adjusted gross income" or "Ohio adjusted gross income"20
means federal adjusted gross income, as defined and used in the21
Internal Revenue Code, adjusted as provided in this section:22

       (1) Add interest or dividends on obligations or securities of 23
any state or of any political subdivision or authority of any24
state, other than this state and its subdivisions and authorities.25

       (2) Add interest or dividends on obligations of any26
authority, commission, instrumentality, territory, or possession27
of the United States to the extent that the interest or dividends28
are exempt from federal income taxes but not from state income29
taxes.30

       (3) Deduct interest or dividends on obligations of the United 31
States and its territories and possessions or of any authority, 32
commission, or instrumentality of the United States to the extent33
that the interest or dividends are included in federal adjusted 34
gross income but exempt from state income taxes under the laws of 35
the United States.36

       (4) Deduct disability and survivor's benefits to the extent37
included in federal adjusted gross income.38

       (5) Deduct benefits under Title II of the Social Security Act 39
and tier 1 railroad retirement benefits to the extent included in 40
federal adjusted gross income under section 86 of the Internal41
Revenue Code.42

       (6) In the case of a taxpayer who is a beneficiary of a trust 43
that makes an accumulation distribution as defined in section 665 44
of the Internal Revenue Code, add, for the beneficiary's taxable 45
years beginning before 2002, the portion, if any, of such 46
distribution that does not exceed the undistributed net income of 47
the trust for the three taxable years preceding the taxable year 48
in which the distribution is made to the extent that the portion 49
was not included in the trust's taxable income for any of the 50
trust's taxable years beginning in 2002 or thereafter.51
"Undistributed net income of a trust" means the taxable income of52
the trust increased by (a)(i) the additions to adjusted gross53
income required under division (A) of this section and (ii) the54
personal exemptions allowed to the trust pursuant to section55
642(b) of the Internal Revenue Code, and decreased by (b)(i) the56
deductions to adjusted gross income required under division (A) of57
this section, (ii) the amount of federal income taxes attributable58
to such income, and (iii) the amount of taxable income that has59
been included in the adjusted gross income of a beneficiary by60
reason of a prior accumulation distribution. Any undistributed net61
income included in the adjusted gross income of a beneficiary62
shall reduce the undistributed net income of the trust commencing63
with the earliest years of the accumulation period.64

       (7) Deduct the amount of wages and salaries, if any, not65
otherwise allowable as a deduction but that would have been66
allowable as a deduction in computing federal adjusted gross67
income for the taxable year, had the targeted jobs credit allowed68
and determined under sections 38, 51, and 52 of the Internal69
Revenue Code not been in effect.70

       (8) Deduct any interest or interest equivalent on public71
obligations and purchase obligations to the extent that the72
interest or interest equivalent is included in federal adjusted73
gross income.74

       (9) Add any loss or deduct any gain resulting from the sale,75
exchange, or other disposition of public obligations to the extent76
that the loss has been deducted or the gain has been included in77
computing federal adjusted gross income.78

       (10) Deduct or add amounts, as provided under section79
5747.70 of the Revised Code, related to contributions to variable80
college savings program accounts made or tuition units purchased81
pursuant to Chapter 3334. of the Revised Code.82

       (11)(a) Deduct, to the extent not otherwise allowable as a83
deduction or exclusion in computing federal or Ohio adjusted gross84
income for the taxable year, the amount the taxpayer paid during85
the taxable year for medical care insurance and qualified86
long-term care insurance for the taxpayer, the taxpayer's spouse,87
and dependents. No deduction for medical care insurance under88
division (A)(11) of this section shall be allowed either to any89
taxpayer who is eligible to participate in any subsidized health90
plan maintained by any employer of the taxpayer or of the91
taxpayer's spouse, or to any taxpayer who is entitled to, or on92
application would be entitled to, benefits under part A of Title93
XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C.94
301, as amended. For the purposes of division (A)(11)(a) of this95
section, "subsidized health plan" means a health plan for which96
the employer pays any portion of the plan's cost. The deduction97
allowed under division (A)(11)(a) of this section shall be the net98
of any related premium refunds, related premium reimbursements, or99
related insurance premium dividends received during the taxable100
year.101

       (b) Deduct, to the extent not otherwise deducted or excluded102
in computing federal or Ohio adjusted gross income during the103
taxable year, the amount the taxpayer paid during the taxable104
year, not compensated for by any insurance or otherwise, for105
medical care of the taxpayer, the taxpayer's spouse, and106
dependents, to the extent the expenses exceed seven and one-half107
per cent of the taxpayer's federal adjusted gross income.108

       (c) For purposes of division (A)(11) of this section,109
"medical care" has the meaning given in section 213 of the110
Internal Revenue Code, subject to the special rules, limitations,111
and exclusions set forth therein, and "qualified long-term care"112
has the same meaning given in section 7702B(c) of the Internal113
Revenue Code.114

       (12)(a) Deduct any amount included in federal adjusted gross115
income solely because the amount represents a reimbursement or116
refund of expenses that in any year the taxpayer had deducted as117
an itemized deduction pursuant to section 63 of the Internal118
Revenue Code and applicable United States department of the119
treasury regulations. The deduction otherwise allowed under120
division (A)(12)(a) of this section shall be reduced to the extent121
the reimbursement is attributable to an amount the taxpayer122
deducted under this section in any taxable year.123

       (b) Add any amount not otherwise included in Ohio adjusted124
gross income for any taxable year to the extent that the amount is125
attributable to the recovery during the taxable year of any amount126
deducted or excluded in computing federal or Ohio adjusted gross127
income in any taxable year.128

       (13) Deduct any portion of the deduction described in section 129
1341(a)(2) of the Internal Revenue Code, for repaying previously 130
reported income received under a claim of right, that meets both 131
of the following requirements:132

       (a) It is allowable for repayment of an item that was133
included in the taxpayer's adjusted gross income for a prior134
taxable year and did not qualify for a credit under division (A)135
or (B) of section 5747.05 of the Revised Code for that year;136

       (b) It does not otherwise reduce the taxpayer's adjusted137
gross income for the current or any other taxable year.138

       (14) Deduct an amount equal to the deposits made to, and net139
investment earnings of, a medical savings account during the140
taxable year, in accordance with section 3924.66 of the Revised141
Code. The deduction allowed by division (A)(14) of this section142
does not apply to medical savings account deposits and earnings143
otherwise deducted or excluded for the current or any other144
taxable year from the taxpayer's federal adjusted gross income.145

       (15)(a) Add an amount equal to the funds withdrawn from a146
medical savings account during the taxable year, and the net147
investment earnings on those funds, when the funds withdrawn were148
used for any purpose other than to reimburse an account holder149
for, or to pay, eligible medical expenses, in accordance with150
section 3924.66 of the Revised Code;151

       (b) Add the amounts distributed from a medical savings152
account under division (A)(2) of section 3924.68 of the Revised153
Code during the taxable year.154

       (16) Add any amount claimed as a credit under section155
5747.059 of the Revised Code to the extent that such amount156
satisfies either of the following:157

       (a) The amount was deducted or excluded from the computation158
of the taxpayer's federal adjusted gross income as required to be159
reported for the taxpayer's taxable year under the Internal160
Revenue Code;161

       (b) The amount resulted in a reduction of the taxpayer's162
federal adjusted gross income as required to be reported for any163
of the taxpayer's taxable years under the Internal Revenue Code.164

