S. B. No. 155 As Introduced

As Introduced

128th General Assembly

Regular Session

2009-2010

S. B. No. 155

Senators Carey, Miller, D.

A BILL

To amend section 5747.01 of the Revised Code to

partially decouple Ohio law from recent federal

tax law changes, to require the Department of Job

and Family Services to operate the Disability

Medical Assistance Program in the same manner the

Program was operated as of June 30, 2009, and to

make appropriations.

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

Section 1. That section 5747.01 of the Revised Code be	8
amended to read as follows:	9

Sec. 5747.01. Except as otherwise expressly provided or	10
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 United	13
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:

(A) "Adjusted gross income" or "Ohio adjusted gross income"	20
means federal adjusted gross income, as defined and used in the	21
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 any	24
state, other than this state and its subdivisions and authorities.	25

(2) Add interest or dividends on obligations of any	26
authority, commission, instrumentality, territory, or possession	27
of the United States to the extent that the interest or dividends	28
are exempt from federal income taxes but not from state income	29
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 extent	33
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 extent	37
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 Internal	41
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 of	52
the trust increased by (a)(i) the additions to adjusted gross	53
income required under division (A) of this section and (ii) the	54
personal exemptions allowed to the trust pursuant to section	55
642(b) of the Internal Revenue Code, and decreased by (b)(i) the	56
deductions to adjusted gross income required under division (A) of	57
this section, (ii) the amount of federal income taxes attributable	58
to such income, and (iii) the amount of taxable income that has	59
been included in the adjusted gross income of a beneficiary by	60
reason of a prior accumulation distribution. Any undistributed net	61
income included in the adjusted gross income of a beneficiary	62
shall reduce the undistributed net income of the trust commencing	63
with the earliest years of the accumulation period.	64

(7) Deduct the amount of wages and salaries, if any, not	65
otherwise allowable as a deduction but that would have been	66
allowable as a deduction in computing federal adjusted gross	67
income for the taxable year, had the targeted jobs credit allowed	68
and determined under sections 38, 51, and 52 of the Internal	69
Revenue Code not been in effect.	70

(8) Deduct any interest or interest equivalent on public	71
obligations and purchase obligations to the extent that the	72
interest or interest equivalent is included in federal adjusted	73
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 extent	76
that the loss has been deducted or the gain has been included in	77
computing federal adjusted gross income.	78

(10) Deduct or add amounts, as provided under section	79
5747.70 of the Revised Code, related to contributions to variable	80
college savings program accounts made or tuition units purchased	81
pursuant to Chapter 3334. of the Revised Code.	82

(11)(a) Deduct, to the extent not otherwise allowable as a	83
deduction or exclusion in computing federal or Ohio adjusted gross	84
income for the taxable year, the amount the taxpayer paid during	85
the taxable year for medical care insurance and qualified	86
long-term care insurance for the taxpayer, the taxpayer's spouse,	87
and dependents. No deduction for medical care insurance under	88
division (A)(11) of this section shall be allowed either to any	89
taxpayer who is eligible to participate in any subsidized health	90
plan maintained by any employer of the taxpayer or of the	91
taxpayer's spouse, or to any taxpayer who is entitled to, or on	92
application would be entitled to, benefits under part A of Title	93
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 this	95
section, "subsidized health plan" means a health plan for which	96
the employer pays any portion of the plan's cost. The deduction	97
allowed under division (A)(11)(a) of this section shall be the net	98
of any related premium refunds, related premium reimbursements, or	99
related insurance premium dividends received during the taxable	100
year.	101

(b) Deduct, to the extent not otherwise deducted or excluded	102
in computing federal or Ohio adjusted gross income during the	103
taxable year, the amount the taxpayer paid during the taxable	104
year, not compensated for by any insurance or otherwise, for	105
medical care of the taxpayer, the taxpayer's spouse, and	106
dependents, to the extent the expenses exceed seven and one-half	107
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 the	110
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 Internal	113
Revenue Code.	114

(12)(a) Deduct any amount included in federal adjusted gross	115
income solely because the amount represents a reimbursement or	116
refund of expenses that in any year the taxpayer had deducted as	117
an itemized deduction pursuant to section 63 of the Internal	118
Revenue Code and applicable United States department of the	119
treasury regulations. The deduction otherwise allowed under	120
division (A)(12)(a) of this section shall be reduced to the extent	121
the reimbursement is attributable to an amount the taxpayer	122
deducted under this section in any taxable year.	123

(b) Add any amount not otherwise included in Ohio adjusted	124
gross income for any taxable year to the extent that the amount is	125
attributable to the recovery during the taxable year of any amount	126
deducted or excluded in computing federal or Ohio adjusted gross	127
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 was	133
included in the taxpayer's adjusted gross income for a prior	134
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 adjusted	137
gross income for the current or any other taxable year.	138

(14) Deduct an amount equal to the deposits made to, and net	139
investment earnings of, a medical savings account during the	140
taxable year, in accordance with section 3924.66 of the Revised	141
Code. The deduction allowed by division (A)(14) of this section	142
does not apply to medical savings account deposits and earnings	143
otherwise deducted or excluded for the current or any other	144
taxable year from the taxpayer's federal adjusted gross income.	145

(15)(a) Add an amount equal to the funds withdrawn from a	146
medical savings account during the taxable year, and the net	147
investment earnings on those funds, when the funds withdrawn were	148
used for any purpose other than to reimburse an account holder	149
for, or to pay, eligible medical expenses, in accordance with	150
section 3924.66 of the Revised Code;	151

