Sec. 5747.01. Except as otherwise expressly provided or | 11 |
clearly appearing from the context, any term used in this chapter | 12 |
that is not otherwise defined in this section has the same meaning | 13 |
as when used in a comparable context in the laws of the United | 14 |
States relating to federal income taxes or if not used in a | 15 |
comparable context in those laws, has the same meaning as in | 16 |
section 5733.40 of the Revised Code. Any reference in this chapter | 17 |
to the Internal Revenue Code includes other laws of the United | 18 |
States relating to federal income taxes. | 19 |
(6) In the case of a taxpayer who is a beneficiary of a trust | 44 |
that makes an accumulation distribution as defined in section 665 | 45 |
of the Internal Revenue Code, add, for the beneficiary's taxable | 46 |
years beginning before 2002, the portion, if any, of such | 47 |
distribution that does not exceed the undistributed net income of | 48 |
the trust for the three taxable years preceding the taxable year | 49 |
in which the distribution is made to the extent that the portion | 50 |
was not included in the trust's taxable income for any of the | 51 |
trust's taxable years beginning in 2002 or thereafter. | 52 |
"Undistributed net income of a trust" means the taxable income of | 53 |
the trust increased by (a)(i) the additions to adjusted gross | 54 |
income required under division (A) of this section and (ii) the | 55 |
personal exemptions allowed to the trust pursuant to section | 56 |
642(b) of the Internal Revenue Code, and decreased by (b)(i) the | 57 |
deductions to adjusted gross income required under division (A) of | 58 |
this section, (ii) the amount of federal income taxes attributable | 59 |
to such income, and (iii) the amount of taxable income that has | 60 |
been included in the adjusted gross income of a beneficiary by | 61 |
reason of a prior accumulation distribution. Any undistributed net | 62 |
income included in the adjusted gross income of a beneficiary | 63 |
shall reduce the undistributed net income of the trust commencing | 64 |
with the earliest years of the accumulation period. | 65 |
(7) Deduct the amount of wages and salaries, if any, not | 66 |
otherwise allowable as a deduction but that would have been | 67 |
allowable as a deduction in computing federal adjusted gross | 68 |
income for the taxable year, had the targeted jobs credit allowed | 69 |
and determined under sections 38, 51, and 52 of the Internal | 70 |
Revenue Code not been in effect. | 71 |
(11)(a) Deduct, to the extent not otherwise allowable as a | 84 |
deduction or exclusion in computing federal or Ohio adjusted gross | 85 |
income for the taxable year, the amount the taxpayer paid during | 86 |
the taxable year for medical care insurance and qualified | 87 |
long-term care insurance for the taxpayer, the taxpayer's spouse, | 88 |
and dependents. No deduction for medical care insurance under | 89 |
division (A)(11) of this section shall be allowed either to any | 90 |
taxpayer who is eligible to participate in any subsidized health | 91 |
plan maintained by any employer of the taxpayer or of the | 92 |
taxpayer's spouse, or to any taxpayer who is entitled to, or on | 93 |
application would be entitled to, benefits under part A of Title | 94 |
XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C. | 95 |
301, as amended. For the purposes of division (A)(11)(a) of this | 96 |
section, "subsidized health plan" means a health plan for which | 97 |
the employer pays any portion of the plan's cost. The deduction | 98 |
allowed under division (A)(11)(a) of this section shall be the net | 99 |
of any related premium refunds, related premium reimbursements, or | 100 |
related insurance premium dividends received during the taxable | 101 |
year. | 102 |
(b) Deduct, to the extent not otherwise deducted or excluded | 103 |
in computing federal or Ohio adjusted gross income during the | 104 |
taxable year, the amount the taxpayer paid during the taxable | 105 |
year, not compensated for by any insurance or otherwise, for | 106 |
medical care of the taxpayer, the taxpayer's spouse, and | 107 |
dependents, to the extent the expenses exceed seven and one-half | 108 |
per cent of the taxpayer's federal adjusted gross income. | 109 |
(c) Deduct, to the extent not otherwise deducted or excluded | 110 |
in computing federal or Ohio adjusted gross income, any amount | 111 |
included in federal adjusted gross income under section 105 or not | 112 |
excluded under section 106 of the Internal Revenue Code solely | 113 |
because it relates to an accident and health plan for a person who | 114 |
otherwise would be a "qualifying relative" and thus a "dependent" | 115 |
under section 152 of the Internal Revenue Code but for the fact | 116 |
