561-P: 2025 Form 561-P Oklahoma Capital Gain Deduction for the Nonresident Partner Included in the Composite Return (Form 514, Part 1) (2025)
Oklahoma · Oklahoma Tax Commission · Used for tax years 2025
Oklahoma Form 561-P calculates the capital gain deduction for a nonresident partner included in a partnership’s composite return (Form 514, Part 1). It reports the partner’s share of qualifying capital gains and losses, the amounts allocated or apportioned to Oklahoma, and the re
Who files this form
Form 561-P is used to calculate the Oklahoma capital gain deduction for a nonresident partner included in the partnership’s 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. Eligible 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 held 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 entity’s asset ownership and the partner’s membership must meet the applicable holding period. An Oklahoma entity 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.
Depending on the gains reported, also provide:
- Schedule D, line 8a gains or losses: Form(s) 1099-B.
- Installment sales on line 2: Federal Form 6252.
- Like-kind exchanges on line 3: Federal Form 8824.
- Gains or losses from partnerships, estates, or trusts on line 4: The page 2 worksheet and Federal Schedule K-1 or other information supplied by the partnership, estate, or trust. Complete a separate worksheet for each property sold.
You will also need the partner’s and partnership’s names and tax identification numbers, the dates the partner acquired ownership, and property details such as acquisition and sale dates, proceeds, cost or other basis, and the Oklahoma location or entity identification number. 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 tax election: Do not enter gains or losses covered by the election on this form. They belong on the electing entity’s Form 561-PTE.
- Overstating the Oklahoma amount: If less than 100% of a gain or loss is apportioned to Oklahoma, include only that portion in Column G.
- Counting the same gain twice: Do not include gains and losses on line 1 if they are reported on lines 2 through 4.
- 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.
- Using the wrong column for a corporate partner: Nonresident corporate partners do not enter an amount on Form 514-PT, Column C.
Questions people ask
Can an installment sale qualify?
Yes. Qualifying installment-sale gains included in the current year’s federal distributable income are eligible if the holding periods are met. Both the partnership’s property ownership and the nonresident partner’s partnership ownership must meet the applicable holding period as of the sale date. Provide Federal Form 6252.
What is the difference between Columns F and G?
Column F reports the nonresident partner’s share of the qualifying federal gain or loss. Column G reports the portion 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 or 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 several types of property were sold?
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.