(b) Add the amounts distributed from a medical savings	152
account under division (A)(2) of section 3924.68 of the Revised	153
Code during the taxable year.	154

(16) Add any amount claimed as a credit under section	155
5747.059 of the Revised Code to the extent that such amount	156
satisfies either of the following:	157

(a) The amount was deducted or excluded from the computation	158
of the taxpayer's federal adjusted gross income as required to be	159
reported for the taxpayer's taxable year under the Internal	160
Revenue Code;	161

(b) The amount resulted in a reduction of the taxpayer's	162
federal adjusted gross income as required to be reported for any	163
of the taxpayer's taxable years under the Internal Revenue Code.	164

(17) Deduct the amount contributed by the taxpayer to an	165
individual development account program established by a county	166
department of job and family services pursuant to sections 329.11	167
to 329.14 of the Revised Code for the purpose of matching funds	168
deposited by program participants. On request of the tax	169
commissioner, the taxpayer shall provide any information that, in	170
the tax commissioner's opinion, is necessary to establish the	171
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 married	174
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 the	178
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 that	183
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 year	190
of any amount the taxpayer deducted under division (A)(18) of this	191
section in any previous taxable year to the extent the amount is	192
not otherwise included in Ohio adjusted gross income.	193

(20)(a)(i) Add five-sixths of the amount of depreciation	194
expense allowed by subsection (k) of section 168 of the Internal	195
Revenue Code, including the taxpayer's proportionate or	196
distributive share of the amount of depreciation expense allowed	197
by that subsection to a pass-through entity in which the taxpayer	198
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 be	216
construed to adjust or modify the adjusted basis of any asset.	217

(c) To the extent the add-back required under division	218
(A)(20)(a) of this section is attributable to property generating	219
nonbusiness income or loss allocated under section 5747.20 of the	220
Revised Code, the add-back shall be sitused to the same location	221
as the nonbusiness income or loss generated by the property for	222
the purpose of determining the credit under division (A) of	223
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 under	235
division (A)(20)(a) of this section for a taxable year, deduct	236
one-fifth of the amount so added for each of the five succeeding	237
taxable years.	238

(b) If the amount deducted under division (A)(21)(a) of this	239
section is attributable to an add-back allocated under division	240
(A)(20)(c) of this section, the amount deducted shall be sitused	241
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 included in federal adjusted gross	264
income and not otherwise allowable as a deduction or exclusion in	265
computing federal or Ohio adjusted gross income for the taxable	266
year, military pay and allowances received by the taxpayer during	267
the taxable year for active duty service in the United States	268
army, air force, navy, marine corps, or coast guard or reserve	269
components thereof or the national guard. The deduction may not be	270
claimed for military pay and allowances received by the taxpayer	271
while the taxpayer is stationed in this state.	272

(25) Deduct, to the extent not otherwise allowable as a	273
deduction or exclusion in computing federal or Ohio adjusted gross	274
income for the taxable year and not otherwise compensated for by	275
any other source, the amount of qualified organ donation expenses	276
incurred by the taxpayer during the taxable year, not to exceed	277
ten thousand dollars. A taxpayer may deduct qualified organ	278
donation expenses only once for all taxable years beginning with	279
taxable years beginning in 2007.	280

For the purposes of division (A)(25) of this section:

281

(a) "Human organ" means all or any portion of a human liver,	282
pancreas, kidney, intestine, or lung, and any portion of human	283
bone marrow.	284

(b) "Qualified organ donation expenses" means travel	285
expenses, lodging expenses, and wages and salary forgone by a	286
taxpayer in connection with the taxpayer's donation, while living,	287
of one or more of the taxpayer's human organs to another human	288
being.	289

(26) Deduct, to the extent not otherwise deducted or excluded	290
in computing federal or Ohio adjusted gross income for the taxable	291
year, amounts received by the taxpayer as retired military	292
personnel pay for service in the United States army, navy, air	293
force, coast guard, or marine corps or reserve components thereof,	294
or the national guard, or received by the surviving spouse or	295
former spouse of such a taxpayer under the survivor benefit plan	296
on account of such a taxpayer's death. If the taxpayer receives	297
income on account of retirement paid under the federal civil	298
service retirement system or federal employees retirement system,	299
or under any successor retirement program enacted by the congress	300
of the United States that is established and maintained for	301
retired employees of the United States government, and such	302
retirement income is based, in whole or in part, on credit for	303
the taxpayer's military service, the deduction allowed under this	304
division shall include only that portion of such retirement	305
income that is attributable to the taxpayer's military service,	306
to the extent that portion of such retirement income is otherwise	307
included in federal adjusted gross income and is not otherwise	308
deducted under this section. Any amount deducted under division	309
(A)(26) of this section is not included in a taxpayer's	310
adjusted gross income for the purposes of section 5747.055 of	311
the Revised Code. No amount may be deducted under division	312
(A)(26) of this section on the basis of which a credit was	313
claimed under section 5747.055 of the Revised Code.	314

(27) Deduct, to the extent not otherwise deducted or excluded	315
in computing federal or Ohio adjusted gross income for the taxable	316
year, the amount the taxpayer received during the taxable year	317
from the military injury relief fund created in section 5101.98 of	318
the Revised Code.	319

(28)(a) Add any amount not included in federal adjusted gross	320
income for the taxable year because of an election under section	321
108(i) of the Internal Revenue Code.	322