that the person fails to meet the income and support limitations | 117 |
under section 152(d)(1)(B) and (C) of the Internal Revenue Code. | 118 |
(d) For purposes of division (A)(11) of this section, | 119 |
"medical care" has the meaning given in section 213 of the | 120 |
Internal Revenue Code, subject to the special rules, limitations, | 121 |
and exclusions set forth therein, and "qualified long-term care" | 122 |
has the same meaning given in section 7702B(c) of the Internal | 123 |
Revenue Code. Solely for purposes of divisions (A)(11)(a) and (c) | 124 |
of this section, "dependent" includes a person who otherwise would | 125 |
be a "qualifying relative" and thus a "dependent" under section | 126 |
152 of the Internal Revenue Code but for the fact that the person | 127 |
fails to meet the income and support limitations under section | 128 |
152(d)(1)(B) and (C) of the Internal Revenue Code. | 129 |
(12)(a) Deduct any amount included in federal adjusted gross | 130 |
income solely because the amount represents a reimbursement or | 131 |
refund of expenses that in any year the taxpayer had deducted as | 132 |
an itemized deduction pursuant to section 63 of the Internal | 133 |
Revenue Code and applicable United States department of the | 134 |
treasury regulations. The deduction otherwise allowed under | 135 |
division (A)(12)(a) of this section shall be reduced to the extent | 136 |
the reimbursement is attributable to an amount the taxpayer | 137 |
deducted under this section in any taxable year. | 138 |
(14) Deduct an amount equal to the deposits made to, and net | 154 |
investment earnings of, a medical savings account during the | 155 |
taxable year, in accordance with section 3924.66 of the Revised | 156 |
Code. The deduction allowed by division (A)(14) of this section | 157 |
does not apply to medical savings account deposits and earnings | 158 |
otherwise deducted or excluded for the current or any other | 159 |
taxable year from the taxpayer's federal adjusted gross income. | 160 |
(15)(a) Add an amount equal to the funds withdrawn from a | 161 |
medical savings account during the taxable year, and the net | 162 |
investment earnings on those funds, when the funds withdrawn were | 163 |
used for any purpose other than to reimburse an account holder | 164 |
for, or to pay, eligible medical expenses, in accordance with | 165 |
section 3924.66 of the Revised Code; | 166 |
(17) Deduct the amount contributed by the taxpayer to an | 180 |
individual development account program established by a county | 181 |
department of job and family services pursuant to sections 329.11 | 182 |
to 329.14 of the Revised Code for the purpose of matching funds | 183 |
deposited by program participants. On request of the tax | 184 |
commissioner, the taxpayer shall provide any information that, in | 185 |
the tax commissioner's opinion, is necessary to establish the | 186 |
amount deducted under division (A)(17) of this section. | 187 |
(18) Beginning in taxable year 2001 but not for any taxable | 188 |
year beginning after December 31, 2005, if the taxpayer is married | 189 |
and files a joint return and the combined federal adjusted gross | 190 |
income of the taxpayer and the taxpayer's spouse for the taxable | 191 |
year does not exceed one hundred thousand dollars, or if the | 192 |
taxpayer is single and has a federal adjusted gross income for the | 193 |
taxable year not exceeding fifty thousand dollars, deduct amounts | 194 |
paid during the taxable year for qualified tuition and fees paid | 195 |
to an eligible institution for the taxpayer, the taxpayer's | 196 |
spouse, or any dependent of the taxpayer, who is a resident of | 197 |
this state and is enrolled in or attending a program that | 198 |
culminates in a degree or diploma at an eligible institution. The | 199 |
deduction may be claimed only to the extent that qualified tuition | 200 |
and fees are not otherwise deducted or excluded for any taxable | 201 |
year from federal or Ohio adjusted gross income. The deduction may | 202 |
not be claimed for educational expenses for which the taxpayer | 203 |
claims a credit under section 5747.27 of the Revised Code. | 204 |
(20)(a)(i) AddSubject to divisions (A)(20)(a)(iii), (iv), | 209 |
and (v) of this section, add five-sixths of the amount of | 210 |
depreciation expense allowed by subsection (k) of section 168 of | 211 |
the Internal Revenue Code, including the taxpayer's proportionate | 212 |
or distributive share of the amount of depreciation expense | 213 |
allowed by that subsection to a pass-through entity in which the | 214 |
taxpayer has a direct or indirect ownership interest. | 215 |
(ii) AddSubject to divisions (A)(20)(a)(iii), (iv), and (v) | 216 |
of this section, add five-sixths of the amount of qualifying | 217 |