       (17) Deduct the amount contributed by the taxpayer to an165
individual development account program established by a county166
department of job and family services pursuant to sections 329.11167
to 329.14 of the Revised Code for the purpose of matching funds168
deposited by program participants. On request of the tax169
commissioner, the taxpayer shall provide any information that, in170
the tax commissioner's opinion, is necessary to establish the171
amount deducted under division (A)(17) of this section.172

       (18) Beginning in taxable year 2001 but not for any taxable 173
year beginning after December 31, 2005, if the taxpayer is married174
and files a joint return and the combined federal adjusted gross 175
income of the taxpayer and the taxpayer's spouse for the taxable 176
year does not exceed one hundred thousand dollars, or if the 177
taxpayer is single and has a federal adjusted gross income for the178
taxable year not exceeding fifty thousand dollars, deduct amounts 179
paid during the taxable year for qualified tuition and fees paid 180
to an eligible institution for the taxpayer, the taxpayer's 181
spouse, or any dependent of the taxpayer, who is a resident of 182
this state and is enrolled in or attending a program that183
culminates in a degree or diploma at an eligible institution. The 184
deduction may be claimed only to the extent that qualified tuition 185
and fees are not otherwise deducted or excluded for any taxable 186
year from federal or Ohio adjusted gross income. The deduction may 187
not be claimed for educational expenses for which the taxpayer 188
claims a credit under section 5747.27 of the Revised Code.189

       (19) Add any reimbursement received during the taxable year190
of any amount the taxpayer deducted under division (A)(18) of this191
section in any previous taxable year to the extent the amount is192
not otherwise included in Ohio adjusted gross income.193

       (20)(a)(i) Add five-sixths of the amount of depreciation194
expense allowed by subsection (k) of section 168 of the Internal195
Revenue Code, including the taxpayer's proportionate or196
distributive share of the amount of depreciation expense allowed197
by that subsection to a pass-through entity in which the taxpayer198
has a direct or indirect ownership interest.199

       (ii) Add five-sixths of the amount of qualifying section 179 200
depreciation expense, including a person's proportionate or 201
distributive share of the amount of qualifying section 179 202
depreciation expense allowed to any pass-through entity in which 203
the person has a direct or indirect ownership. For the purposes of 204
this division, "qualifying section 179 depreciation expense" means 205
the difference between (I) the amount of depreciation expense 206
directly or indirectly allowed to the taxpayer under section 179 207
of the Internal Revenue Code, and (II) the amount of depreciation 208
expense directly or indirectly allowed to the taxpayer under 209
section 179 of the Internal Revenue Code as that section existed 210
on December 31, 2002.211

       The tax commissioner, under procedures established by the 212
commissioner, may waive the add-backs related to a pass-through 213
entity if the taxpayer owns, directly or indirectly, less than 214
five per cent of the pass-through entity.215

       (b) Nothing in division (A)(20) of this section shall be216
construed to adjust or modify the adjusted basis of any asset.217

       (c) To the extent the add-back required under division218
(A)(20)(a) of this section is attributable to property generating219
nonbusiness income or loss allocated under section 5747.20 of the220
Revised Code, the add-back shall be sitused to the same location221
as the nonbusiness income or loss generated by the property for222
the purpose of determining the credit under division (A) of223
section 5747.05 of the Revised Code. Otherwise, the add-back shall 224
be apportioned, subject to one or more of the four alternative 225
methods of apportionment enumerated in section 5747.21 of the 226
Revised Code.227

       (d) For the purposes of division (A) of this section, net 228
operating loss carryback and carryforward shall not include 229
five-sixths of the allowance of any net operating loss deduction 230
carryback or carryforward to the taxable year to the extent such 231
loss resulted from depreciation allowed by section 168(k) of the 232
Internal Revenue Code and by the qualifying section 179 233
depreciation expense amount.234

       (21)(a) If the taxpayer was required to add an amount under235
division (A)(20)(a) of this section for a taxable year, deduct236
one-fifth of the amount so added for each of the five succeeding237
taxable years.238

       (b) If the amount deducted under division (A)(21)(a) of this239
section is attributable to an add-back allocated under division240
(A)(20)(c) of this section, the amount deducted shall be sitused241
to the same location. Otherwise, the add-back shall be apportioned 242
using the apportionment factors for the taxable year in which the 243
deduction is taken, subject to one or more of the four alternative 244
methods of apportionment enumerated in section 5747.21 of the 245
Revised Code.246

       (c) No deduction is available under division (A)(21)(a) of 247
this section with regard to any depreciation allowed by section 248
168(k) of the Internal Revenue Code and by the qualifying section 249
179 depreciation expense amount to the extent that such 250
depreciation resulted in or increased a federal net operating loss 251
carryback or carryforward to a taxable year to which division 252
(A)(20)(d) of this section does not apply.253

       (22) Deduct, to the extent not otherwise deducted or excluded 254
in computing federal or Ohio adjusted gross income for the taxable 255
year, the amount the taxpayer received during the taxable year as 256
reimbursement for life insurance premiums under section 5919.31 of 257
the Revised Code.258

        (23) Deduct, to the extent not otherwise deducted or excluded 259
in computing federal or Ohio adjusted gross income for the taxable 260
year, the amount the taxpayer received during the taxable year as 261
a death benefit paid by the adjutant general under section 5919.33 262
of the Revised Code.263

       (24) Deduct, to the extent not otherwise allowable as a 264
deduction or exclusion in computing federal or Ohio adjusted gross 265
income for the taxable year and not otherwise compensated for by 266
any other source, the amount of qualified organ donation expenses 267
incurred by the taxpayer during the taxable year, not to exceed 268
ten thousand dollars. A taxpayer may deduct qualified organ 269
donation expenses only once for all taxable years.270

       For the purposes of division (A)(24) of this section:271

        (a) "Human organ" means all or any portion of a human liver, 272
pancreas, kidney, intestine, or lung, and any portion of human 273
bone marrow.274

        (b) "Qualified organ donation expenses" means travel 275
expenses, lodging expenses, and wages and salary foregone by a 276
taxpayer in connection with the taxpayer's donation, while living, 277
of one or more of the taxpayer's human organs to another human 278
being.279

       (B) "Business income" means income, including gain or loss,280
arising from transactions, activities, and sources in the regular281
course of a trade or business and includes income, gain, or loss282
from real property, tangible property, and intangible property if283
the acquisition, rental, management, and disposition of the284
property constitute integral parts of the regular course of a285
trade or business operation. "Business income" includes income,286
including gain or loss, from a partial or complete liquidation of287
a business, including, but not limited to, gain or loss from the288
sale or other disposition of goodwill.289

       (C) "Nonbusiness income" means all income other than business 290
income and may include, but is not limited to, compensation, rents 291
and royalties from real or tangible personal property, capital 292
gains, interest, dividends and distributions, patent or copyright 293
royalties, or lottery winnings, prizes, and awards.294

       (D) "Compensation" means any form of remuneration paid to an295
employee for personal services.296

       (E) "Fiduciary" means a guardian, trustee, executor,297
administrator, receiver, conservator, or any other person acting298
in any fiduciary capacity for any individual, trust, or estate.299

       (F) "Fiscal year" means an accounting period of twelve months 300
ending on the last day of any month other than December.301

