561-C: 2025 Form 561-C Oklahoma Capital Gain Deduction for Corporations Filing Form 512 (2025)
Oklahoma · Oklahoma Tax Commission · Used for tax years 2025
Oklahoma Form 561-C calculates the Oklahoma capital gain deduction for corporations filing Form 512. It reports qualifying Oklahoma capital gains and losses, capital loss carryovers, and the deduction allowed based on net capital gain allocated or apportioned to Oklahoma.
Who files this form
Form 561-C is for corporations filing Oklahoma Form 512 that claim the Oklahoma capital gain deduction. The deduction applies to qualifying gains included in federal taxable income.
Qualifying gains must come from:
- Real or tangible personal property located in Oklahoma that the corporation owned for at least five uninterrupted years before the sale.
- Stock or an ownership interest in an Oklahoma company, limited liability company, or partnership held for at least three uninterrupted years before the sale.
- Oklahoma real, tangible personal, or intangible personal property sold as part of all or substantially all of an Oklahoma entity’s assets. The property must have been owned directly or indirectly by the entity, or by its owners, and used in or derived from the entity for at least three uninterrupted years before the sale.
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.
What you'll need
Provide Federal Form 1120, Schedule D, and Form(s) 8949.
Depending on the gains 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 on line 2.
- Federal Form 6252: For installment sale gains on line 3.
- Federal Form 8824: For like-kind exchange gains or losses on line 4.
You will need the corporation’s name and federal employer identification number, property descriptions, acquisition and sale dates, proceeds, basis information, and the gain or loss allocated or apportioned to Oklahoma. For line A2, use the Oklahoma property location/address or the federal identification number of the entity whose stock or ownership interest was sold.
For qualifying pass-through gains, the pass-through entity must provide supplemental information identifying those gains.
Common mistakes
- Counting the same gain twice: Do not include gains or losses on line 1 if they are reported on lines 2 through 4.
- Including gains covered by a pass-through entity election: Direct or indirect members of an electing PTE must not include gains or losses covered by the election on Form 561-C. Those amounts go on the PTE’s Form 561-PTE.
- Using the full gain when only part belongs to Oklahoma: If less than 100% is apportioned to Oklahoma, include only that portion in Column F.
- Entering a negative deduction: Enter zero on line 7 if the result is zero or less, and zero on line 8 if there is a net capital loss. Line 9 cannot be less than zero or exceed the net capital gain allocated or apportioned to Oklahoma.
Questions people ask
How do I calculate and report the deduction?
Add line 1, Column F, and lines 2 through 4 on line 5. Subtract the qualifying Oklahoma capital loss carryover on line 6 to calculate line 7, entering zero if the result is zero or less. On line 9, enter the smaller of lines 7 and 8, but not less than zero. Report that amount on Form 512, Part 1, Column B, line 26, or Part 2, line 7d.
Can installment sale gains qualify?
Yes. Use the current year’s taxable portion of the installment payment allocated or apportioned to Oklahoma. The property must have met the applicable holding period as of the sale date. Provide Federal Form 6252.
Can gains from a pass-through entity qualify?
Yes, if both the corporation’s membership in the PTE and the PTE’s ownership of the asset meet the applicable uninterrupted three- or five-year holding period. The asset type determines the period. Gains covered by an electing PTE’s election are instead reported on Form 561-PTE.
Do prior-year qualifying capital losses affect the deduction?
Yes. A capital loss carryover from qualified property reduces current-year gains from eligible property. Line 6 includes qualifying Oklahoma capital losses carried over or back from another year, allocated or apportioned to Oklahoma, and reported on Federal Schedule D, line 6.