(b) Deduct any amount included in federal adjusted gross	323
income for the taxable year because of an election under section	324
108(i) of the Internal Revenue Code.	325

(B) "Business income" means income, including gain or loss,	326
arising from transactions, activities, and sources in the regular	327
course of a trade or business and includes income, gain, or loss	328
from real property, tangible property, and intangible property if	329
the acquisition, rental, management, and disposition of the	330
property constitute integral parts of the regular course of a	331
trade or business operation. "Business income" includes income,	332
including gain or loss, from a partial or complete liquidation of	333
a business, including, but not limited to, gain or loss from the	334
sale or other disposition of goodwill.	335

(C) "Nonbusiness income" means all income other than business	336
income and may include, but is not limited to, compensation, rents	337
and royalties from real or tangible personal property, capital	338
gains, interest, dividends and distributions, patent or copyright	339
royalties, or lottery winnings, prizes, and awards.	340

(D) "Compensation" means any form of remuneration paid to an	341
employee for personal services.	342

(E) "Fiduciary" means a guardian, trustee, executor,	343
administrator, receiver, conservator, or any other person acting	344
in any fiduciary capacity for any individual, trust, or estate.	345

(F) "Fiscal year" means an accounting period of twelve months	346
ending on the last day of any month other than December.	347

(G) "Individual" means any natural person.

348

(H) "Internal Revenue Code" means the "Internal Revenue Code	349
of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.	350

(I) "Resident" means any of the following, provided that	351
division (I)(3) of this section applies only to taxable years of a	352
trust beginning in 2002 or thereafter:	353

(1) An individual who is domiciled in this state, subject to	354
section 5747.24 of the Revised Code;	355

(2) The estate of a decedent who at the time of death was	356
domiciled in this state. The domicile tests of section 5747.24 of	357
the Revised Code are not controlling for purposes of division	358
(I)(2) of this section.	359

(3) A trust that, in whole or part, resides in this state.	360
If only part of a trust resides in this state, the trust is a	361
resident only with respect to that part.	362

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

363

(a) A trust resides in this state for the trust's current	364
taxable year to the extent, as described in division (I)(3)(d) of	365
this section, that the trust consists directly or indirectly, in	366
whole or in part, of assets, net of any related liabilities, that	367
were transferred, or caused to be transferred, directly or	368
indirectly, to the trust by any of the following:	369

(i) A person, a court, or a governmental entity or	370
instrumentality on account of the death of a decedent, but only if	371
the trust is described in division (I)(3)(e)(i) or (ii) of this	372
section;	373

(ii) A person who was domiciled in this state for the	374
purposes of this chapter when the person directly or indirectly	375
transferred assets to an irrevocable trust, but only if at least	376
one of the trust's qualifying beneficiaries is domiciled in this	377
state for the purposes of this chapter during all or some portion	378
of the trust's current taxable year;	379

(iii) A person who was domiciled in this state for the	380
purposes of this chapter when the trust document or instrument or	381
part of the trust document or instrument became irrevocable, but	382
only if at least one of the trust's qualifying beneficiaries is a	383
resident domiciled in this state for the purposes of this chapter	384
during all or some portion of the trust's current taxable year. If	385
a trust document or instrument became irrevocable upon the death	386
of a person who at the time of death was domiciled in this state	387
for purposes of this chapter, that person is a person described in	388
division (I)(3)(a)(iii) of this section.	389

(b) A trust is irrevocable to the extent that the transferor	390
is not considered to be the owner of the net assets of the trust	391
under sections 671 to 678 of the Internal Revenue Code.	392

(c) With respect to a trust other than a charitable lead	393
trust, "qualifying beneficiary" has the same meaning as "potential	394
current beneficiary" as defined in section 1361(e)(2) of the	395
Internal Revenue Code, and with respect to a charitable lead trust	396
"qualifying beneficiary" is any current, future, or contingent	397
beneficiary, but with respect to any trust "qualifying	398
beneficiary" excludes a person or a governmental entity or	399
instrumentality to any of which a contribution would qualify for	400
the charitable deduction under section 170 of the Internal Revenue	401
Code.	402

(d) For the purposes of division (I)(3)(a) of this section,	403
the extent to which a trust consists directly or indirectly, in	404
whole or in part, of assets, net of any related liabilities, that	405
were transferred directly or indirectly, in whole or part, to the	406
trust by any of the sources enumerated in that division shall be	407
ascertained by multiplying the fair market value of the trust's	408
assets, net of related liabilities, by the qualifying ratio, which	409
shall be computed as follows:	410

(i) The first time the trust receives assets, the numerator	411
of the qualifying ratio is the fair market value of those assets	412
at that time, net of any related liabilities, from sources	413
enumerated in division (I)(3)(a) of this section. The denominator	414
of the qualifying ratio is the fair market value of all the	415
trust's assets at that time, net of any related liabilities.	416

(ii) Each subsequent time the trust receives assets, a	417
revised qualifying ratio shall be computed. The numerator of the	418
revised qualifying ratio is the sum of (1) the fair market value	419
of the trust's assets immediately prior to the subsequent	420
transfer, net of any related liabilities, multiplied by the	421
qualifying ratio last computed without regard to the subsequent	422
transfer, and (2) the fair market value of the subsequently	423
transferred assets at the time transferred, net of any related	424
liabilities, from sources enumerated in division (I)(3)(a) of this	425
section. The denominator of the revised qualifying ratio is the	426
fair market value of all the trust's assets immediately after the	427
subsequent transfer, net of any related liabilities.	428