       (G) "Individual" means any natural person.302

       (H) "Internal Revenue Code" means the "Internal Revenue Code303
of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.304

       (I) "Resident" means any of the following, provided that305
division (I)(3) of this section applies only to taxable years of a306
trust beginning in 2002 or thereafter:307

       (1) An individual who is domiciled in this state, subject to308
section 5747.24 of the Revised Code;309

       (2) The estate of a decedent who at the time of death was310
domiciled in this state. The domicile tests of section 5747.24 of311
the Revised Code and any election under section 5747.25 of the312
Revised Code are not controlling for purposes of division (I)(2)313
of this section.314

       (3) A trust that, in whole or part, resides in this state. If315
only part of a trust resides in this state, the trust is a316
resident only with respect to that part.317

       For the purposes of division (I)(3) of this section:318

       (a) A trust resides in this state for the trust's current319
taxable year to the extent, as described in division (I)(3)(d) of320
this section, that the trust consists directly or indirectly, in 321
whole or in part, of assets, net of any related liabilities, that 322
were transferred, or caused to be transferred, directly or 323
indirectly, to the trust by any of the following:324

        (i) A person, a court, or a governmental entity or 325
instrumentality on account of the death of a decedent, but only if 326
the trust is described in division (I)(3)(e)(i) or (ii) of this 327
section;328

       (ii) A person who was domiciled in this state for the 329
purposes of this chapter when the person directly or indirectly 330
transferred assets to an irrevocable trust, but only if at least 331
one of the trust's qualifying beneficiaries is domiciled in this 332
state for the purposes of this chapter during all or some portion 333
of the trust's current taxable year;334

       (iii) A person who was domiciled in this state for the335
purposes of this chapter when the trust document or instrument or336
part of the trust document or instrument became irrevocable, but337
only if at least one of the trust's qualifying beneficiaries is a 338
resident domiciled in this state for the purposes of this chapter339
during all or some portion of the trust's current taxable year. If 340
a trust document or instrument became irrevocable upon the death 341
of a person who at the time of death was domiciled in this state 342
for purposes of this chapter, that person is a person described in 343
division (I)(3)(a)(iii) of this section.344

        (b) A trust is irrevocable to the extent that the transferor 345
is not considered to be the owner of the net assets of the trust 346
under sections 671 to 678 of the Internal Revenue Code.347

       (c) With respect to a trust other than a charitable lead348
trust, "qualifying beneficiary" has the same meaning as "potential349
current beneficiary" as defined in section 1361(e)(2) of the350
Internal Revenue Code, and with respect to a charitable lead trust351
"qualifying beneficiary" is any current, future, or contingent352
beneficiary, but with respect to any trust "qualifying353
beneficiary" excludes a person or a governmental entity or354
instrumentality to any of which a contribution would qualify for355
the charitable deduction under section 170 of the Internal Revenue356
Code.357

        (d) For the purposes of division (I)(3)(a) of this section,358
the extent to which a trust consists directly or indirectly, in359
whole or in part, of assets, net of any related liabilities, that360
were transferred directly or indirectly, in whole or part, to the361
trust by any of the sources enumerated in that division shall be362
ascertained by multiplying the fair market value of the trust's363
assets, net of related liabilities, by the qualifying ratio, which364
shall be computed as follows:365

        (i) The first time the trust receives assets, the numerator366
of the qualifying ratio is the fair market value of those assets367
at that time, net of any related liabilities, from sources368
enumerated in division (I)(3)(a) of this section. The denominator369
of the qualifying ratio is the fair market value of all the370
trust's assets at that time, net of any related liabilities.371

        (ii) Each subsequent time the trust receives assets, a372
revised qualifying ratio shall be computed. The numerator of the373
revised qualifying ratio is the sum of (1) the fair market value374
of the trust's assets immediately prior to the subsequent375
transfer, net of any related liabilities, multiplied by the376
qualifying ratio last computed without regard to the subsequent377
transfer, and (2) the fair market value of the subsequently378
transferred assets at the time transferred, net of any related379
liabilities, from sources enumerated in division (I)(3)(a) of this380
section. The denominator of the revised qualifying ratio is the381
fair market value of all the trust's assets immediately after the382
subsequent transfer, net of any related liabilities.383

       (iii) Whether a transfer to the trust is by or from any of 384
the sources enumerated in division (I)(3)(a) of this section shall 385
be ascertained without regard to the domicile of the trust's 386
beneficiaries.387

        (e) For the purposes of division (I)(3)(a)(i) of this388
section:389

        (i) A trust is described in division (I)(3)(e)(i) of this390
section if the trust is a testamentary trust and the testator of391
that testamentary trust was domiciled in this state at the time of392
the testator's death for purposes of the taxes levied under393
Chapter 5731. of the Revised Code.394

        (ii) A trust is described in division (I)(3)(e)(ii) of this395
section if the transfer is a qualifying transfer described in any396
of divisions (I)(3)(f)(i) to (vi) of this section, the trust is an397
irrevocable inter vivos trust, and at least one of the trust's398
qualifying beneficiaries is domiciled in this state for purposes399
of this chapter during all or some portion of the trust's current400
taxable year.401

        (f) For the purposes of division (I)(3)(e)(ii) of this402
section, a "qualifying transfer" is a transfer of assets, net of403
any related liabilities, directly or indirectly to a trust, if the404
transfer is described in any of the following:405

        (i) The transfer is made to a trust, created by the decedent 406
before the decedent's death and while the decedent was domiciled 407
in this state for the purposes of this chapter, and, prior to the 408
death of the decedent, the trust became irrevocable while the 409
decedent was domiciled in this state for the purposes of this 410
chapter.411

        (ii) The transfer is made to a trust to which the decedent,412
prior to the decedent's death, had directly or indirectly413
transferred assets, net of any related liabilities, while the414
decedent was domiciled in this state for the purposes of this415
chapter, and prior to the death of the decedent the trust became416
irrevocable while the decedent was domiciled in this state for the417
purposes of this chapter.418

        (iii) The transfer is made on account of a contractual419
relationship existing directly or indirectly between the420
transferor and either the decedent or the estate of the decedent421
at any time prior to the date of the decedent's death, and the422
decedent was domiciled in this state at the time of death for423
purposes of the taxes levied under Chapter 5731. of the Revised424
Code.425

        (iv) The transfer is made to a trust on account of a426
contractual relationship existing directly or indirectly between427
the transferor and another person who at the time of the428
decedent's death was domiciled in this state for purposes of this429
chapter.430

        (v) The transfer is made to a trust on account of the will of 431
a testator.432

        (vi) The transfer is made to a trust created by or caused to 433
be created by a court, and the trust was directly or indirectly434
created in connection with or as a result of the death of an435
individual who, for purposes of the taxes levied under Chapter436
5731. of the Revised Code, was domiciled in this state at the time437
of the individual's death.438

       (g) The tax commissioner may adopt rules to ascertain the439
part of a trust residing in this state.440

       (J) "Nonresident" means an individual or estate that is not a 441
resident. An individual who is a resident for only part of a442
taxable year is a nonresident for the remainder of that taxable443
year.444

       (K) "Pass-through entity" has the same meaning as in section445
5733.04 of the Revised Code.446

       (L) "Return" means the notifications and reports required to447
be filed pursuant to this chapter for the purpose of reporting the448
tax due and includes declarations of estimated tax when so449
required.450