section 179 depreciation expense, including a person'sthe | 218 |
taxpayer's proportionate or distributive share of the amount of | 219 |
qualifying section 179 depreciation expense allowed to any | 220 |
pass-through entity in which the
persontaxpayer has a direct or | 221 |
indirect ownership interest. For the purposes of this division, | 222 |
"qualifying section 179 depreciation expense" means the difference | 223 |
between (I) the amount of depreciation expense directly or | 224 |
indirectly allowed to the taxpayer under section 179 of the | 225 |
Internal Revenue Code, and (II) the amount of depreciation expense | 226 |
directly or indirectly allowed to the taxpayer under section 179 | 227 |
of the Internal Revenue Code as that section existed on December | 228 |
31, 2002. | 229 |
(iii) Subject to division (A)(20)(a)(v) of this section, for | 230 |
taxable years beginning in 2012 or thereafter, if the increase in | 231 |
income taxes withheld by the taxpayer is equal to or greater than | 232 |
ten per cent of income taxes withheld by the taxpayer during the | 233 |
taxpayer's immediately preceding taxable year, "two-thirds" shall | 234 |
be substituted for "five-sixths" for the purpose of divisions | 235 |
(A)(20)(a)(i) and (ii) of this section. | 236 |
(iv) Subject to division (A)(20)(a)(v) of this section, for | 237 |
taxable years beginning in 2012 or thereafter, a taxpayer is not | 238 |
required to add an amount under division (A)(20) of this section | 239 |
if the increase in income taxes withheld by the taxpayer and by | 240 |
any pass-through entity in which the taxpayer has a direct or | 241 |
indirect ownership interest is equal to or greater than the sum of | 242 |
(I) the amount of qualifying section 179 depreciation expense and | 243 |
(II) the amount of depreciation expense allowed to the taxpayer by | 244 |
subsection (k) of section 168 of the Internal Revenue Code, and | 245 |
including the taxpayer's proportionate or distributive shares of | 246 |
such amounts allowed to any such pass-through entities. | 247 |
(v) If a taxpayer directly or indirectly incurs a net | 248 |
operating loss for the taxable year for federal income tax | 249 |
purposes, to the extent such loss resulted from depreciation | 250 |
expense allowed by subsection (k) of section 168 of the Internal | 251 |
Revenue Code and by qualifying section 179 depreciation expense, | 252 |
"the entire" shall be substituted for "five-sixths of the" for the | 253 |
purpose of divisions (A)(20)(a)(i) and (ii) of this section. | 254 |
(c) To the extent the add-back required under division | 261 |
(A)(20)(a) of this section is attributable to property generating | 262 |
nonbusiness income or loss allocated under section 5747.20 of the | 263 |
Revised Code, the add-back shall be sitused to the same location | 264 |
as the nonbusiness income or loss generated by the property for | 265 |
the purpose of determining the credit under division (A) of | 266 |
section 5747.05 of the Revised Code. Otherwise, the add-back shall | 267 |
be apportioned, subject to one or more of the four alternative | 268 |
methods of apportionment enumerated in section 5747.21 of the | 269 |
Revised Code. | 270 |
(b) If the amount deducted under division (A)(21)(a) of this | 309 |
section is attributable to an add-back allocated under division | 310 |
(A)(20)(c) of this section, the amount deducted shall be sitused | 311 |
to the same location. Otherwise, the add-back shall be apportioned | 312 |
using the apportionment factors for the taxable year in which the | 313 |
deduction is taken, subject to one or more of the four alternative | 314 |
methods of apportionment enumerated in section 5747.21 of the | 315 |
Revised Code. | 316 |
(c) No deduction is available under division (A)(21)(a) of | 317 |
this section with regard to any depreciation allowed by section | 318 |
168(k) of the Internal Revenue Code and by the qualifying section | 319 |
179 depreciation expense amount to the extent that such | 320 |
depreciation resultedresults in or increasedincreases a federal | 321 |
net operating loss carryback or carryforward to a taxable year to | 322 |
which division (A)(20)(d) of this section does not apply. If no | 323 |
such deduction is available for a taxable year, the taxpayer may | 324 |
carry forward the amount not deducted in such taxable year to the | 325 |
next taxable year and add that amount to any deduction otherwise | 326 |
available under division (A)(21)(a) of this section for that next | 327 |
taxable year. The carryforward of amounts not so deducted shall | 328 |
continue until the entire addition required by division (A)(20)(a) | 329 |
of this section has been deducted. | 330 |
(24) Deduct, to the extent included in federal adjusted gross | 343 |
income and not otherwise allowable as a deduction or exclusion in | 344 |
