Oklahoma Administrative Code › Title 710 - Oklahoma Tax Commission › Chapter 50 - Income › Subchapter 15 - Oklahoma Taxable Income › Part 5 - OTHER ADJUSTMENTS TO INCOME › Section 710:50-15-48 - Oklahoma source capital gain deduction

Current through Vol. 41, No. 20, July 1, 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.