       (M) "Taxable year" means the calendar year or the taxpayer's451
fiscal year ending during the calendar year, or fractional part452
thereof, upon which the adjusted gross income is calculated453
pursuant to this chapter.454

       (N) "Taxpayer" means any person subject to the tax imposed by 455
section 5747.02 of the Revised Code or any pass-through entity456
that makes the election under division (D) of section 5747.08 of457
the Revised Code.458

       (O) "Dependents" means dependents as defined in the Internal459
Revenue Code and as claimed in the taxpayer's federal income tax460
return for the taxable year or which the taxpayer would have been461
permitted to claim had the taxpayer filed a federal income tax462
return.463

       (P) "Principal county of employment" means, in the case of a464
nonresident, the county within the state in which a taxpayer465
performs services for an employer or, if those services are466
performed in more than one county, the county in which the major467
portion of the services are performed.468

       (Q) As used in sections 5747.50 to 5747.55 of the Revised469
Code:470

       (1) "Subdivision" means any county, municipal corporation,471
park district, or township.472

       (2) "Essential local government purposes" includes all473
functions that any subdivision is required by general law to474
exercise, including like functions that are exercised under a475
charter adopted pursuant to the Ohio Constitution.476

       (R) "Overpayment" means any amount already paid that exceeds477
the figure determined to be the correct amount of the tax.478

       (S) "Taxable income" or "Ohio taxable income" applies only to 479
estates and trusts, and means federal taxable income, as defined 480
and used in the Internal Revenue Code, adjusted as follows:481

       (1) Add interest or dividends, net of ordinary, necessary,482
and reasonable expenses not deducted in computing federal taxable483
income, on obligations or securities of any state or of any484
political subdivision or authority of any state, other than this485
state and its subdivisions and authorities, but only to the extent 486
that such net amount is not otherwise includible in Ohio taxable 487
income and is described in either division (S)(1)(a) or (b) of 488
this section:489

        (a) The net amount is not attributable to the S portion of an 490
electing small business trust and has not been distributed to491
beneficiaries for the taxable year;492

        (b) The net amount is attributable to the S portion of an493
electing small business trust for the taxable year.494

       (2) Add interest or dividends, net of ordinary, necessary,495
and reasonable expenses not deducted in computing federal taxable496
income, on obligations of any authority, commission,497
instrumentality, territory, or possession of the United States to498
the extent that the interest or dividends are exempt from federal499
income taxes but not from state income taxes, but only to the500
extent that such net amount is not otherwise includible in Ohio501
taxable income and is described in either division (S)(1)(a) or502
(b) of this section;503

       (3) Add the amount of personal exemption allowed to the504
estate pursuant to section 642(b) of the Internal Revenue Code;505

       (4) Deduct interest or dividends, net of related expenses506
deducted in computing federal taxable income, on obligations of507
the United States and its territories and possessions or of any508
authority, commission, or instrumentality of the United States to509
the extent that the interest or dividends are exempt from state510
taxes under the laws of the United States, but only to the extent511
that such amount is included in federal taxable income and is512
described in either division (S)(1)(a) or (b) of this section;513

       (5) Deduct the amount of wages and salaries, if any, not514
otherwise allowable as a deduction but that would have been515
allowable as a deduction in computing federal taxable income for516
the taxable year, had the targeted jobs credit allowed under517
sections 38, 51, and 52 of the Internal Revenue Code not been in518
effect, but only to the extent such amount relates either to519
income included in federal taxable income for the taxable year or520
to income of the S portion of an electing small business trust for521
the taxable year;522

       (6) Deduct any interest or interest equivalent, net of523
related expenses deducted in computing federal taxable income, on524
public obligations and purchase obligations, but only to the525
extent that such net amount relates either to income included in526
federal taxable income for the taxable year or to income of the S527
portion of an electing small business trust for the taxable year;528

       (7) Add any loss or deduct any gain resulting from sale,529
exchange, or other disposition of public obligations to the extent530
that such loss has been deducted or such gain has been included in531
computing either federal taxable income or income of the S portion532
of an electing small business trust for the taxable year;533

       (8) Except in the case of the final return of an estate, add534
any amount deducted by the taxpayer on both its Ohio estate tax535
return pursuant to section 5731.14 of the Revised Code, and on its536
federal income tax return in determining federal taxable income;537

       (9)(a) Deduct any amount included in federal taxable income538
solely because the amount represents a reimbursement or refund of539
expenses that in a previous year the decedent had deducted as an540
itemized deduction pursuant to section 63 of the Internal Revenue541
Code and applicable treasury regulations. The deduction otherwise542
allowed under division (S)(9)(a) of this section shall be reduced543
to the extent the reimbursement is attributable to an amount the544
taxpayer or decedent deducted under this section in any taxable545
year.546

       (b) Add any amount not otherwise included in Ohio taxable547
income for any taxable year to the extent that the amount is548
attributable to the recovery during the taxable year of any amount549
deducted or excluded in computing federal or Ohio taxable income550
in any taxable year, but only to the extent such amount has not551
been distributed to beneficiaries for the taxable year.552

       (10) Deduct any portion of the deduction described in section 553
1341(a)(2) of the Internal Revenue Code, for repaying previously 554
reported income received under a claim of right, that meets both 555
of the following requirements:556

       (a) It is allowable for repayment of an item that was557
included in the taxpayer's taxable income or the decedent's558
adjusted gross income for a prior taxable year and did not qualify559
for a credit under division (A) or (B) of section 5747.05 of the560
Revised Code for that year.561

       (b) It does not otherwise reduce the taxpayer's taxable562
income or the decedent's adjusted gross income for the current or563
any other taxable year.564

       (11) Add any amount claimed as a credit under section565
5747.059 of the Revised Code to the extent that the amount566
satisfies either of the following:567

       (a) The amount was deducted or excluded from the computation568
of the taxpayer's federal taxable income as required to be569
reported for the taxpayer's taxable year under the Internal570
Revenue Code;571

       (b) The amount resulted in a reduction in the taxpayer's572
federal taxable income as required to be reported for any of the573
taxpayer's taxable years under the Internal Revenue Code.574

       (12) Deduct any amount, net of related expenses deducted in575
computing federal taxable income, that a trust is required to576
report as farm income on its federal income tax return, but only577
if the assets of the trust include at least ten acres of land578
satisfying the definition of "land devoted exclusively to579
agricultural use" under section 5713.30 of the Revised Code,580
regardless of whether the land is valued for tax purposes as such581
land under sections 5713.30 to 5713.38 of the Revised Code. If the582
trust is a pass-through entity investor, section 5747.231 of the583
Revised Code applies in ascertaining if the trust is eligible to584
claim the deduction provided by division (S)(12) of this section585
in connection with the pass-through entity's farm income.586

        Except for farm income attributable to the S portion of an587
electing small business trust, the deduction provided by division588
(S)(12) of this section is allowed only to the extent that the589
trust has not distributed such farm income. Division (S)(12) of590
this section applies only to taxable years of a trust beginning in591
2002 or thereafter.592

       (13) Add the net amount of income described in section 641(c)593
of the Internal Revenue Code to the extent that amount is not594
included in federal taxable income.595

       (14) Add or deduct the amount the taxpayer would be required596
to add or deduct under division (A)(20) or (21) of this section if597
the taxpayer's Ohio taxable income were computed in the same598
manner as an individual's Ohio adjusted gross income is computed599
under this section. In the case of a trust, division (S)(14) of600
this section applies only to any of the trust's taxable years601
beginning in 2002 or thereafter.602