(iii) Whether a transfer to the trust is by or from any of	429
the sources enumerated in division (I)(3)(a) of this section shall	430
be ascertained without regard to the domicile of the trust's	431
beneficiaries.	432

(e) For the purposes of division (I)(3)(a)(i) of this	433
section:	434

(i) A trust is described in division (I)(3)(e)(i) of this	435
section if the trust is a testamentary trust and the testator of	436
that testamentary trust was domiciled in this state at the time of	437
the testator's death for purposes of the taxes levied under	438
Chapter 5731. of the Revised Code.	439

(ii) A trust is described in division (I)(3)(e)(ii) of this	440
section if the transfer is a qualifying transfer described in any	441
of divisions (I)(3)(f)(i) to (vi) of this section, the trust is an	442
irrevocable inter vivos trust, and at least one of the trust's	443
qualifying beneficiaries is domiciled in this state for purposes	444
of this chapter during all or some portion of the trust's current	445
taxable year.	446

(f) For the purposes of division (I)(3)(e)(ii) of this	447
section, a "qualifying transfer" is a transfer of assets, net of	448
any related liabilities, directly or indirectly to a trust, if the	449
transfer is described in any of the following:	450

(i) The transfer is made to a trust, created by the decedent	451
before the decedent's death and while the decedent was domiciled	452
in this state for the purposes of this chapter, and, prior to the	453
death of the decedent, the trust became irrevocable while the	454
decedent was domiciled in this state for the purposes of this	455
chapter.	456

(ii) The transfer is made to a trust to which the decedent,	457
prior to the decedent's death, had directly or indirectly	458
transferred assets, net of any related liabilities, while the	459
decedent was domiciled in this state for the purposes of this	460
chapter, and prior to the death of the decedent the trust became	461
irrevocable while the decedent was domiciled in this state for the	462
purposes of this chapter.	463

(iii) The transfer is made on account of a contractual	464
relationship existing directly or indirectly between the	465
transferor and either the decedent or the estate of the decedent	466
at any time prior to the date of the decedent's death, and the	467
decedent was domiciled in this state at the time of death for	468
purposes of the taxes levied under Chapter 5731. of the Revised	469
Code.	470

(iv) The transfer is made to a trust on account of a	471
contractual relationship existing directly or indirectly between	472
the transferor and another person who at the time of the	473
decedent's death was domiciled in this state for purposes of this	474
chapter.	475

(v) The transfer is made to a trust on account of the will of	476
a testator.	477

(vi) The transfer is made to a trust created by or caused to	478
be created by a court, and the trust was directly or indirectly	479
created in connection with or as a result of the death of an	480
individual who, for purposes of the taxes levied under Chapter	481
5731. of the Revised Code, was domiciled in this state at the time	482
of the individual's death.	483

(g) The tax commissioner may adopt rules to ascertain the	484
part of a trust residing in this state.	485

(J) "Nonresident" means an individual or estate that is not a	486
resident. An individual who is a resident for only part of a	487
taxable year is a nonresident for the remainder of that taxable	488
year.	489

(K) "Pass-through entity" has the same meaning as in section	490
5733.04 of the Revised Code.	491

(L) "Return" means the notifications and reports required to	492
be filed pursuant to this chapter for the purpose of reporting the	493
tax due and includes declarations of estimated tax when so	494
required.	495

(M) "Taxable year" means the calendar year or the taxpayer's	496
fiscal year ending during the calendar year, or fractional part	497
thereof, upon which the adjusted gross income is calculated	498
pursuant to this chapter.	499

(N) "Taxpayer" means any person subject to the tax imposed by	500
section 5747.02 of the Revised Code or any pass-through entity	501
that makes the election under division (D) of section 5747.08 of	502
the Revised Code.	503

(O) "Dependents" means dependents as defined in the Internal	504
Revenue Code and as claimed in the taxpayer's federal income tax	505
return for the taxable year or which the taxpayer would have been	506
permitted to claim had the taxpayer filed a federal income tax	507
return.	508

(P) "Principal county of employment" means, in the case of a	509
nonresident, the county within the state in which a taxpayer	510
performs services for an employer or, if those services are	511
performed in more than one county, the county in which the major	512
portion of the services are performed.	513

(Q) As used in sections 5747.50 to 5747.55 of the Revised	514
Code:	515

(1) "Subdivision" means any county, municipal corporation,	516
park district, or township.	517

(2) "Essential local government purposes" includes all	518
functions that any subdivision is required by general law to	519
exercise, including like functions that are exercised under a	520
charter adopted pursuant to the Ohio Constitution.	521

(R) "Overpayment" means any amount already paid that exceeds	522
the figure determined to be the correct amount of the tax.	523

(S) "Taxable income" or "Ohio taxable income" applies only to	524
estates and trusts, and means federal taxable income, as defined	525
and used in the Internal Revenue Code, adjusted as follows:	526

(1) Add interest or dividends, net of ordinary, necessary,	527
and reasonable expenses not deducted in computing federal taxable	528
income, on obligations or securities of any state or of any	529
political subdivision or authority of any state, other than this	530
state and its subdivisions and authorities, but only to the extent	531
that such net amount is not otherwise includible in Ohio taxable	532
income and is described in either division (S)(1)(a) or (b) of	533
this section:	534

(a) The net amount is not attributable to the S portion of an	535
electing small business trust and has not been distributed to	536
beneficiaries for the taxable year;	537

(b) The net amount is attributable to the S portion of an	538
electing small business trust for the taxable year.	539

