Form 527-A - Small Business Capital Company Report For Investors

Form 527-A - Page 3

Instructions and Guidelines for Preparing

Small Business Capital Company Report for Investors

Title 68 O.S. Section 2357.60-2357.65 and Rule 710:50-15-86

Credits

There shall be allowed a credit equal to 20% of a qualified investment in a qualified Small Business Capital Company

which is subsequently invested in an Oklahoma Small Business Venture. The credit may only be claimed in the tax year

in which the Small Business Capital Company makes the qualified investment in an Oklahoma Small Business Venture if

the funds are used in pursuit of a legitimate business purpose of the Oklahoma Small Business Venture consistent with

its organizational instrument, bylaws or other agreement responsible for the governance of the Small Business Venture.

If the tax credit exceeds the amount of tax liability, the amount of unused credit may be carried forward for a period not to

exceed three years.

There shall also be allowed a credit equal to 20% of the investment in Oklahoma Small Business Ventures in conjunction

with qualified investment in such ventures made by a qualified Small Business Capital Company. To qualify for the credit,

a qualified investment shall be:

Made by a shareholder or partner of a qualified Small Business Capital Company that has made a qualified in-

vestment in an Oklahoma small business venture;

Invested in the purchase of equity or near-equity in an Oklahoma Small Business Venture;

Made under the same terms and conditions as the qualified investment made by the qualified Small Business

Capital Company; and

Limited to the lesser of:

a. 200% of any qualified investment by the taxpayer in the qualified Small Business Capital Company, or

b. 200% of any qualified investment made by the qualified Small Business Capital Company in the Oklahoma

Small Business Venture.

If the tax credit exceeds the amount of tax liability, the amount of unused credit may be carried forward for a

period not to exceed three years.

The credit shall be allowed against income tax imposed by Section 2355 or the bank “in lieu” tax imposed by Section

2370.

No credit will be allowed for qualified investments made prior to January 1, 1998 or from June 1, 2010 to December 31,

2011, nor for the same qualified investment for which a Rural Small Business Capital Credit is claimed under Section

2357.73 or 2357.74.

Recapture

The Oklahoma Tax Commission is authorized to recapture the credit if it finds that the transaction does not meet the

requirements of the Small Business Capital Formation Incentive Act.

Reporting Requirement

The Small Business Capital Company must furnish this form to the investor by January 31st of the year following when

the investment becomes eligible for the credit. A copy must be enclosed with the investor’s income tax return if the credit

is claimed. If the investor is a partnership, S-Corporation or other pass-through entity, such entity must provide to each

partner, shareholder or member documentation showing their share of the “total credit allowed in 2010”. Such documen-

tation must be provided with the partner’s, shareholder’s or member’s income tax return when their share of the credit is

being claimed.

Part 2 – 2010 Credit Carryover

The credit not used may be carried over, in order, to each of the three years following the year in which the credit was

eligible to be claimed. Complete Part 2 to compute the amount of the 2010 credit carryover to be used in each of the next

three subsequent years. Keep a copy of this form to file with your return for each such year in which the 2010 credit car-

ryover is claimed.

Form 527-A - Small Business Capital Company Report For Investors - 2010 Page 3

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