Election and allocation against capital account – Definitions. A. A taxpayer may elect to treat one hundred percent (100%) of the cost of a qualified refinery property as an expense that is not chargeable to a capital account. Any cost so treated shall be allowed as a deduction for the year in which the qualified refinery property expense is incurred. B. 1. An election under this section for any taxable year shall be made on the taxpayer's return of the tax imposed by this chapter for the taxable year. The election shall be made in a manner as the Oklahoma Tax Commission may by rule prescribe. 2. An election made pursuant to this section shall not be revoked except with the consent of the Tax Commission. C. 1. As used in this section, the term “qualified refinery property” means any portion of a qualified refinery: a. the original use of which commences with the taxpayer, b. which is placed in service by the taxpayer after the effective date of this act and before January 1, 2012, c. which meets the requirements of subsection E of this section, other than a qualified refinery which is separate from any existing refinery, d. which meets all applicable environmental laws in effect on the date the portion was placed in service, e. for which no written binding contract for the construction of was in effect on or before June 14, 2005, and f. (1) the construction of which is subject to a written binding construction contract entered into before January 1, 2008, (2) which is placed in service before January 1, 2008, or (3) in the case of self-constructed property, the construction of which began after June 14, 2005, and before January 1, 2008. 2. For purposes of subparagraph a of paragraph 1 of this subsection, if property is: a. originally placed in service after the effective date of this act by a person, and b. sold and leased back to the person within three (3) months after the date the property was originally placed in service, the property shall be treated as originally placed in service not earlier than the date on which the property is used under the leaseback provision referred to in subparagraph b of paragraph 1 of this subsection. 3. A waiver under the federal Clean Air Act shall not be taken into account in determining whether the requirements of subparagraph d of paragraph 1 of this subsection are met. D. For purposes of this section, the term “qualified refinery” means any refinery located in the State of Oklahoma that is designed to serve the primary purpose of processing liquid fuel from crude oil or qualified fuels. E. The requirements of this section shall be met if the portion of the qualified refinery: 1. Enables the existing qualified refinery to increase total volume output, determined without regard to asphalt or lube oil, by five percent (5%) or more on an average daily basis; or 2. Enables the existing qualified refinery to process qualified fuels at a rate that is equal to or greater than twenty-five percent (25%) of the total throughput of such qualified refinery on an average daily basis. F. No deduction shall be allowed under this section for any qualified refinery property the primary purpose of which is for use as a topping plant, asphalt plant, lube oil facility, or crude or product terminal. G. 1. The taxpayer may elect to allocate all or a portion of the deduction allowable under subsection A of this section to qualified persons. The allocation shall be equal to the ratable share of the total amount allocated for each qualified person, determined on the basis of the ownership interest the person has in the taxpayer. The taxable income of the taxpayer shall not be reduced under Section 10 of this act by reason of any amount to which this subsection applies. 2. An election under paragraph 1 of this subsection for any taxable year shall be made on a timely filed return for that year. The election, once made, shall be irrevocable for the taxable year. 3. If any portion of the deduction available under subsection A of this section is allocated to an owner under paragraph 1 of this subsection, the cooperative shall provide the owner receiving the allocation written notice of the amount of the allocation. Notice shall be provided before the date on which the return described in paragraph 2 of this subsection is due. H. No deduction shall be allowed under subsection A of this section to any taxpayer for any taxable year unless the taxpayer files with the Tax Commission a report containing information with respect to the operation of the refineries as shall be required by the Tax Commission. I. The provisions of this section shall apply to qualified refinery properties placed in service after the effective date of this act.
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