561-C: 2024 Form 561-C Oklahoma Capital Gain Deduction for Corporations Filing Form 512 (2024)
Oklahoma · Oklahoma Tax Commission · Used for tax years 2024
Oklahoma Form 561-C calculates the capital gain deduction for corporations filing Form 512. It reports qualifying Oklahoma capital gains and losses, adjusts for qualifying capital loss carryovers, and determines the deduction to enter on Form 512.
Who files this form
Form 561-C is for corporations filing Oklahoma Form 512 that claim a deduction for qualifying capital gains included in federal taxable income.
Qualifying gains must come from one of these types of sales:
- Oklahoma real or tangible personal property: The corporation must have owned the property for at least five uninterrupted years before the transaction.
- Stock or an ownership interest in an Oklahoma entity: The stock or interest must have been owned for at least three uninterrupted years before the transaction.
- Property sold as part of all or substantially all of an Oklahoma entity’s assets: The real, tangible personal or intangible personal property must be located in Oklahoma. It must have been directly or indirectly owned by the entity or its owners, and used in or derived from the entity, for at least three uninterrupted years before the transaction.
An Oklahoma company, limited liability company or partnership must have had its primary headquarters in Oklahoma for at least three uninterrupted years before the sale.
Gains passed through by a pass-through entity may also qualify. Both the corporation’s membership in the entity and the entity’s ownership of the asset must meet the applicable uninterrupted three- or five-year holding period. Gains or losses covered by a pass-through entity’s election under the Pass-Through Entity Act of 2019 are reported on Form 561-PTE, not this form.
What you'll need
The form asks you to provide Federal Form 1120, Schedule D and Form(s) 8949.
Depending on the gains or losses reported, also provide:
- Form(s) 1099-B: For qualifying gains or losses reported on Federal Schedule D, line 8a.
- Federal Form 4797: For qualifying business property gains reported on line 2.
- Federal Form 6252: For installment sale gains reported on line 3.
- Federal Form 8824: For like-kind exchange gains or losses reported on line 4.
- Supplemental information from a pass-through entity: Identifying qualifying capital gains passed through to the corporation.
You will also need the corporation’s name and federal employer identification number, property descriptions, acquisition and sale dates, proceeds, and basis information. For line 1, provide the Oklahoma location or address of real or tangible personal property, or the federal identification number of the entity whose stock or ownership interest was sold.
Common mistakes
- Including gains or losses covered by a pass-through entity election: If you are a direct or indirect member of an electing entity, do not include gains or losses covered by that election on Form 561-C. They belong on the entity’s Form 561-PTE.
- Using the full gain or loss when only part belongs to Oklahoma: Column F must include only the amount allocated or apportioned to Oklahoma.
- Counting the same gain or loss twice: Do not include on line 1 any gains or losses reported on lines 2 through 4.
- Entering a negative deduction: Enter zero on line 7 if the result is zero or less, and on line 8 if there is a net capital loss. Line 9 cannot be less than zero or exceed the smaller of lines 7 and 8.
Questions people ask
How much is the Oklahoma capital gain deduction?
Line 9 is the smaller of line 7, qualifying Oklahoma net capital gain, or line 8, net capital gain allocated or apportioned to Oklahoma. Do not enter less than zero. Transfer the amount to Form 512, Part 1, column B, line 25, or Part 2, line 6d.
Can an installment sale qualify?
Yes, if the property met the applicable holding period when it was sold. Use the current year’s taxable portion of the installment payment allocated or apportioned to Oklahoma, and provide Federal Form 6252.
Do capital losses from another year affect the deduction?
Yes. A capital loss carryover from qualified property reduces current-year gains from eligible property. On line 6, enter qualifying Oklahoma capital losses carried over or back from another year that were reported on Federal Schedule D, line 6, and allocated or apportioned to Oklahoma.
What property-type code should I enter?
Use 1 for stock in a qualified Oklahoma corporation; 2 for an ownership interest in a qualified Oklahoma company, limited liability company or partnership; 3 for qualified Oklahoma real property; 4 for qualified Oklahoma tangible personal property; and 5 for qualified Oklahoma intangible personal property sold as part of all or substantially all of an Oklahoma entity’s assets. On lines 2 through 4, use 99 if the net gain or loss comes from more than one type of property.