561-P: 2024 Form 561-P Oklahoma Capital Gain Deduction for the Nonresident Partner Included in the Composite Return (Form 514, Part 1) (2024)
Oklahoma · Oklahoma Tax Commission · Used for tax years 2024
Oklahoma Form 561-P calculates the capital gain deduction for a nonresident partner included in a partnership’s composite return. It reports the partner’s share of qualifying Oklahoma capital gains and losses, the amounts allocated or apportioned to Oklahoma, and the resulting de
Who files this form
Form 561-P is used to calculate the Oklahoma capital gain deduction for a nonresident partner included in the composite return, Form 514, Part 1. Complete a separate Form 561-P for each nonresident partner whose income is reported on Form 514-PT.
The deduction applies to qualifying gains included in federal income. Qualifying sales include:
- Oklahoma real or tangible personal property owned for at least five uninterrupted years before the sale.
- Stock or an ownership interest in an Oklahoma company, limited liability company, or partnership owned for at least three uninterrupted years, or two years for individuals.
- Oklahoma property sold as part of the sale of all or substantially all of an Oklahoma entity’s assets, subject to the stated ownership and use requirements for at least three uninterrupted years, or two years for individuals.
For qualifying property held by a pass-through entity, both the member and the entity must meet the applicable holding-period requirements. 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 1065, Schedule D, and Form(s) 8949 as requested on the form.
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 6252: For installment-sale gains on line 2.
- Federal Form 8824: For like-kind exchange gains or losses on line 3.
- The page 2 worksheet and Federal Schedule K-1: For qualifying gains or losses from partnerships, estates, or trusts on line 4. The line 4 instructions also allow other information supplied by the partnership, estate, or trust. Complete a separate worksheet for each property sold.
Have the partner’s and partnership’s names and tax identification numbers, the dates the partner acquired ownership, and the property’s description, location or entity identification number, acquisition date, sale date, proceeds, and basis information ready. A pass-through entity must provide supplemental information identifying qualifying capital gains passed through to its members.
Common mistakes
- Combining partners on one form: Complete a separate Form 561-P for each nonresident partner whose income is reported on Form 514-PT.
- Including gains covered by a pass-through entity election: Do not include gain or loss covered by the election under the Pass-Through Entity Act of 2019. It belongs on the entity’s Form 561-PTE.
- Counting the same gain twice: Do not include on line 1 gains or losses reported on lines 2 through 4.
- Overstating the Oklahoma amount: Column G includes only the portion allocated or apportioned to Oklahoma.
- Entering a negative deduction: Enter zero on lines 5 and 6 if the amount is zero or less. Line 7 is the smaller of lines 5 and 6 and cannot be less than zero.
- Carrying a corporate partner’s deduction to the wrong column: Nonresident corporate partners do not enter an amount on Form 514-PT, Column C.
Questions people ask
Can an installment sale qualify for the deduction?
Yes. Qualifying installment-sale gains included in federal distributable income for the current year are eligible if the holding periods are met. Both the partnership’s ownership of the property and the nonresident partner’s membership must meet the applicable holding period as of the sale date. Provide Federal Form 6252.
What is the difference between the Federal Amount and Oklahoma Amount columns?
Column F reports the nonresident partner’s share of qualifying gains or losses included on Federal Schedule D. Column G reports the portion of that amount allocated or apportioned to Oklahoma.
How much is the deduction?
For each column, line 7 is the smaller of the qualifying Oklahoma net capital gain on line 5 and the net capital gain on line 6. The deduction cannot be less than zero. Net capital gain means net long-term capital gain minus net short-term capital loss.
What property code should I use if a gain includes more than one type of property?
For lines 2 through 4, enter code 99 if the net gain or loss comes from the sale of more than one type of property.