computing federal or Ohio adjusted gross income for the taxable | 345 |
year, military pay and allowances received by the taxpayer during | 346 |
the taxable year for active duty service in the United States | 347 |
army, air force, navy, marine corps, or coast guard or reserve | 348 |
components thereof or the national guard. The deduction may not be | 349 |
claimed for military pay and allowances received by the taxpayer | 350 |
while the taxpayer is stationed in this state. | 351 |
(25) Deduct, to the extent not otherwise allowable as a | 352 |
deduction or exclusion in computing federal or Ohio adjusted gross | 353 |
income for the taxable year and not otherwise compensated for by | 354 |
any other source, the amount of qualified organ donation expenses | 355 |
incurred by the taxpayer during the taxable year, not to exceed | 356 |
ten thousand dollars. A taxpayer may deduct qualified organ | 357 |
donation expenses only once for all taxable years beginning with | 358 |
taxable years beginning in 2007. | 359 |
(26) Deduct, to the extent not otherwise deducted or excluded | 369 |
in computing federal or Ohio adjusted gross income for the taxable | 370 |
year, amounts received by the taxpayer as retired military | 371 |
personnel pay for service in the United States army, navy, air | 372 |
force, coast guard, or marine corps or reserve components thereof, | 373 |
or the national guard, or received by the surviving spouse or | 374 |
former spouse of such a taxpayer under the survivor benefit plan | 375 |
on account of such a taxpayer's death. If the taxpayer receives | 376 |
income on account of retirement paid under the federal civil | 377 |
service retirement system or federal employees retirement system, | 378 |
or under any successor retirement program enacted by the congress | 379 |
of the United States that is established and maintained for | 380 |
retired employees of the United States government, and such | 381 |
retirement income is based, in whole or in part, on credit for the | 382 |
taxpayer's military service, the deduction allowed under this | 383 |
division shall include only that portion of such retirement income | 384 |
that is attributable to the taxpayer's military service, to the | 385 |
extent that portion of such retirement income is otherwise | 386 |
included in federal adjusted gross income and is not otherwise | 387 |
deducted under this section. Any amount deducted under division | 388 |
(A)(26) of this section is not included in a taxpayer's adjusted | 389 |
gross income for the purposes of section 5747.055 of the Revised | 390 |
Code. No amount may be deducted under division (A)(26) of this | 391 |
section on the basis of which a credit was claimed under section | 392 |
5747.055 of the Revised Code. | 393 |
(30) Deduct, to the extent not otherwise deducted or excluded | 410 |
in computing federal or Ohio adjusted gross income for the taxable | 411 |
year, any income derived from providing public services under a | 412 |
contract through a project owned by the state, as described in | 413 |
section 126.604 of the Revised Code or derived from a transfer | 414 |
agreement or from the enterprise transferred under that agreement | 415 |
under section 4313.02 of the Revised Code. | 416 |
(B) "Business income" means income, including gain or loss, | 417 |
arising from transactions, activities, and sources in the regular | 418 |
course of a trade or business and includes income, gain, or loss | 419 |
from real property, tangible property, and intangible property if | 420 |
the acquisition, rental, management, and disposition of the | 421 |
property constitute integral parts of the regular course of a | 422 |
trade or business operation. "Business income" includes income, | 423 |
including gain or loss, from a partial or complete liquidation of | 424 |
a business, including, but not limited to, gain or loss from the | 425 |
sale or other disposition of goodwill. | 426 |
(C) "Nonbusiness income" means all income other than business | 427 |
income and may include, but is not limited to, compensation, rents | 428 |
and royalties from real or tangible personal property, capital | 429 |
gains, interest, dividends and distributions, patent or copyright | 430 |
royalties, or lottery winnings, prizes, and awards. | 431 |
(a) A trust resides in this state for the trust's current | 455 |
taxable year to the extent, as described in division (I)(3)(d) of | 456 |
this section, that the trust consists directly or indirectly, in | 457 |
whole or in part, of assets, net of any related liabilities, that | 458 |
were transferred, or caused to be transferred, directly or | 459 |
indirectly, to the trust by any of the following: | 460 |
(iii) A person who was domiciled in this state for the | 471 |
