561-PTE: 2025 Form 561-PTE Oklahoma Capital Gain Deduction for an Electing Pass Through Entity (PTE) Filing Form 587-PTE (2025)
Oklahoma · Oklahoma Tax Commission · Used for tax years 2025
Form 561-PTE calculates the Oklahoma capital gain deduction for an electing pass-through entity filing Form 587-PTE. It reports qualifying Oklahoma capital gains and losses and determines the deduction used to compute each member’s Oklahoma taxable income.
Who files this form
Form 561-PTE is for an electing pass-through entity (PTE) filing Form 587-PTE to claim the Oklahoma capital gain deduction. The deduction applies to qualifying gains included in federal income.
Qualifying gains must come from one of these sales:
- Oklahoma real or tangible personal property: The property must have been owned for at least five uninterrupted years before the sale.
- Stock or an ownership interest in an Oklahoma company, limited liability company, or partnership: The stock or interest must have been owned for at least three uninterrupted years before the sale.
- Property sold as part of all or substantially all of an Oklahoma entity’s assets: The Oklahoma real, tangible personal, or intangible personal property must meet the stated ownership and business-use requirements 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 1065 or 1120-S, Schedule D, and Form(s) 8949.
Depending on the gains reported, also provide:
- Line 1: Form(s) 1099-B if the qualifying gain or loss is reported on federal Schedule D, line 8a.
- Line 2, installment sales: Federal Form 6252.
- Line 3, like-kind exchanges: Federal Form 8824.
- Line 4, gains or losses from partnerships, estates, or trusts: The worksheet on page 2 and Federal Schedule K-1 or other information supplied by the partnership, estate, or trust. Complete a separate worksheet for each property sold.
Have the property description, Oklahoma location or applicable federal identification number, acquisition and sale dates, sales price, basis information, and gain or loss allocated or apportioned to Oklahoma available. The page 2 worksheet also asks when you acquired ownership in the PTE.
Common mistakes
- Counting a gain or loss twice: Do not include amounts on line 1 that are reported on lines 2 through 4.
- Including amounts not assigned to Oklahoma: If less than 100% of a gain or loss is apportioned to Oklahoma, include only the Oklahoma portion in Column F.
- Entering a negative deduction: Enter “0” on line 5 if its total is zero or less. Enter “0” on line 6 if there is a net capital loss. Line 7 cannot be less than zero.
- Exceeding the deduction limit: Line 7 must be the smaller of lines 5 and 6.
- Leaving out required support: Provide the federal forms and, when applicable, the page 2 worksheet requested for the gains you report.
Questions people ask
Can an installment sale qualify?
Yes. Qualifying installment-sale gains included in federal distributable income for the current year are eligible if the property met the applicable holding period when sold. Use the current year’s taxable portion allocated or apportioned to Oklahoma and provide Federal Form 6252.
Can gains passed through from another PTE qualify?
Yes. The electing PTE must have been a member of the other PTE for the applicable three or five uninterrupted years, and the other PTE must have held the asset for at least that period before the sale. The PTE must provide supplemental information identifying the qualifying capital gains passed through to the member.
How much is the deduction?
The deduction on line 7 is the smaller of the qualifying Oklahoma net capital gain on line 5 or the net capital gain allocated or apportioned to Oklahoma on line 6. It cannot be less than zero. Net capital gain means net long-term capital gain minus net short-term capital loss.
Where does the deduction go on Form 587-PTE?
Use the line 7 deduction when computing each member’s Oklahoma taxable income. Enter each member’s pro-rata share of the deduction in Form 587-PTE, Column C.