(2) Add interest or dividends, net of ordinary, necessary,	540
and reasonable expenses not deducted in computing federal taxable	541
income, on obligations of any authority, commission,	542
instrumentality, territory, or possession of the United States to	543
the extent that the interest or dividends are exempt from federal	544
income taxes but not from state income taxes, but only to the	545
extent that such net amount is not otherwise includible in Ohio	546
taxable income and is described in either division (S)(1)(a) or	547
(b) of this section;	548

(3) Add the amount of personal exemption allowed to the	549
estate pursuant to section 642(b) of the Internal Revenue Code;	550

(4) Deduct interest or dividends, net of related expenses	551
deducted in computing federal taxable income, on obligations of	552
the United States and its territories and possessions or of any	553
authority, commission, or instrumentality of the United States to	554
the extent that the interest or dividends are exempt from state	555
taxes under the laws of the United States, but only to the extent	556
that such amount is included in federal taxable income and is	557
described in either division (S)(1)(a) or (b) of this section;	558

(5) Deduct the amount of wages and salaries, if any, not	559
otherwise allowable as a deduction but that would have been	560
allowable as a deduction in computing federal taxable income for	561
the taxable year, had the targeted jobs credit allowed under	562
sections 38, 51, and 52 of the Internal Revenue Code not been in	563
effect, but only to the extent such amount relates either to	564
income included in federal taxable income for the taxable year or	565
to income of the S portion of an electing small business trust for	566
the taxable year;	567

(6) Deduct any interest or interest equivalent, net of	568
related expenses deducted in computing federal taxable income, on	569
public obligations and purchase obligations, but only to the	570
extent that such net amount relates either to income included in	571
federal taxable income for the taxable year or to income of the S	572
portion of an electing small business trust for the taxable year;	573

(7) Add any loss or deduct any gain resulting from sale,	574
exchange, or other disposition of public obligations to the extent	575
that such loss has been deducted or such gain has been included in	576
computing either federal taxable income or income of the S portion	577
of an electing small business trust for the taxable year;	578

(8) Except in the case of the final return of an estate, add	579
any amount deducted by the taxpayer on both its Ohio estate tax	580
return pursuant to section 5731.14 of the Revised Code, and on its	581
federal income tax return in determining federal taxable income;	582

(9)(a) Deduct any amount included in federal taxable income	583
solely because the amount represents a reimbursement or refund of	584
expenses that in a previous year the decedent had deducted as an	585
itemized deduction pursuant to section 63 of the Internal Revenue	586
Code and applicable treasury regulations. The deduction otherwise	587
allowed under division (S)(9)(a) of this section shall be reduced	588
to the extent the reimbursement is attributable to an amount the	589
taxpayer or decedent deducted under this section in any taxable	590
year.	591

(b) Add any amount not otherwise included in Ohio taxable	592
income for any taxable year to the extent that the amount is	593
attributable to the recovery during the taxable year of any amount	594
deducted or excluded in computing federal or Ohio taxable income	595
in any taxable year, but only to the extent such amount has not	596
been distributed to beneficiaries for the taxable year.	597

(10) Deduct any portion of the deduction described in section	598
1341(a)(2) of the Internal Revenue Code, for repaying previously	599
reported income received under a claim of right, that meets both	600
of the following requirements:	601

(a) It is allowable for repayment of an item that was	602
included in the taxpayer's taxable income or the decedent's	603
adjusted gross income for a prior taxable year and did not qualify	604
for a credit under division (A) or (B) of section 5747.05 of the	605
Revised Code for that year.	606

(b) It does not otherwise reduce the taxpayer's taxable	607
income or the decedent's adjusted gross income for the current or	608
any other taxable year.	609

(11) Add any amount claimed as a credit under section	610
5747.059 of the Revised Code to the extent that the amount	611
satisfies either of the following:	612

(a) The amount was deducted or excluded from the computation	613
of the taxpayer's federal taxable income as required to be	614
reported for the taxpayer's taxable year under the Internal	615
Revenue Code;	616

(b) The amount resulted in a reduction in the taxpayer's	617
federal taxable income as required to be reported for any of the	618
taxpayer's taxable years under the Internal Revenue Code.	619

(12) Deduct any amount, net of related expenses deducted in	620
computing federal taxable income, that a trust is required to	621
report as farm income on its federal income tax return, but only	622
if the assets of the trust include at least ten acres of land	623
satisfying the definition of "land devoted exclusively to	624
agricultural use" under section 5713.30 of the Revised Code,	625
regardless of whether the land is valued for tax purposes as such	626
land under sections 5713.30 to 5713.38 of the Revised Code. If the	627
trust is a pass-through entity investor, section 5747.231 of the	628
Revised Code applies in ascertaining if the trust is eligible to	629
claim the deduction provided by division (S)(12) of this section	630
in connection with the pass-through entity's farm income.	631

Except for farm income attributable to the S portion of an	632
electing small business trust, the deduction provided by division	633
(S)(12) of this section is allowed only to the extent that the	634
trust has not distributed such farm income. Division (S)(12) of	635
this section applies only to taxable years of a trust beginning in	636
2002 or thereafter.	637

(13) Add the net amount of income described in section 641(c)	638
of the Internal Revenue Code to the extent that amount is not	639
included in federal taxable income.	640

(14) Add or deduct the amount the taxpayer would be required	641
to add or deduct under division (A)(20) or (21) of this section if	642
the taxpayer's Ohio taxable income were computed in the same	643
manner as an individual's Ohio adjusted gross income is computed	644
under this section. In the case of a trust, division (S)(14) of	645
this section applies only to any of the trust's taxable years	646
beginning in 2002 or thereafter.	647