purposes of this chapter when the trust document or instrument or | 472 |
part of the trust document or instrument became irrevocable, but | 473 |
only if at least one of the trust's qualifying beneficiaries is a | 474 |
resident domiciled in this state for the purposes of this chapter | 475 |
during all or some portion of the trust's current taxable year. If | 476 |
a trust document or instrument became irrevocable upon the death | 477 |
of a person who at the time of death was domiciled in this state | 478 |
for purposes of this chapter, that person is a person described in | 479 |
division (I)(3)(a)(iii) of this section. | 480 |
(c) With respect to a trust other than a charitable lead | 484 |
trust, "qualifying beneficiary" has the same meaning as "potential | 485 |
current beneficiary" as defined in section 1361(e)(2) of the | 486 |
Internal Revenue Code, and with respect to a charitable lead trust | 487 |
"qualifying beneficiary" is any current, future, or contingent | 488 |
beneficiary, but with respect to any trust "qualifying | 489 |
beneficiary" excludes a person or a governmental entity or | 490 |
instrumentality to any of which a contribution would qualify for | 491 |
the charitable deduction under section 170 of the Internal Revenue | 492 |
Code. | 493 |
(d) For the purposes of division (I)(3)(a) of this section, | 494 |
the extent to which a trust consists directly or indirectly, in | 495 |
whole or in part, of assets, net of any related liabilities, that | 496 |
were transferred directly or indirectly, in whole or part, to the | 497 |
trust by any of the sources enumerated in that division shall be | 498 |
ascertained by multiplying the fair market value of the trust's | 499 |
assets, net of related liabilities, by the qualifying ratio, which | 500 |
shall be computed as follows: | 501 |
(ii) Each subsequent time the trust receives assets, a | 508 |
revised qualifying ratio shall be computed. The numerator of the | 509 |
revised qualifying ratio is the sum of (1) the fair market value | 510 |
of the trust's assets immediately prior to the subsequent | 511 |
transfer, net of any related liabilities, multiplied by the | 512 |
qualifying ratio last computed without regard to the subsequent | 513 |
transfer, and (2) the fair market value of the subsequently | 514 |
transferred assets at the time transferred, net of any related | 515 |
liabilities, from sources enumerated in division (I)(3)(a) of this | 516 |
section. The denominator of the revised qualifying ratio is the | 517 |
fair market value of all the trust's assets immediately after the | 518 |
subsequent transfer, net of any related liabilities. | 519 |
(ii) The transfer is made to a trust to which the decedent, | 548 |
prior to the decedent's death, had directly or indirectly | 549 |
transferred assets, net of any related liabilities, while the | 550 |
decedent was domiciled in this state for the purposes of this | 551 |
chapter, and prior to the death of the decedent the trust became | 552 |
irrevocable while the decedent was domiciled in this state for the | 553 |
purposes of this chapter. | 554 |
(1) Add interest or dividends, net of ordinary, necessary, | 620 |
and reasonable expenses not deducted in computing federal taxable | 621 |
income, on obligations or securities of any state or of any | 622 |
political subdivision or authority of any state, other than this | 623 |
state and its subdivisions and authorities, but only to the extent | 624 |
that such net amount is not otherwise includible in Ohio taxable | 625 |
income and is described in either division (S)(1)(a) or (b) of | 626 |
this section: | 627 |
(2) Add interest or dividends, net of ordinary, necessary, | 633 |
and reasonable expenses not deducted in computing federal taxable | 634 |
income, on obligations of any authority, commission, | 635 |
instrumentality, territory, or possession of the United States to | 636 |
the extent that the interest or dividends are exempt from federal | 637 |
income taxes but not from state income taxes, but only to the | 638 |
extent that such net amount is not otherwise includible in Ohio | 639 |
taxable income and is described in either division (S)(1)(a) or | 640 |
(b) of this section; | 641 |
(4) Deduct interest or dividends, net of related expenses | 644 |
deducted in computing federal taxable income, on obligations of | 645 |
the United States and its territories and possessions or of any | 646 |
authority, commission, or instrumentality of the United States to | 647 |
the extent that the interest or dividends are exempt from state | 648 |
taxes under the laws of the United States, but only to the extent | 649 |
that such amount is included in federal taxable income and is | 650 |
described in either division (S)(1)(a) or (b) of this section; | 651 |
