Form 561 - Oklahoma Capital Gain Deduction For Residents

Form 561

Oklahoma Capital Gain Deduction for Residents Filing Form 511

Title 68 Section 2358 and Rule 710:50-15-48

General Information

Individual taxpayers can deduct qualifying gains receiving capital gain treatment which are included in Federal

adjusted gross income. “Qualifying gains receiving capital treatment” means the amount of net capital gains, as

defined under Internal Revenue Code Section 1222(11). The qualifying gain must result from:

1. the sale of real or tangible personal property located within Oklahoma that has been owned for at

least five uninterrupted years prior to the date of the transaction that gave rise to the capital gain;

2. the sale of stock or an ownership interest in an Oklahoma company, limited liability company, or

partnership where such stock or ownership interest has been owned for at least two uninterrupted

years prior to the date of the transaction that gave rise to the capital gain; or

3. the sale of real property, tangible personal property or intangible personal property located within

Oklahoma as part of the sale of all or substantially all of the assets of an Oklahoma company, lim-

ited liability company, or partnership or an Oklahoma proprietorship business enterprise where such

property has been owned by such entity or business enterprise or owned by the owners of such

entity or business enterprise for a period of at least two uninterrupted years prior to the date of the

transaction that gave rise to the capital gain.

An Oklahoma company, limited liability company, partnership or proprietorship business enterprise is an entity

whose primary headquarters has been located in Oklahoma for at least three uninterrupted years prior to the

date of sale.

A capital loss carryover from qualified property reduces the current year gains from eligible property.

Pass-through entities...

Capital gain from qualifying property, as described above, held by a pass-through entity is eligible for the

Oklahoma capital gain deduction, provided the individual has been a member of the pass-through entity for

an uninterrupted period of the applicable two or five years and the pass-through entity has held the asset for

not less than the applicable two or five uninterrupted years prior to the date of the transaction that created the

capital gain. The type of asset sold, as shown in 1-3 above, determines whether the applicable number of unin-

terrupted years is two or five. The pass-through entity must provide supplemental information to the individual

identifying the pass-through of qualifying capital gains.

Installment sales...

Qualifying gains included in an individual taxpayer’s Federal adjusted gross income for the current year which

are derived from installment sales are eligible for exclusion, provided the appropriate holding periods are met.

Specific Instructions

Line 1: List qualifying Oklahoma capital gains and losses from Federal Schedule D, line 8 or from Federal

Schedule D-1, line 8. In Column A, line A1 enter the description of the property as shown in Federal Column A.

On line A2 enter either the Oklahoma location/address of the real or tangible personal property sold or the Fed-

eral Identification Number of the company, limited liability company or partnership whose stock or ownership

interest was sold. Complete Columns B through F using the information from the corresponding columns of the

Federal Schedule D or D-1. In Column B, enter the date the property was acquired. If you entered “VARIOUS”

or “INHERITED” on your Federal Schedule D, enter the date you actually acquired the property. Do not include

gains and losses reported on Form 561 lines 2 through 5.

Line 2: If Federal Form 6252 was used to report the installment method for gain on the sale of eligible property

on the Federal return, compute the capital gain deduction using the current year’s taxable portion of the install-

ment payment. Enclose Federal Form 6252. Capital gain from an installment sale is eligible for the Oklahoma

capital gain deduction provided the property was held for the appropriate holding period as of the date sold.

Form 561 - Oklahoma Capital Gain Deduction For Residents - 2008 Page 2

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