(15)(a) Add any amount not included in federal taxable income	648
for the taxable year because of an election under section 108(i)	649
of the Internal Revenue Code.	650

(b) Deduct any amount included in federal taxable income for	651
the taxable year because of an election under section 108(i) of	652
the Internal Revenue Code.	653

(T) "School district income" and "school district income tax"	654
have the same meanings as in section 5748.01 of the Revised Code.	655

(U) As used in divisions (A)(8), (A)(9), (S)(6), and (S)(7)	656
of this section, "public obligations," "purchase obligations," and	657
"interest or interest equivalent" have the same meanings as in	658
section 5709.76 of the Revised Code.	659

(V) "Limited liability company" means any limited liability	660
company formed under Chapter 1705. of the Revised Code or under	661
the laws of any other state.	662

(W) "Pass-through entity investor" means any person who,	663
during any portion of a taxable year of a pass-through entity, is	664
a partner, member, shareholder, or equity investor in that	665
pass-through entity.	666

(X) "Banking day" has the same meaning as in section 1304.01	667
of the Revised Code.	668

(Y) "Month" means a calendar month.

669

(Z) "Quarter" means the first three months, the second three	670
months, the third three months, or the last three months of the	671
taxpayer's taxable year.	672

(AA)(1) "Eligible institution" means a state university or	673
state institution of higher education as defined in section	674
3345.011 of the Revised Code, or a private, nonprofit college,	675
university, or other post-secondary institution located in this	676
state that possesses a certificate of authorization issued by the	677
Ohio board of regents pursuant to Chapter 1713. of the Revised	678
Code or a certificate of registration issued by the state board of	679
career colleges and schools under Chapter 3332. of the Revised	680
Code.	681

(2) "Qualified tuition and fees" means tuition and fees	682
imposed by an eligible institution as a condition of enrollment or	683
attendance, not exceeding two thousand five hundred dollars in	684
each of the individual's first two years of post-secondary	685
education. If the individual is a part-time student, "qualified	686
tuition and fees" includes tuition and fees paid for the academic	687
equivalent of the first two years of post-secondary education	688
during a maximum of five taxable years, not exceeding a total of	689
five thousand dollars. "Qualified tuition and fees" does not	690
include:	691

(a) Expenses for any course or activity involving sports,	692
games, or hobbies unless the course or activity is part of the	693
individual's degree or diploma program;	694

(b) The cost of books, room and board, student activity fees,	695
athletic fees, insurance expenses, or other expenses unrelated to	696
the individual's academic course of instruction;	697

(c) Tuition, fees, or other expenses paid or reimbursed	698
through an employer, scholarship, grant in aid, or other	699
educational benefit program.	700

(BB)(1) "Modified business income" means the business income	701
included in a trust's Ohio taxable income after such taxable	702
income is first reduced by the qualifying trust amount, if any.	703

(2) "Qualifying trust amount" of a trust means capital gains	704
and losses from the sale, exchange, or other disposition of equity	705
or ownership interests in, or debt obligations of, a qualifying	706
investee to the extent included in the trust's Ohio taxable	707
income, but only if the following requirements are satisfied:	708

(a) The book value of the qualifying investee's physical	709
assets in this state and everywhere, as of the last day of the	710
qualifying investee's fiscal or calendar year ending immediately	711
prior to the date on which the trust recognizes the gain or loss,	712
is available to the trust.	713

(b) The requirements of section 5747.011 of the Revised Code	714
are satisfied for the trust's taxable year in which the trust	715
recognizes the gain or loss.	716

Any gain or loss that is not a qualifying trust amount is	717
modified business income, qualifying investment income, or	718
modified nonbusiness income, as the case may be.	719

(3) "Modified nonbusiness income" means a trust's Ohio	720
taxable income other than modified business income, other than the	721
qualifying trust amount, and other than qualifying investment	722
income, as defined in section 5747.012 of the Revised Code, to the	723
extent such qualifying investment income is not otherwise part of	724
modified business income.	725

(4) "Modified Ohio taxable income" applies only to trusts,	726
and means the sum of the amounts described in divisions (BB)(4)(a)	727
to (c) of this section:	728

(a) The fraction, calculated under section 5747.013, and	729
applying section 5747.231 of the Revised Code, multiplied by the	730
sum of the following amounts:	731

(i) The trust's modified business income;

732

(ii) The trust's qualifying investment income, as defined in	733
section 5747.012 of the Revised Code, but only to the extent the	734
qualifying investment income does not otherwise constitute	735
modified business income and does not otherwise constitute a	736
qualifying trust amount.	737

(b) The qualifying trust amount multiplied by a fraction, the	738
numerator of which is the sum of the book value of the qualifying	739
investee's physical assets in this state on the last day of the	740
qualifying investee's fiscal or calendar year ending immediately	741
prior to the day on which the trust recognizes the qualifying	742
trust amount, and the denominator of which is the sum of the book	743
value of the qualifying investee's total physical assets	744
everywhere on the last day of the qualifying investee's fiscal or	745
calendar year ending immediately prior to the day on which the	746
trust recognizes the qualifying trust amount. If, for a taxable	747
year, the trust recognizes a qualifying trust amount with respect	748
to more than one qualifying investee, the amount described in	749
division (BB)(4)(b) of this section shall equal the sum of the	750
products so computed for each such qualifying investee.	751

