Oklahoma Administrative Code
Title 710 - Oklahoma Tax Commission
Chapter 50 - Income
Appendix E - Computation of Adjustment for Expenses Allocated to Nontaxable Income [NEW]
A non-Oklahoma domiciled taxpayer has the following beginning of year and end of year balance sheets (assets only):
|
ASSET: |
BOY |
EOY |
COMMENT |
|
Cash |
5,000 |
10,000 |
|
|
Accounts Receivable |
100,000 |
150,000 |
These assets are the result of the sales of the products sold by the unitary business |
|
Inventory |
80,000 |
120,000 |
These assets are the products on hand to be sold by the unitary business |
|
US Government Obligations (A) |
25,000 |
50,000 |
These assets generate interest income from US government obligations not taxable in Oklahoma |
|
Other Current Assets |
8,000 |
10,000 |
These assets relate to the unitary business |
|
Investments in Subsidiaries (A) |
500,000 |
600,000 |
These assets may generate dividend income or gain (loss) on sale that is allocated to the taxpayer's domiciliary situs (commercial domicile) |
|
Investments in Corporate Stock (A) |
5,000 |
5,000 |
These assets may generate dividend income or gain (loss) on sale that is allocated to the taxpayer's domiciliary situs (commercial domicile) |
|
Investments in Partnerships (A) |
100,000 |
120,000 |
These assets generate partnership income (loss) that is allocated to the state (s) where the partnership has business operations or gain (loss) on sale that is allocated to the taxpayer's domiciliary situs (commercial domicile) |
|
Fixed Assets (Net) |
1,000,000 |
1,500,000 |
These assets are used in the unitary business to produce the products sold |
|
Intangible Assets (Net) |
500,000 |
600,000 |
These assets are used in the unitary business to produce the products sold |
|
Long Term Notes Receivable (A) |
100,000 |
100,000 |
These assets generate interest income not related to working capital that is allocated to the taxpayer's domiciliary situs (commercial domicile) |
|
Other Assets |
50,000 |
50,000 |
These assets relate to the unitary business |
|
Total Assets |
2,473,000 |
3,315,000 |
The taxpayer incurs interest expense on borrowed funds necessary to operate their overall business. Oklahoma utilizes an asset based ratio to allocate the interest expense incurred between the unitary business operations and all other activities that do not produce unitary income as follows:
|
ASSET: |
BOY |
EOY |
COMMENT |
|
Assets that may produce allocable or nontaxable income |
730,000 |
875,000 |
|
|
Average assets that may produce allocable or nontaxable income |
802,500 |
73,000 plus 875,000 divided by 2 |
|
|
Average total assets |
2,894,000 |
2,473,000 plus 3,315,000 divided by 2 |
|
|
Ratio of assets that may produce allocable or nontaxable income to total assets |
0.27729786 |