       (T) "School district income" and "school district income tax" 603
have the same meanings as in section 5748.01 of the Revised Code.604

       (U) As used in divisions (A)(8), (A)(9), (S)(6), and (S)(7)605
of this section, "public obligations," "purchase obligations," and606
"interest or interest equivalent" have the same meanings as in607
section 5709.76 of the Revised Code.608

       (V) "Limited liability company" means any limited liability609
company formed under Chapter 1705. of the Revised Code or under610
the laws of any other state.611

       (W) "Pass-through entity investor" means any person who,612
during any portion of a taxable year of a pass-through entity, is613
a partner, member, shareholder, or equity investor in that614
pass-through entity.615

       (X) "Banking day" has the same meaning as in section 1304.01616
of the Revised Code.617

       (Y) "Month" means a calendar month.618

       (Z) "Quarter" means the first three months, the second three619
months, the third three months, or the last three months of the620
taxpayer's taxable year.621

       (AA)(1) "Eligible institution" means a state university or622
state institution of higher education as defined in section623
3345.011 of the Revised Code, or a private, nonprofit college,624
university, or other post-secondary institution located in this625
state that possesses a certificate of authorization issued by the626
Ohio board of regents pursuant to Chapter 1713. of the Revised627
Code or a certificate of registration issued by the state board of628
career colleges and schools under Chapter 3332. of the Revised629
Code.630

       (2) "Qualified tuition and fees" means tuition and fees631
imposed by an eligible institution as a condition of enrollment or632
attendance, not exceeding two thousand five hundred dollars in633
each of the individual's first two years of post-secondary634
education. If the individual is a part-time student, "qualified635
tuition and fees" includes tuition and fees paid for the academic636
equivalent of the first two years of post-secondary education637
during a maximum of five taxable years, not exceeding a total of638
five thousand dollars. "Qualified tuition and fees" does not639
include:640

       (a) Expenses for any course or activity involving sports,641
games, or hobbies unless the course or activity is part of the642
individual's degree or diploma program;643

       (b) The cost of books, room and board, student activity fees,644
athletic fees, insurance expenses, or other expenses unrelated to 645
the individual's academic course of instruction;646

       (c) Tuition, fees, or other expenses paid or reimbursed647
through an employer, scholarship, grant in aid, or other648
educational benefit program.649

       (BB)(1) "Modified business income" means the business income650
included in a trust's Ohio taxable income after such taxable651
income is first reduced by the qualifying trust amount, if any.652

       (2) "Qualifying trust amount" of a trust means capital gains653
and losses from the sale, exchange, or other disposition of equity654
or ownership interests in, or debt obligations of, a qualifying655
investee to the extent included in the trust's Ohio taxable 656
income, but only if the following requirements are satisfied:657

        (a) The book value of the qualifying investee's physical 658
assets in this state and everywhere, as of the last day of the 659
qualifying investee's fiscal or calendar year ending immediately 660
prior to the date on which the trust recognizes the gain or loss, 661
is available to the trust.662

       (b) The requirements of section 5747.011 of the Revised Code663
are satisfied for the trust's taxable year in which the trust664
recognizes the gain or loss.665

        Any gain or loss that is not a qualifying trust amount is666
modified business income, qualifying investment income, or667
modified nonbusiness income, as the case may be.668

       (3) "Modified nonbusiness income" means a trust's Ohio669
taxable income other than modified business income, other than the670
qualifying trust amount, and other than qualifying investment671
income, as defined in section 5747.012 of the Revised Code, to the672
extent such qualifying investment income is not otherwise part of673
modified business income.674

       (4) "Modified Ohio taxable income" applies only to trusts,675
and means the sum of the amounts described in divisions (BB)(4)(a) 676
to (c) of this section:677

       (a) The fraction, calculated under section 5747.013, and 678
applying section 5747.231 of the Revised Code, multiplied by the 679
sum of the following amounts:680

        (i) The trust's modified business income;681

        (ii) The trust's qualifying investment income, as defined in 682
section 5747.012 of the Revised Code, but only to the extent the 683
qualifying investment income does not otherwise constitute684
modified business income and does not otherwise constitute a685
qualifying trust amount.686

       (b) The qualifying trust amount multiplied by a fraction, the 687
numerator of which is the sum of the book value of the qualifying 688
investee's physical assets in this state on the last day of the 689
qualifying investee's fiscal or calendar year ending immediately 690
prior to the day on which the trust recognizes the qualifying 691
trust amount, and the denominator of which is the sum of the book 692
value of the qualifying investee's total physical assets 693
everywhere on the last day of the qualifying investee's fiscal or 694
calendar year ending immediately prior to the day on which the 695
trust recognizes the qualifying trust amount. If, for a taxable 696
year, the trust recognizes a qualifying trust amount with respect 697
to more than one qualifying investee, the amount described in 698
division (BB)(4)(b) of this section shall equal the sum of the699
products so computed for each such qualifying investee.700

       (c)(i) With respect to a trust or portion of a trust that is 701
a resident as ascertained in accordance with division (I)(3)(d) of 702
this section, its modified nonbusiness income.703

        (ii) With respect to a trust or portion of a trust that is704
not a resident as ascertained in accordance with division705
(I)(3)(d) of this section, the amount of its modified nonbusiness706
income satisfying the descriptions in divisions (B)(2) to (5) of707
section 5747.20 of the Revised Code, except as otherwise provided 708
in division (BB)(4)(c)(ii) of this section. With respect to a 709
trust or portion of a trust that is not a resident as ascertained 710
in accordance with division (I)(3)(d) of this section, the trust's 711
portion of modified nonbusiness income recognized from the sale, 712
exchange, or other disposition of a debt interest in or equity 713
interest in a section 5747.212 entity, as defined in section 714
5747.212 of the Revised Code, without regard to division (A) of 715
that section, shall not be allocated to this state in accordance 716
with section 5747.20 of the Revised Code but shall be apportioned 717
to this state in accordance with division (B) of section 5747.212 718
of the Revised Code without regard to division (A) of that 719
section.720

       If the allocation and apportionment of a trust's income under721
divisions (BB)(4)(a) and (c) of this section do not fairly722
represent the modified Ohio taxable income of the trust in this723
state, the alternative methods described in division (C) of724
section 5747.21 of the Revised Code may be applied in the manner725
and to the same extent provided in that section.726

       (5)(a) Except as set forth in division (BB)(5)(b) of this 727
section, "qualifying investee" means a person in which a trust has 728
an equity or ownership interest, or a person or unit of government 729
the debt obligations of either of which are owned by a trust. For 730
the purposes of division (BB)(2)(a) of this section and for the 731
purpose of computing the fraction described in division (BB)(4)(b) 732
of this section, all of the following apply:733

        (i) If the qualifying investee is a member of a qualifying734
controlled group on the last day of the qualifying investee's735
fiscal or calendar year ending immediately prior to the date on736
which the trust recognizes the gain or loss, then "qualifying737
investee" includes all persons in the qualifying controlled group738
on such last day.739