(c)(i) With respect to a trust or portion of a trust that is	752
a resident as ascertained in accordance with division (I)(3)(d) of	753
this section, its modified nonbusiness income.	754

(ii) With respect to a trust or portion of a trust that is	755
not a resident as ascertained in accordance with division	756
(I)(3)(d) of this section, the amount of its modified nonbusiness	757
income satisfying the descriptions in divisions (B)(2) to (5) of	758
section 5747.20 of the Revised Code, except as otherwise provided	759
in division (BB)(4)(c)(ii) of this section. With respect to a	760
trust or portion of a trust that is not a resident as ascertained	761
in accordance with division (I)(3)(d) of this section, the trust's	762
portion of modified nonbusiness income recognized from the sale,	763
exchange, or other disposition of a debt interest in or equity	764
interest in a section 5747.212 entity, as defined in section	765
5747.212 of the Revised Code, without regard to division (A) of	766
that section, shall not be allocated to this state in accordance	767
with section 5747.20 of the Revised Code but shall be apportioned	768
to this state in accordance with division (B) of section 5747.212	769
of the Revised Code without regard to division (A) of that	770
section.	771

If the allocation and apportionment of a trust's income under	772
divisions (BB)(4)(a) and (c) of this section do not fairly	773
represent the modified Ohio taxable income of the trust in this	774
state, the alternative methods described in division (C) of	775
section 5747.21 of the Revised Code may be applied in the manner	776
and to the same extent provided in that section.	777

(5)(a) Except as set forth in division (BB)(5)(b) of this	778
section, "qualifying investee" means a person in which a trust has	779
an equity or ownership interest, or a person or unit of government	780
the debt obligations of either of which are owned by a trust. For	781
the purposes of division (BB)(2)(a) of this section and for the	782
purpose of computing the fraction described in division (BB)(4)(b)	783
of this section, all of the following apply:	784

(i) If the qualifying investee is a member of a qualifying	785
controlled group on the last day of the qualifying investee's	786
fiscal or calendar year ending immediately prior to the date on	787
which the trust recognizes the gain or loss, then "qualifying	788
investee" includes all persons in the qualifying controlled group	789
on such last day.	790

(ii) If the qualifying investee, or if the qualifying	791
investee and any members of the qualifying controlled group of	792
which the qualifying investee is a member on the last day of the	793
qualifying investee's fiscal or calendar year ending immediately	794
prior to the date on which the trust recognizes the gain or loss,	795
separately or cumulatively own, directly or indirectly, on the	796
last day of the qualifying investee's fiscal or calendar year	797
ending immediately prior to the date on which the trust recognizes	798
the qualifying trust amount, more than fifty per cent of the	799
equity of a pass-through entity, then the qualifying investee and	800
the other members are deemed to own the proportionate share of the	801
pass-through entity's physical assets which the pass-through	802
entity directly or indirectly owns on the last day of the	803
pass-through entity's calendar or fiscal year ending within or	804
with the last day of the qualifying investee's fiscal or calendar	805
year ending immediately prior to the date on which the trust	806
recognizes the qualifying trust amount.	807

(iii) For the purposes of division (BB)(5)(a)(iii) of this	808
section, "upper level pass-through entity" means a pass-through	809
entity directly or indirectly owning any equity of another	810
pass-through entity, and "lower level pass-through entity" means	811
that other pass-through entity.	812

An upper level pass-through entity, whether or not it is also	813
a qualifying investee, is deemed to own, on the last day of the	814
upper level pass-through entity's calendar or fiscal year, the	815
proportionate share of the lower level pass-through entity's	816
physical assets that the lower level pass-through entity directly	817
or indirectly owns on the last day of the lower level pass-through	818
entity's calendar or fiscal year ending within or with the last	819
day of the upper level pass-through entity's fiscal or calendar	820
year. If the upper level pass-through entity directly and	821
indirectly owns less than fifty per cent of the equity of the	822
lower level pass-through entity on each day of the upper level	823
pass-through entity's calendar or fiscal year in which or with	824
which ends the calendar or fiscal year of the lower level	825
pass-through entity and if, based upon clear and convincing	826
evidence, complete information about the location and cost of the	827
physical assets of the lower pass-through entity is not available	828
to the upper level pass-through entity, then solely for purposes	829
of ascertaining if a gain or loss constitutes a qualifying trust	830
amount, the upper level pass-through entity shall be deemed as	831
owning no equity of the lower level pass-through entity for each	832
day during the upper level pass-through entity's calendar or	833
fiscal year in which or with which ends the lower level	834
pass-through entity's calendar or fiscal year. Nothing in division	835
(BB)(5)(a)(iii) of this section shall be construed to provide for	836
any deduction or exclusion in computing any trust's Ohio taxable	837
income.	838

(b) With respect to a trust that is not a resident for the	839
taxable year and with respect to a part of a trust that is not a	840
resident for the taxable year, "qualifying investee" for that	841
taxable year does not include a C corporation if both of the	842
following apply:	843

(i) During the taxable year the trust or part of the trust	844
recognizes a gain or loss from the sale, exchange, or other	845
disposition of equity or ownership interests in, or debt	846
obligations of, the C corporation.	847

(ii) Such gain or loss constitutes nonbusiness income.

