Oklahoma Administrative Code › Title 710 - Oklahoma Tax Commission › Chapter 50 - Income › Subchapter 17 - Oklahoma Taxable Income for Corporations › Part 5 - DETERMINATION OF TAXABLE CORPORATE INCOME › Section 710:50-17-52 - Payment of rents and interest to a captive Real Estate Investment Trust (REIT)

Current through Vol. 41, No. 20, July 1, 2024
(a)
General
				  provisions.
Taxpayers that make rent or interest payments to a captive
				  real estate investment trust (REIT) must add back those expenses to arrive at
				  Oklahoma taxable income. For purposes of this subsection, the constructive
				  ownership rules of Section 318(a) of the Internal Revenue Code of 1986, as
				  amended, as modified by Section 856(d)(5) of the Internal Revenue Code of 1986,
				  as amended, will apply in determining the ownership of stock, assets, or net
				  profits of any person.
(b)
Definitions.
The following words and terms, when used in this
				  Section, shall have the following meaning, unless the context clearly indicates
				  otherwise:
(1)
"Real estate investment
				  trust"
or
"REIT"
is any entity as defined in Section 856 of
				  the Internal Revenue Code of 1986, as amended, as a real estate investment
				  trust.
(2)
"Captive real
				  estate investment trust"
is any real estate investment trust that has
				  shares or beneficial interests that are not regularly traded on an established
				  securities market and in which more than 50% of the voting power or value of
				  the beneficial interests or shares are owned or controlled, either directly or
				  indirectly, by a single entity treated as an association taxable as a
				  corporation under the Internal Revenue Code of 1986, as amended, and is not
				  exempt from federal income tax pursuant to the provisions of Section 501(a) of
				  the Internal Revenue Code of 1986, as amended. "Captive real estate investment
				  trust" does not include real estate investment trusts that are intended to be
				  regularly traded on an established securities market, and that satisfies the
				  requirements of Section 856(a)(5) and (6) of the U.S. Internal Revenue Code by
				  reason of Section 856(h)(2) of the Internal Revenue Code.
(3)
"Association taxable as a
				  corporation"
does not include the following entities:
(A) real estate investment trusts as defined
				  in subsection (b)(1) other than a "captive real estate investment
				  trust";
(B) qualified real estate
				  investment trust subsidiaries defined under Section 856(i) of the Internal
				  Revenue Code of 1986, as amended, other than a qualified REIT subsidiary of a
				  "captive real estate investment trust";
(C) Listed Australian Property Trusts
				  (meaning an Australian unit trust registered as a "Managed Investment Scheme"
				  under the Australian Corporations Act in which the principal class of units is
				  listed on a recognized stock exchange in Australia and is regularly traded on
				  an established securities market), or entities organized as a trusts, provided
				  that a Listed Australian Property Trust owns or controls, directly or
				  indirectly, seventy-five percent (75%) or more of the voting power or value of
				  the beneficial interests or shares of such trust;
(D) Qualified Foreign Entities, including
				  corporations, trusts, associations or partnerships organized outside the laws
				  of the United States and which satisfy the following criteria:
(i) at least seventy-five percent (75%) of
				  the entity's total asset value at the close of its taxable year is represented
				  by real estate assets, as defined in Section 856(c)(5)(B) of the Internal
				  Revenue Code of 1986, as amended, thereby including shares or certificates of
				  beneficial interest in any real estate investment trust, cash and cash
				  equivalents, and U.S. Government securities,
(ii) the entity receives a dividend-paid
				  deduction comparable to Section 561 of the Internal Revenue Code of 1986, as
				  amended, or is exempt from entity level tax,
(iii) the entity is required to distribute at
				  least eighty-five percent (85%) of its taxable income, as computed in the
				  jurisdiction in which it is organized, to the holders of its shares or
				  certificates of beneficial interest on an annual basis,
(iv) not more than ten percent (10%) of the
				  voting power or value in such entity is held directly or indirectly or
				  constructively by a single entity or individual, or the shares or beneficial
				  interests of such entity are regularly traded on an established securities
				  market; and
(v) the entity is
				  organized in a country which has a tax treaty with the United States.