(5) Deduct the amount of wages and salaries, if any, not | 652 |
otherwise allowable as a deduction but that would have been | 653 |
allowable as a deduction in computing federal taxable income for | 654 |
the taxable year, had the targeted jobs credit allowed under | 655 |
sections 38, 51, and 52 of the Internal Revenue Code not been in | 656 |
effect, but only to the extent such amount relates either to | 657 |
income included in federal taxable income for the taxable year or | 658 |
to income of the S portion of an electing small business trust for | 659 |
the taxable year; | 660 |
(9)(a) Deduct any amount included in federal taxable income | 676 |
solely because the amount represents a reimbursement or refund of | 677 |
expenses that in a previous year the decedent had deducted as an | 678 |
itemized deduction pursuant to section 63 of the Internal Revenue | 679 |
Code and applicable treasury regulations. The deduction otherwise | 680 |
allowed under division (S)(9)(a) of this section shall be reduced | 681 |
to the extent the reimbursement is attributable to an amount the | 682 |
taxpayer or decedent deducted under this section in any taxable | 683 |
year. | 684 |
(12) Deduct any amount, net of related expenses deducted in | 713 |
computing federal taxable income, that a trust is required to | 714 |
report as farm income on its federal income tax return, but only | 715 |
if the assets of the trust include at least ten acres of land | 716 |
satisfying the definition of "land devoted exclusively to | 717 |
agricultural use" under section 5713.30 of the Revised Code, | 718 |
regardless of whether the land is valued for tax purposes as such | 719 |
land under sections 5713.30 to 5713.38 of the Revised Code. If the | 720 |
trust is a pass-through entity investor, section 5747.231 of the | 721 |
Revised Code applies in ascertaining if the trust is eligible to | 722 |
claim the deduction provided by division (S)(12) of this section | 723 |
in connection with the pass-through entity's farm income. | 724 |
(AA)(1) "Eligible institution" means a state university or | 760 |
state institution of higher education as defined in section | 761 |
3345.011 of the Revised Code, or a private, nonprofit college, | 762 |
university, or other post-secondary institution located in this | 763 |
state that possesses a certificate of authorization issued by the | 764 |
Ohio board of regents pursuant to Chapter 1713. of the Revised | 765 |
Code or a certificate of registration issued by the state board of | 766 |
career colleges and schools under Chapter 3332. of the Revised | 767 |
Code. | 768 |
(2) "Qualified tuition and fees" means tuition and fees | 769 |
imposed by an eligible institution as a condition of enrollment or | 770 |
attendance, not exceeding two thousand five hundred dollars in | 771 |
each of the individual's first two years of post-secondary | 772 |
education. If the individual is a part-time student, "qualified | 773 |
tuition and fees" includes tuition and fees paid for the academic | 774 |
equivalent of the first two years of post-secondary education | 775 |
during a maximum of five taxable years, not exceeding a total of | 776 |
five thousand dollars. "Qualified tuition and fees" does not | 777 |
include: | 778 |
(b) The qualifying trust amount multiplied by a fraction, the | 825 |
numerator of which is the sum of the book value of the qualifying | 826 |
investee's physical assets in this state on the last day of the | 827 |
qualifying investee's fiscal or calendar year ending immediately | 828 |
prior to the day on which the trust recognizes the qualifying | 829 |
trust amount, and the denominator of which is the sum of the book | 830 |
value of the qualifying investee's total physical assets | 831 |
everywhere on the last day of the qualifying investee's fiscal or | 832 |
calendar year ending immediately prior to the day on which the | 833 |
trust recognizes the qualifying trust amount. If, for a taxable | 834 |
year, the trust recognizes a qualifying trust amount with respect | 835 |
to more than one qualifying investee, the amount described in | 836 |
division (BB)(4)(b) of this section shall equal the sum of the | 837 |
products so computed for each such qualifying investee. | 838 |
(ii) With respect to a trust or portion of a trust that is | 842 |
not a resident as ascertained in accordance with division | 843 |
(I)(3)(d) of this section, the amount of its modified nonbusiness | 844 |
income satisfying the descriptions in divisions (B)(2) to (5) of | 845 |
section 5747.20 of the Revised Code, except as otherwise provided | 846 |
in division (BB)(4)(c)(ii) of this section. With respect to a | 847 |
trust or portion of a trust that is not a resident as ascertained | 848 |
in accordance with division (I)(3)(d) of this section, the trust's | 849 |
