Georgia & Oklahoma Decouple From IRC Sec. 108(1)

State Tax Update - Income/Franchise Tax:

The States have spent their portion of the stimulus money and they are looking for new ways to get money. Georgia and Oklahoma recently passed legislation decoupling from select provisions of the federal American Recovery and Reinvestment Act of 2009 (ARRA) for state corporate and personal income tax purposes (i.e. ,deferral of recognition of income from discharge of certain business indebtedness under IRC Sec. 108(i)).The following summarizes the new laws:

Georgia:
Although Georgia’s legislation was signed into law on June 3, 2010, the new law applies to tax years beginning on Jan 1, 2009.
For taxable years beginning on or after January 1, 2009, the law specifically decouples from select provisions of the federal American Recovery and Reinvestment Act of 2009 (ARRA) for state corporate and personal income tax purposes, including the:
• Deferral of recognition of income from discharge of certain business indebtedness under IRC Sec. 108(i), and
• Expanded carry back period for net operating losses (NOLs) of certain small businesses under IRC Sec. 172(b)(1)(H).
Additionally, with respect to stock purchases and sales occurring on or after June 3, 2010, the new law also requires that all IRC Sec. 338 elections apply for purposes of calculating a corporation’s Georgia taxable net income.

Oklahoma:

Applicable for taxable years beginning on or after January 1, 2010, new law requires Oklahoma corporate and personal income taxpayers to add to their Oklahoma taxable income an amount equal to the amount of deferred income not included in such taxable income pursuant to Internal Revenue Code (IRC) Sec. 108(i)(1), as amended by Section 1231 of the American Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
The new law correspondingly requires a subtraction from Oklahoma taxable income for the amount of deferred income included in their taxable income pursuant to IRC Sec. 108(i)(1), as amended by Section 1231 of the American Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).