What information do you have related to IRC 965 and IRC 951A income?

Oklahoma law includes foreign earnings deemed repatriated under IRC § 965 and global intangible low-taxed income (“GILTI”) included in federal income under IRC § 951A in the state tax base. For purposes of calculating Oklahoma taxable income, both IRC § 965 income and GILTI are considered dividends for purposes of 68 O.S. § 2358(A)(4)(b). The OTC intends to propose new administrative rules confirming this interpretation during the 2018 rulemaking session.

Section 965 and GILTI income should be reported on the Oklahoma return as dividend income. If such income was not included in a taxpayer’s federal taxable income (e.g., in the case of Form 1120 filers who do not report the income on the 1120, but rather on an IRC 965 Transition Tax Statement), the income should be included on the Oklahoma return as an addition to net taxable income; the income should then be allocated as dividend income in accordance with 68 O.S. § 2358(A)(4). Include a copy of the IRC 965 Transition Tax Statement, if filed, and/or a statement identifying the amount of such income included in “Other income” on the federal income tax return.

The Oklahoma legislature has adopted the federal timeline upon which tax payments resulting from IRC § 965 income must be made. 68 O.S. § 2368(K) provides: “For tax years ending after January 1, 2017, if a taxpayer elects to make installment payments of tax due pursuant to the provisions of subsection (h) of Section 965 of the Internal Revenue Code, 26 U.S.C., Section 965, such election may also apply to the payment of Oklahoma income tax, attributable to the income upon which such installment payments are based.” Taxpayers electing to make installment payments should include a schedule reflecting Oklahoma income tax attributable to the § 965 income, as well as the amount of the installment payments which will be remitted each year. On the tax line of the return, add the installment payment to the Oklahoma income tax and enter the designated number in the box. For tax year 2017, refer to the table below for the tax line of each return and the number to enter in the box. 2017 returns using this method must be paper filed.

Tax Year 2017