Corporate Close-Up: Oklahoma Latest State to Issue I.R.C. §§ 951A, 965 Guidance


The Oklahoma Tax Commission released new, informal guidance on reporting global intangible low-taxed income (GILTI) and deemed repatriation income under I.R.C. §§ 951A and 965, respectively. More importantly, perhaps, the commission indicated it would propose new administrative rules conforming to this guidance in the 2018 rulemaking session.

GILTI Includable in Oklahoma Tax Base

The Commission clarified that the state conforms to the federal treatment of GILTI under I.R.C. § 951A. Oklahoma treats income under I.R.C. § 951A as includable dividend income for purposes of computing Oklahoma taxable income, though it did not clearly specify in the guidance whether it will follow the treatment of the foreign-derived intangible income (FDII) and GILTI deductions under I.R.C. § 250.

I.R.C. § 965 Income is Dividend Income

Likewise, Oklahoma will treat I.R.C. § 965 amounts as includable dividend income. If I.R.C. § 965 income was excluded from a filer’s federal Form 1120 and instead included on the federal IRC 965 Transition Tax Statement, Oklahoma requires an addition modification. For corporations reporting I.R.C. § 965 income, a copy of the IRC 965 Transition Tax Statement, if filed, or an alternative statement must be included with the Oklahoma return.

Allocation of Dividends in Oklahoma

As opposed to other, more traditional apportionment states, Oklahoma allocates, with exception, all dividend income to the taxpayer’s commercial domicile. As a result, I.R.C. § 965 repatriation income should be allocated to Oklahoma if the taxpayer’s commercial domicile is in that state. However, Oklahoma has a rule that if dividend income acquires a non-unitary business or commercial situs apart from the domicile of the taxpayer, it should be allocated to that situs or business.

Installment Payments Available in Oklahoma

The Commissions also concluded that Oklahoma taxpayers who elect to make installment payments of the federal tax due on deemed repatriation income in accordance with I.R.C. § 965 may also elect to pay the Oklahoma income tax attributed to such income according to the same installment schedule.

Oklahoma joins many other states in issuing necessary guidance on these topics, as previously detailed in the SALT Talk blog on multiple occasions, here and here, this year.

Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: What issues should the Oklahoma Tax Commission address in its forthcoming administrative rules on I.R.C. § 951A and 965?

For more information on the impact of Pub. L. No. 115-97, examine Bloomberg Tax’s Tax Reform Roadmap, showing detailed comparisons between pre-reform law and impending changes, with pertinent cites attached.

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