848

(6) "Available" means information is such that a person is	849
able to learn of the information by the due date plus extensions,	850
if any, for filing the return for the taxable year in which the	851
trust recognizes the gain or loss.	852

(CC) "Qualifying controlled group" has the same meaning as in	853
section 5733.04 of the Revised Code.	854

(DD) "Related member" has the same meaning as in section	855
5733.042 of the Revised Code.	856

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

857

(a) "Qualifying person" means any person other than a	858
qualifying corporation.	859

(b) "Qualifying corporation" means any person classified for	860
federal income tax purposes as an association taxable as a	861
corporation, except either of the following:	862

(i) A corporation that has made an election under subchapter	863
S, chapter one, subtitle A, of the Internal Revenue Code for its	864
taxable year ending within, or on the last day of, the investor's	865
taxable year;	866

(ii) A subsidiary that is wholly owned by any corporation	867
that has made an election under subchapter S, chapter one,	868
subtitle A of the Internal Revenue Code for its taxable year	869
ending within, or on the last day of, the investor's taxable year.	870

(2) For the purposes of this chapter, unless expressly stated	871
otherwise, no qualifying person indirectly owns any asset directly	872
or indirectly owned by any qualifying corporation.	873

(FF) For purposes of this chapter and Chapter 5751. of the	874
Revised Code:	875

(1) "Trust" does not include a qualified pre-income tax	876
trust.	877

(2) A "qualified pre-income tax trust" is any pre-income tax	878
trust that makes a qualifying pre-income tax trust election as	879
described in division (FF)(3) of this section.	880

(3) A "qualifying pre-income tax trust election" is an	881
election by a pre-income tax trust to subject to the tax imposed	882
by section 5751.02 of the Revised Code the pre-income tax trust	883
and all pass-through entities of which the trust owns or	884
controls, directly, indirectly, or constructively through related	885
interests, five per cent or more of the ownership or equity	886
interests. The trustee shall notify the tax commissioner in	887
writing of the election on or before April 15, 2006. The	888
election, if timely made, shall be effective on and after January	889
1, 2006, and shall apply for all tax periods and tax years until	890
revoked by the trustee of the trust.	891

(4) A "pre-income tax trust" is a trust that satisfies all of	892
the following requirements:	893

(a) The document or instrument creating the trust was	894
executed by the grantor before January 1, 1972;	895

(b) The trust became irrevocable upon the creation of the	896
trust; and	897

(c) The grantor was domiciled in this state at the time the	898
trust was created.	899

Section 2. That existing section 5747.01 of the Revised Code	900
is hereby repealed.	901

Section 3. No refund of a tax imposed under Chapter 5747. of	902
the Revised Code to the extent resulting from an election under	903
section 172(b)(1)(H) of the Internal Revenue Code as amended by	904
the "American Recovery and Reinvestment Act of 2009," Pub. L. No.	905
111-5, 123 Stat. 115, shall be paid before July 1, 2011.	906

Section 4. The Department of Job and Family Services shall	907
operate the Disability Medical Assistance Program in the same	908
manner the Program was operated as of June 30, 2009. The Director	909
of Job and Family Services may adopt in accordance with section	910
111.15 of the Revised Code, any rules necessary for the	911
implementation of this section.	912

Section 5. All items in this section are hereby appropriated	913
as designated out of any moneys in the state treasury to the	914
credit of the General Revenue Fund. For all appropriations made in	915
this act, those in the first column are for fiscal year 2010 and	916
those in the second column are for fiscal year 2011. The	917
appropriations made in this act are in addition to any other	918
appropriations made for the FY 2010-FY 2011 biennium.	919

Appropriations

DNR DEPARTMENT OF NATURAL RESOURCES	920

General Revenue Fund	921

GRF	725502	Soil and Water Districts	$	6,000,000	$	6,000,000	922
TOTAL GRF General Revenue Fund			$	6,000,000	$	6,000,000	923
TOTAL ALL BUDGET FUND GROUPS			$	6,000,000	$	6,000,000	924

JFS DEPARTMENT OF JOB AND FAMILY SERVICES	925

General Revenue Fund	926

GRF	600525	Health Care/Medicaid	$	6,000,000	$	6,000,000	927
GRF	600528	Adoption Services					928
		State	$	8,000,000	$	8,000,000	929
		Federal	$	17,268,478	$	15,337,223	930
		Adoption Services Total	$	25,268,478	$	23,337,223	931
TOTAL GRF General Revenue Fund			$	31,268,478	$	29,337,223	932
TOTAL ALL BUDGET FUND GROUPS			$	31,268,478	$	29,337,223	933

DISABILITY MEDICAL ASSISTANCE PROGRAM

934

The foregoing appropriation item 600525, Health	935
Care/Medicaid, shall be used by the Department of Job and Family	936
Services to fund the Disability Medical Assistance Program in	937
accordance with Section 4 of this act.	938

Within the limits set forth in this act, the Director of	939
Budget and Management shall establish accounts indicating the	940
source and amount of funds for each appropriation made in this	941
act, and shall determine the form and manner in which	942
appropriation accounts shall be maintained. Expenditures from	943
appropriations contained in this act shall be accounted for as	944
though made in Am. Sub. H.B. 1 of the 128th General Assembly.	945

The appropriations made in this act are subject to all	946
provisions of Am. Sub. H.B. 1 of the 128th General Assembly that	947
are generally applicable to such appropriations.	948

Section 6. The sections of law contained in this act are	949
exempt from the referendum because they are or relate to an	950
appropriation for current expenses within the meaning of Ohio	951
Constitution, Article II, Section 1d and section 1.471 of the	952
Revised Code, and therefore take effect immediately when this act	953
becomes law.	954