Current through Vol. 42, No. 1, September 16, 2024
(a)
General provisions. For tax
years beginning on or after January 1, 2005, individual taxpayers can subtract
from the Oklahoma adjusted gross income, gains reported on their Oklahoma
income tax return and included in federal taxable income receiving capital
treatment. The gain must be realized on or after January 1, 2005, in order to
be eligible for the Oklahoma exclusion. Effective for tax years beginning on or
after January 1, 2006 corporate taxpayers can subtract from the Oklahoma
taxable income, gains reported on their Oklahoma income tax return and included
in federal taxable income receiving capital treatment. For corporate taxpayers
the gain must be realized on or after January 1, 2006 in order to be eligible
for the Oklahoma exclusion.
(b)
Qualifying gains receiving capital treatment. As used in this
Section, "qualifying gains receiving capital treatment" means the
amount of net capital gains, as defined under Internal Revenue Code Section
1222(11), [IRC §1222(11)]. The gain must be included in the federal income
tax return of the taxpayer.
(1)
Sale of
real or tangible personal property. To qualify for the Oklahoma
deduction, the gain must be earned as a result of the sale of real or tangible
personal property located within Oklahoma. Taxpayers must have held the asset
for not less than five (5) uninterrupted years prior to the date of the
transaction that created the capital gain.
(2)
Sale of stock or ownership
interest. To qualify for the Oklahoma deduction, the gain must be earned
as a result of the sale of stock or ownership interest in an Oklahoma company,
limited liability company, or partnership and the stock or ownership interest
must have been held by the taxpayer for at least three (3) uninterrupted years
prior to the date of the transaction that created the capital gain. For tax
year 2006 and subsequent tax years, the stock or ownership interest must have
been held by the individual taxpayer for at least two (2) uninterrupted years
prior to the date of the transaction that created the capital gain. Non
individual taxpayer's stock or ownership interest must have been held for at
least three (3) uninterrupted years prior to the date of the transaction that
created the capital gain.
(3)
Sale of real or tangible personal property by pass-through
entities. Net capital gains earned by member, partner, or shareholder of
a pass-through entity as a result of the sale of real or tangible personal
property located within Oklahoma, and included in the a taxpayer's federal
taxable income is excludable, provided that the taxpayer has been a member of
the pass-through entity for an uninterrupted period of five (5) years and that
the pass-through entity has held the asset for not less than five (5)
uninterrupted years prior to the date of the transaction that created the
capital gain.
(4)
Sale of
stock or ownership interests by pass-through entities. Net capital gains
earned by a member, partner, or shareholder of a pass-through entity as a
result of the sale of stock or an ownership interest in an Oklahoma company,
limited liability company, or partnership, is excludable, provided that the
taxpayer has been a member of the pass-through entity for an uninterrupted
period of three (3) years and that the pass-through entity has held the asset
for not less than three (3) uninterrupted years prior to the date of the
transaction that created the capital gain. For tax year 2006 and subsequent tax
years, the stock or ownership interest must have been held by the individual
taxpayer for at least two (2) uninterrupted years prior to the date of the
transaction that created the capital gain. Non individual taxpayer's stock or
ownership interest must have been held for at least three (3) uninterrupted
years prior to the date of the transaction that created the capital
gain.
(5)
Installment
sales. Qualifying gains included in an individual taxpayer's federal
taxable income for years after December 31, 2004, or a corporate taxpayer's
federal taxable income for years after December 31, 2005, which are derived
from installment sales are eligible for exclusion, provided the appropriate
holding periods are met.
(c)
"Oklahoma company" ,
"limited liability company" , "partnership". An
Oklahoma company, limited liability company, or partnership is one whose
primary headquarters has been located in Oklahoma for at least three (3) years
prior to the capital gain transaction. The Oklahoma company, limited liability
company, or partnership must meet the three (3) year rule for an uninterrupted
period.
Added at 22 Ok Reg
354, eff 1-1-05 (emergency); Added at 22 Ok Reg 1532, eff 6-11-05; Amended at
23 Ok Reg 2824, eff 6-25-06; Amended at 24 Ok Reg 2359, eff
6-25-07