        (ii) If the qualifying investee, or if the qualifying740
investee and any members of the qualifying controlled group of741
which the qualifying investee is a member on the last day of the742
qualifying investee's fiscal or calendar year ending immediately743
prior to the date on which the trust recognizes the gain or loss,744
separately or cumulatively own, directly or indirectly, on the745
last day of the qualifying investee's fiscal or calendar year746
ending immediately prior to the date on which the trust recognizes747
the qualifying trust amount, more than fifty per cent of the748
equity of a pass-through entity, then the qualifying investee and749
the other members are deemed to own the proportionate share of the750
pass-through entity's physical assets which the pass-through751
entity directly or indirectly owns on the last day of the752
pass-through entity's calendar or fiscal year ending within or753
with the last day of the qualifying investee's fiscal or calendar754
year ending immediately prior to the date on which the trust755
recognizes the qualifying trust amount.756

        (iii) For the purposes of division (BB)(5)(a)(iii) of this757
section, "upper level pass-through entity" means a pass-through758
entity directly or indirectly owning any equity of another759
pass-through entity, and "lower level pass-through entity" means760
that other pass-through entity.761

        An upper level pass-through entity, whether or not it is also 762
a qualifying investee, is deemed to own, on the last day of the 763
upper level pass-through entity's calendar or fiscal year, the764
proportionate share of the lower level pass-through entity's765
physical assets that the lower level pass-through entity directly766
or indirectly owns on the last day of the lower level pass-through767
entity's calendar or fiscal year ending within or with the last768
day of the upper level pass-through entity's fiscal or calendar769
year. If the upper level pass-through entity directly and770
indirectly owns less than fifty per cent of the equity of the771
lower level pass-through entity on each day of the upper level772
pass-through entity's calendar or fiscal year in which or with773
which ends the calendar or fiscal year of the lower level774
pass-through entity and if, based upon clear and convincing775
evidence, complete information about the location and cost of the776
physical assets of the lower pass-through entity is not available777
to the upper level pass-through entity, then solely for purposes778
of ascertaining if a gain or loss constitutes a qualifying trust779
amount, the upper level pass-through entity shall be deemed as780
owning no equity of the lower level pass-through entity for each781
day during the upper level pass-through entity's calendar or782
fiscal year in which or with which ends the lower level783
pass-through entity's calendar or fiscal year. Nothing in division 784
(BB)(5)(a)(iii) of this section shall be construed to provide for 785
any deduction or exclusion in computing any trust's Ohio taxable 786
income.787

       (b) With respect to a trust that is not a resident for the788
taxable year and with respect to a part of a trust that is not a789
resident for the taxable year, "qualifying investee" for that790
taxable year does not include a C corporation if both of the791
following apply:792

       (i) During the taxable year the trust or part of the trust793
recognizes a gain or loss from the sale, exchange, or other794
disposition of equity or ownership interests in, or debt795
obligations of, the C corporation.796

       (ii) Such gain or loss constitutes nonbusiness income.797

        (6) "Available" means information is such that a person is 798
able to learn of the information by the due date plus extensions, 799
if any, for filing the return for the taxable year in which the 800
trust recognizes the gain or loss.801

        (CC) "Qualifying controlled group" has the same meaning as in 802
section 5733.04 of the Revised Code.803

        (DD) "Related member" has the same meaning as in section804
5733.042 of the Revised Code.805

       (EE)(1) For the purposes of division (EE) of this section: 806

       (a) "Qualifying person" means any person other than a 807
qualifying corporation.808

       (b) "Qualifying corporation" means any person classified for 809
federal income tax purposes as an association taxable as a 810
corporation, except either of the following:811

       (i) A corporation that has made an election under subchapter 812
S, chapter one, subtitle A, of the Internal Revenue Code for its 813
taxable year ending within, or on the last day of, the investor's 814
taxable year;815

       (ii) A subsidiary that is wholly owned by any corporation 816
that has made an election under subchapter S, chapter one, 817
subtitle A of the Internal Revenue Code for its taxable year 818
ending within, or on the last day of, the investor's taxable year.819

       (2) For the purposes of this chapter, unless expressly stated 820
otherwise, no qualifying person indirectly owns any asset directly 821
or indirectly owned by any qualifying corporation.822

       (FF) For purposes of this chapter and Chapter 5751. of the 823
Revised Code:824

       (1) "Trust" does not include a qualified pre-income tax 825
trust.826

       (2) A "qualified pre-income tax trust" is any pre-income tax 827
trust that makes a qualifying pre-income tax trust election as 828
described in division (FF)(3) of this section.829

       (3) A "qualifying pre-income tax trust election" is an 830
election by a pre-income tax trust to subject to the tax imposed 831
by section 5751.02 of the Revised Code the pre-income tax trust 832
and all pass-through entities of which the trust owns or controls, 833
directly, indirectly, or constructively through related interests, 834
five per cent or more of the ownership or equity interests. The 835
trustee shall notify the tax commissioner in writing of the 836
election on or before April 15, 2006. The election, if timely 837
made, shall be effective on and after January 1, 2006, and shall 838
apply for all tax periods and tax years until revoked by the 839
trustee of the trust.840

       (4) A "pre-income tax trust" is a trust that satisfies all of 841
the following requirements:842

       (a) The document or instrument creating the trust was 843
executed by the grantor before January 1, 1972;844

       (b) The trust became irrevocable upon the creation of the 845
trust; and846

       (c) The grantor was domiciled in this state at the time the 847
trust was created.848

       Sec. 5747.08.  An annual return with respect to the tax849
imposed by section 5747.02 of the Revised Code and each tax850
imposed under Chapter 5748. of the Revised Code shall be made by851
every taxpayer for any taxable year for which the taxpayer is852
liable for the tax imposed by that section or under that chapter,853
unless the total credits allowed under divisions (E), (F), and (G)854
of section 5747.05 of the Revised Code for the year are equal to855
or exceed the tax imposed by section 5747.02 of the Revised Code,856
in which case no return shall be required unless the taxpayer is857
liable for a tax imposed pursuant to Chapter 5748. of the Revised858
Code.859

       (A) If an individual is deceased, any return or notice860
required of that individual under this chapter shall be made and861
filed by that decedent's executor, administrator, or other person862
charged with the property of that decedent.863

       (B) If an individual is unable to make a return or notice864
required by this chapter, the return or notice required of that865
individual shall be made and filed by the individual's duly866
authorized agent, guardian, conservator, fiduciary, or other867
person charged with the care of the person or property of that868
individual.869

       (C) Returns or notices required of an estate or a trust shall 870
be made and filed by the fiduciary of the estate or trust.871

       (D)(1)(a) Except as otherwise provided in division (D)(1)(b)872
of this section, any pass-through entity may file a single return873
on behalf of one or more of the entity's investors other than an874
investor that is a person subject to the tax imposed under section875
5733.06 of the Revised Code. The single return shall set forth the 876
name, address, and social security number or other identifying877
number of each of those pass-through entity investors and shall878
indicate the distributive share of each of those pass-through879
entity investor's income taxable in this state in accordance with880
sections 5747.20 to 5747.231 of the Revised Code. Such881
pass-through entity investors for whom the pass-through entity882
elects to file a single return are not entitled to the exemption883
or credit provided for by sections 5747.02 and 5747.022 of the884
Revised Code; shall calculate the tax before business credits at885
the highest rate of tax set forth in section 5747.02 of the886
Revised Code for the taxable year for which the return is filed;887
and are entitled to only their distributive share of the business888
credits as defined in division (D)(2) of this section. A single889
check drawn by the pass-through entity shall accompany the return890
in full payment of the tax due, as shown on the single return, for891
such investors, other than investors who are persons subject to892
the tax imposed under section 5733.06 of the Revised Code.893