portion of modified nonbusiness income recognized from the sale, | 850 |
exchange, or other disposition of a debt interest in or equity | 851 |
interest in a section 5747.212 entity, as defined in section | 852 |
5747.212 of the Revised Code, without regard to division (A) of | 853 |
that section, shall not be allocated to this state in accordance | 854 |
with section 5747.20 of the Revised Code but shall be apportioned | 855 |
to this state in accordance with division (B) of section 5747.212 | 856 |
of the Revised Code without regard to division (A) of that | 857 |
section. | 858 |
(5)(a) Except as set forth in division (BB)(5)(b) of this | 865 |
section, "qualifying investee" means a person in which a trust has | 866 |
an equity or ownership interest, or a person or unit of government | 867 |
the debt obligations of either of which are owned by a trust. For | 868 |
the purposes of division (BB)(2)(a) of this section and for the | 869 |
purpose of computing the fraction described in division (BB)(4)(b) | 870 |
of this section, all of the following apply: | 871 |
(ii) If the qualifying investee, or if the qualifying | 878 |
investee and any members of the qualifying controlled group of | 879 |
which the qualifying investee is a member on the last day of the | 880 |
qualifying investee's fiscal or calendar year ending immediately | 881 |
prior to the date on which the trust recognizes the gain or loss, | 882 |
separately or cumulatively own, directly or indirectly, on the | 883 |
last day of the qualifying investee's fiscal or calendar year | 884 |
ending immediately prior to the date on which the trust recognizes | 885 |
the qualifying trust amount, more than fifty per cent of the | 886 |
equity of a pass-through entity, then the qualifying investee and | 887 |
the other members are deemed to own the proportionate share of the | 888 |
pass-through entity's physical assets which the pass-through | 889 |
entity directly or indirectly owns on the last day of the | 890 |
pass-through entity's calendar or fiscal year ending within or | 891 |
with the last day of the qualifying investee's fiscal or calendar | 892 |
year ending immediately prior to the date on which the trust | 893 |
recognizes the qualifying trust amount. | 894 |
An upper level pass-through entity, whether or not it is also | 900 |
a qualifying investee, is deemed to own, on the last day of the | 901 |
upper level pass-through entity's calendar or fiscal year, the | 902 |
proportionate share of the lower level pass-through entity's | 903 |
physical assets that the lower level pass-through entity directly | 904 |
or indirectly owns on the last day of the lower level pass-through | 905 |
entity's calendar or fiscal year ending within or with the last | 906 |
day of the upper level pass-through entity's fiscal or calendar | 907 |
year. If the upper level pass-through entity directly and | 908 |
indirectly owns less than fifty per cent of the equity of the | 909 |
lower level pass-through entity on each day of the upper level | 910 |
pass-through entity's calendar or fiscal year in which or with | 911 |
which ends the calendar or fiscal year of the lower level | 912 |
pass-through entity and if, based upon clear and convincing | 913 |
evidence, complete information about the location and cost of the | 914 |
physical assets of the lower pass-through entity is not available | 915 |
to the upper level pass-through entity, then solely for purposes | 916 |
of ascertaining if a gain or loss constitutes a qualifying trust | 917 |
amount, the upper level pass-through entity shall be deemed as | 918 |
owning no equity of the lower level pass-through entity for each | 919 |
day during the upper level pass-through entity's calendar or | 920 |
fiscal year in which or with which ends the lower level | 921 |
pass-through entity's calendar or fiscal year. Nothing in division | 922 |
(BB)(5)(a)(iii) of this section shall be construed to provide for | 923 |
any deduction or exclusion in computing any trust's Ohio taxable | 924 |
income. | 925 |
(3) A "qualifying pre-income tax trust election" is an | 968 |
election by a pre-income tax trust to subject to the tax imposed | 969 |
by section 5751.02 of the Revised Code the pre-income tax trust | 970 |
and all pass-through entities of which the trust owns or controls, | 971 |
directly, indirectly, or constructively through related interests, | 972 |
five per cent or more of the ownership or equity interests. The | 973 |
trustee shall notify the tax commissioner in writing of the | 974 |
election on or before April 15, 2006. The election, if timely | 975 |
made, shall be effective on and after January 1, 2006, and shall | 976 |
apply for all tax periods and tax years until revoked by the | 977 |
trustee of the trust. | 978 |