§68-2354.

§68-2354.
   
   A. If a taxpayer (including a partnership) shall have been required to
   report his taxable income to the State of Oklahoma for years prior to
   the effective date of this act, in a manner different than he has been
   required to report his federal income for the same period of time,
   and, as a consequence of the differences in reporting income during
   that period of time, has a different basis of assets for gain or loss
   through the taking of different amounts for depletion, depreciation or
   amortization, or shall have a different amount of some prepaid income
   or deferred expense or other similar balance sheet item, such taxpayer
   shall be entitled, at his option, to a transitional deduction. The
   determination of the amount of the deduction shall be made as though
   an application to change accounting method had been granted and shall
   include all items subject to adjustment, whether resulting in an
   increase or decrease in the transitional deduction. Items subject to
   adjustment shall be only those which:
   
   1. Have been treated differently in determining amounts subject to tax
   under Oklahoma and federal income tax laws which were applicable in a
   prior period;
   
   2. Have been an element in determining Oklahoma income subject to tax
   in periods with respect to which Oklahoma income tax was paid; and
   
   3. Except for the required change in reporting income, would have
   produced in a subsequent taxable period an adjustment to income
   subject to tax on account of the differences in federal and Oklahoma
   tax reporting.
   
   Items subject to adjustment may consist of deductions taken or not
   taken in prior years, or amounts of income required to be included or
   excluded in such years, but such items shall be disregarded to the
   extent it can be shown that the prior treatment of such items had no
   actual effect on the amount of Oklahoma income tax paid; in making
   such showing, no items other than the items subject to this
   transitional adjustment shall be considered.
   
   No net addition to Oklahoma taxable income shall be required by reason
   of this section, but, at the election of the taxpayer, a deduction in
   the amount of such net adjustment shall be available as provided
   below.
   
   B. An affirmative election to use the optional transitional deduction
   shall be made on the income tax return filed for the first taxable
   period in which a deduction under this section is allowable, on or
   before the due date of the return including any extension of time
   granted in which to file said return or on an amended return. Failure
   to claim such deduction within three (3) years shall be deemed an
   election not to claim the optional transitional deduction. C. The net
   deduction allowable under this section shall be deductible only in
   equal amounts of one-third (1/3) each over the first three taxable
   periods ending after the effective date of this act except that if
   such net deduction is less than Twenty-five Thousand Dollars
   ($25,000.00) the deduction shall be allowable in full in the first
   taxable period after the effective date hereof to the extent of the
   taxpayer's taxable income and to the second and third taxable period
   thereafter to the extent not previously taken in the earliest
   successive taxable year. In no event shall the deduction allowed under
   this section be carried back or applied against income for years prior
   to the effective date of this act or carried forward to any taxable
   year subsequent to the third full taxable year following the effective
   date hereof.