       (b)(i) A pass-through entity shall not include in such a894
single return any investor that is a trust to the extent that any895
direct or indirect current, future, or contingent beneficiary of896
the trust is a person subject to the tax imposed under section897
5733.06 of the Revised Code.898

       (ii) A pass-through entity shall not include in such a single 899
return any investor that is itself a pass-through entity to the 900
extent that any direct or indirect investor in the second901
pass-through entity is a person subject to the tax imposed under902
section 5733.06 of the Revised Code.903

       (c) Nothing in division (D) of this section precludes the tax 904
commissioner from requiring such investors to file the return and 905
make the payment of taxes and related interest, penalty, and906
interest penalty required by this section or section 5747.02,907
5747.09, or 5747.15 of the Revised Code. Nothing in division (D)908
of this section shall be construed to provide to such an investor909
or pass-through entity any additional deduction or credit, other910
than the credit provided by division (J) of this section, solely911
on account of the entity's filing a return in accordance with this912
section. Such a pass-through entity also shall make the filing and 913
payment of estimated taxes on behalf of the pass-through entity914
investors other than an investor that is a person subject to the 915
tax imposed under section 5733.06 of the Revised Code.916

       (2) For the purposes of this section, "business credits"917
means the credits listed in section 5747.98 of the Revised Code918
excluding the following credits:919

       (a) The retirement credit under division (B) of section920
5747.055 of the Revised Code;921

       (b) The senior citizen credit under division (C) of section922
5747.05 of the Revised Code;923

       (c) The lump sum distribution credit under division (D) of924
section 5747.05 of the Revised Code;925

       (d) The dependent care credit under section 5747.054 of the926
Revised Code;927

       (e) The lump sum retirement income credit under division (C)928
of section 5747.055 of the Revised Code;929

       (f) The lump sum retirement income credit under division (D)930
of section 5747.055 of the Revised Code;931

       (g) The lump sum retirement income credit under division (E)932
of section 5747.055 of the Revised Code;933

       (h) The credit for displaced workers who pay for job training 934
under section 5747.27 of the Revised Code;935

       (i) The twenty-dollar personal exemption credit under section 936
5747.022 of the Revised Code;937

       (j) The joint filing credit under division (G) of section938
5747.05 of the Revised Code;939

       (k) The nonresident credit under division (A) of section940
5747.05 of the Revised Code;941

       (l) The credit for a resident's out-of-state income under942
division (B) of section 5747.05 of the Revised Code;943

       (m) The low-income credit under section 5747.056 of the 944
Revised Code;945

       (n) The credit for human organ and tissue donations under 946
section 5747.81 of the Revised Code.947

       (3) The election provided for under division (D) of this948
section applies only to the taxable year for which the election is949
made by the pass-through entity. Unless the tax commissioner950
provides otherwise, this election, once made, is binding and951
irrevocable for the taxable year for which the election is made.952
Nothing in this division shall be construed to provide for any953
deduction or credit that would not be allowable if a nonresident954
pass-through entity investor were to file an annual return.955

       (4) If a pass-through entity makes the election provided for956
under division (D) of this section, the pass-through entity shall957
be liable for any additional taxes, interest, interest penalty, or958
penalties imposed by this chapter if the tax commissioner finds 959
that the single return does not reflect the correct tax due by the960
pass-through entity investors covered by that return. Nothing in961
this division shall be construed to limit or alter the liability,962
if any, imposed on pass-through entity investors for unpaid or963
underpaid taxes, interest, interest penalty, or penalties as a964
result of the pass-through entity's making the election provided965
for under division (D) of this section. For the purposes of966
division (D) of this section, "correct tax due" means the tax that967
would have been paid by the pass-through entity had the single968
return been filed in a manner reflecting the tax commissioner's969
findings. Nothing in division (D) of this section shall be970
construed to make or hold a pass-through entity liable for tax971
attributable to a pass-through entity investor's income from a972
source other than the pass-through entity electing to file the973
single return.974

       (E) If a husband and wife file a joint federal income tax975
return for a taxable year, they shall file a joint return under976
this section for that taxable year, and their liabilities are977
joint and several, but, if the federal income tax liability of978
either spouse is determined on a separate federal income tax979
return, they shall file separate returns under this section.980

       If either spouse is not required to file a federal income tax981
return and either or both are required to file a return pursuant982
to this chapter, they may elect to file separate or joint returns,983
and, pursuant to that election, their liabilities are separate or984
joint and several. If a husband and wife file separate returns985
pursuant to this chapter, each must claim the taxpayer's own986
exemption, but not both, as authorized under section 5747.02 of987
the Revised Code on the taxpayer's own return.988

       (F) Each return or notice required to be filed under this989
section shall contain the signature of the taxpayer or the990
taxpayer's duly authorized agent and of the person who prepared991
the return for the taxpayer, and shall include the taxpayer's992
social security number. Each return shall be verified by a993
declaration under the penalties of perjury. The tax commissioner994
shall prescribe the form that the signature and declaration shall995
take.996

       (G) Each return or notice required to be filed under this997
section shall be made and filed as required by section 5747.04 of998
the Revised Code, on or before the fifteenth day of April of each999
year, on forms that the tax commissioner shall prescribe, together1000
with remittance made payable to the treasurer of state in the1001
combined amount of the state and all school district income taxes1002
shown to be due on the form, unless the combined amount shown to1003
be due is one dollar or less, in which case that amount need not1004
be remitted.1005

       Upon good cause shown, the tax commissioner may extend the1006
period for filing any notice or return required to be filed under1007
this section and may adopt rules relating to extensions. If the1008
extension results in an extension of time for the payment of any1009
state or school district income tax liability with respect to1010
which the return is filed, the taxpayer shall pay at the time the1011
tax liability is paid an amount of interest computed at the rate1012
per annum prescribed by section 5703.47 of the Revised Code on1013
that liability from the time that payment is due without extension1014
to the time of actual payment. Except as provided in section1015
5747.132 of the Revised Code, in addition to all other interest1016
charges and penalties, all taxes imposed under this chapter or1017
Chapter 5748. of the Revised Code and remaining unpaid after they1018
become due, except combined amounts due of one dollar or less,1019
bear interest at the rate per annum prescribed by section 5703.471020
of the Revised Code until paid or until the day an assessment is1021
issued under section 5747.13 of the Revised Code, whichever occurs1022
first.1023

       If the tax commissioner considers it necessary in order to 1024
ensure the payment of the tax imposed by section 5747.02 of the 1025
Revised Code or any tax imposed under Chapter 5748. of the Revised 1026
Code, the tax commissioner may require returns and payments to be 1027
made otherwise than as provided in this section.1028

       To the extent that any provision in this division conflicts 1029
with any provision in section 5747.026 of the Revised Code, the 1030
provision in that section prevails.1031

       (H) If any report, claim, statement, or other document1032
required to be filed, or any payment required to be made, within a1033
prescribed period or on or before a prescribed date under this1034
chapter is delivered after that period or that date by United1035
States mail to the agency, officer, or office with which the1036
report, claim, statement, or other document is required to be1037
filed, or to which the payment is required to be made, the date of1038
the postmark stamped on the cover in which the report, claim,1039
statement, or other document, or payment is mailed shall be deemed1040
to be the date of delivery or the date of payment.1041

       If a payment is required to be made by electronic funds1042
transfer pursuant to section 5747.072 of the Revised Code, the1043
payment is considered to be made when the payment is received by1044
the treasurer of state or credited to an account designated by the1045
treasurer of state for the receipt of tax payments.1046

       "The date of the postmark" means, in the event there is more1047
than one date on the cover, the earliest date imprinted on the1048
cover by the United States postal service.1049

       (I) The amounts withheld by the employer pursuant to section1050
5747.06 of the Revised Code shall be allowed to the recipient of1051
the compensation as credits against payment of the appropriate1052
taxes imposed on the recipient by section 5747.02 and under1053
Chapter 5748. of the Revised Code.1054

       (J) If, in accordance with division (D) of this section, a1055
pass-through entity elects to file a single return and if any1056
investor is required to file the return and make the payment of1057
taxes required by this chapter on account of the investor's other1058
income that is not included in a single return filed by a1059
pass-through entity, the investor is entitled to a refundable1060
credit equal to the investor's proportionate share of the tax paid1061
by the pass-through entity on behalf of the investor. The investor 1062
shall claim the credit for the investor's taxable year in which or 1063
with which ends the taxable year of the pass-through entity. 1064
Nothing in this chapter shall be construed to allow any credit 1065
provided in this chapter to be claimed more than once. For the 1066
purposes of computing any interest, penalty, or interest penalty, 1067
the investor shall be deemed to have paid the refundable credit 1068
provided by this division on the day that the pass-through entity 1069
paid the estimated tax or the tax giving rise to the credit.1070

       Sec. 5747.81. For taxable years beginning on or after January 1071
1, 2007, a refundable credit shall be allowed against the tax 1072
imposed by section 5747.02 of the Revised Code for a taxpayer who 1073
died during the taxable year and who donated a human organ, human 1074
eye, or any other human tissue following death. The amount of the 1075
credit shall equal five hundred dollars.1076

       The credit allowed by this section shall be claimed on the 1077
return required to be filed under section 5747.08 of the Revised 1078
Code by the decedent taxpayer's executor, administrator, or other 1079
person charged with the decedent taxpayer's property for the 1080
taxable year in which the decedent died.1081

       The credit allowed by this section shall be claimed in the 1082
order required under section 5747.98 of the Revised Code.1083

       Sec. 5747.98.  (A) To provide a uniform procedure for1084
calculating the amount of tax due under section 5747.02 of the1085
Revised Code, a taxpayer shall claim any credits to which the1086
taxpayer is entitled in the following order:1087

       (1) The retirement income credit under division (B) of1088
section 5747.055 of the Revised Code;1089

       (2) The senior citizen credit under division (C) of section1090
5747.05 of the Revised Code;1091

       (3) The lump sum distribution credit under division (D) of1092
section 5747.05 of the Revised Code;1093

       (4) The dependent care credit under section 5747.054 of the1094
Revised Code;1095

       (5) The lump sum retirement income credit under division (C)1096
of section 5747.055 of the Revised Code;1097

       (6) The lump sum retirement income credit under division (D)1098
of section 5747.055 of the Revised Code;1099

       (7) The lump sum retirement income credit under division (E)1100
of section 5747.055 of the Revised Code;1101

       (8) The low-income credit under section 5747.056 of the 1102
Revised Code;1103

       (9) The credit for displaced workers who pay for job training 1104
under section 5747.27 of the Revised Code;1105

       (10) The campaign contribution credit under section 5747.291106
of the Revised Code;1107

       (11) The twenty-dollar personal exemption credit under1108
section 5747.022 of the Revised Code;1109

       (12) The joint filing credit under division (G) of section1110
5747.05 of the Revised Code;1111

       (13) The nonresident credit under division (A) of section1112
5747.05 of the Revised Code;1113

       (14) The credit for a resident's out-of-state income under1114
division (B) of section 5747.05 of the Revised Code;1115

       (15) The credit for employers that enter into agreements with 1116
child day-care centers under section 5747.34 of the Revised Code;1117

       (16) The credit for employers that reimburse employee child 1118
care expenses under section 5747.36 of the Revised Code;1119

       (17) The credit for adoption of a minor child under section1120
5747.37 of the Revised Code;1121

       (18) The credit for purchases of lights and reflectors under1122
section 5747.38 of the Revised Code;1123

       (19) The job retention credit under division (B) of section1124
5747.058 of the Revised Code;1125

       (20) The credit for purchases of new manufacturing machinery1126
and equipment under section 5747.26 or section 5747.261 of the1127
Revised Code;1128

       (21) The second credit for purchases of new manufacturing1129
machinery and equipment and the credit for using Ohio coal under1130
section 5747.31 of the Revised Code;1131

       (22) The job training credit under section 5747.39 of the1132
Revised Code;1133

       (23) The enterprise zone credit under section 5709.66 of the1134
Revised Code;1135

       (24) The credit for the eligible costs associated with a1136
voluntary action under section 5747.32 of the Revised Code;1137

       (25) The credit for employers that establish on-site child1138
day-care centers under section 5747.35 of the Revised Code;1139

       (26) The ethanol plant investment credit under section1140
5747.75 of the Revised Code;1141

       (27) The credit for purchases of qualifying grape production1142
property under section 5747.28 of the Revised Code;1143

       (28) The export sales credit under section 5747.057 of the1144
Revised Code;1145

       (29) The credit for research and development and technology1146
transfer investors under section 5747.33 of the Revised Code;1147

       (30) The enterprise zone credits under section 5709.65 of the1148
Revised Code;1149

       (31) The research and development credit under section 1150
5747.331 of the Revised Code;1151

       (32) The refundable jobs creation credit under division (A)1152
of section 5747.058 of the Revised Code;1153

       (33) The refundable credit for taxes paid by a qualifying1154
entity granted under section 5747.059 of the Revised Code;1155

       (34) The refundable credits for taxes paid by a qualifying1156
pass-through entity granted under division (J) of section 5747.081157
of the Revised Code;1158

       (35) The refundable credit for tax withheld under division1159
(B)(1) of section 5747.062 of the Revised Code;1160

       (36) The refundable credit under section 5747.80 of the 1161
Revised Code for losses on loans made to the Ohio venture capital 1162
program under sections 150.01 to 150.10 of the Revised Code;1163

       (37) The refundable credit for human organ and tissue 1164
donations under section 5747.81 of the Revised Code.1165

       (B) For any credit, except the refundable credits enumerated1166
in divisions (A)(32) to (36) of this section and the credit 1167
granted under division (I) of section 5747.08 of the Revised Code, 1168
the amount of the credit for a taxable year shall not exceed the 1169
tax due after allowing for any other credit that precedes it in 1170
the order required under this section. Any excess amount of a 1171
particular credit may be carried forward if authorized under the 1172
section creating that credit. Nothing in this chapter shall be 1173
construed to allow a taxpayer to claim, directly or indirectly, a1174
credit more than once for a taxable year.1175

       Section 2. That existing sections 5747.01, 5747.08, and 1176
5747.98 of the Revised Code are hereby repealed.1177

       Section 3. The amendment or enactment by this act of sections 1178
5747.01, 5747.08, 5747.81, and 5747.98 of the Revised Code applies 1179
to taxable years beginning on or after January 1, 2007.1180