Form 526-A Draft - Rural Small Business Capital Company Report For Investors

2011 Form 526-A - Page 2

Instructions and Guidelines for Preparing

Rural Small Business Capital Company Report for Investors

68 Oklahoma Statutes (OS) Sec. 2357.71-2357.76 and Rule 710:50-15-87

Tax Credit Moratorium

No credit may be claimed for qualified investments in Oklahoma rural small business ventures during the period of June 1,

2010 through December 31, 2011. No amount of qualified investment made in a qualified rural small business capital com-

pany which has not been invested in one or more Oklahoma rural small business ventures prior to June 1, 2010 is eligible

for any credit otherwise authorized, and no investment made during the moratorium is eligible for a credit.

Note: Credit Carryover - Credits established before June 1, 2010 are eligible to be claimed under normal carryover provi-

sions if applicable.

Draft

Part 1 – Establishing the Credit

9/17/11

Column 1:

List the date(s) the investor invested in, or in conjunction with, the Rural Small Business Capital Company.

Column 2:

List the total amount(s) invested in, or in conjunction with, the Rural Small Business Capital Company. Any funds invested

in an Oklahoma Rural Small Business Venture shall be subject to the following requirements:

1. The Oklahoma Rural Small Business Venture must issue its equity securities or subordinated debt instruments in

exchange for a qualified investment within 30 days of the date as of which the investment occurs;

2. The qualified Rural Small Business Capital Company or any entity making an investment in conjunction with

investment by a qualified Rural Small Business Capital Company must reflect the documented qualified

investment in the Oklahoma Rural Small Business Venture as an asset in its accounting system;

3. The qualified Rural Small Business Capital Company shall not make a qualified investment in an Oklahoma Small

Business Venture in which it has, at any time, more than 50% ownership, whether directly or indirectly, of the

voting interest entitled to elect the governing board of any Oklahoma Rural Small Business Venture in which a

qualified investment is to be made by the qualified Rural Small Business Capital Company; and

4. Neither the qualified Rural Small Business Capital Company nor the Oklahoma Rural Small Business Venture

can enter into any agreement, whether formal or informal, written or unwritten, the purpose of which is to control,

directly or indirectly, the return of a specific amount of qualified investment by the Oklahoma Rural Small Business

Venture to the qualified Rural Small Business Capital Company or the purpose of which is to cause or require

the transfer of such specific amount of qualified investment to any other entity within five years of the date the

qualified investment is made available to the Oklahoma Rural Small Business Venture.

Column 3:

Compute the total Credit available. Multiply the figure in column 2 by 30%.

Note: If a pass-through entity is entitled to the credit, the pass-through entity shall allocate such credit to one or more

of the shareholders, partners or members of the pass-through entity, provided the total of all credits allocated shall not

exceed the amount of the credit to which the pass-through entity is entitled. The credit may only be claimed for funds

borrowed by the pass-through entity to make a qualified investment if a shareholder, partner or member to whom the

credit is allocated has an unlimited and continuing legal obligation to repay the borrowed funds but the allocation may not

exceed such shareholder’s, partner’s or member’s pro-rata equity share of the pass-through entity even if the taxpayer’s

legal obligation to repay the borrowed funds is in excess of such amount.

Column 4:

List the amount of credit eligible to be claimed this year. The credit for investments made in a Rural Small Business Capi-

tal Company may only be claimed for a taxable year during which such company invests funds in an Oklahoma Rural

Small Business Venture and the credit shall be allowed only for the amount of the funds invested in such venture. The

credit for investments made in conjunction with the Rural Small Business Capital Company may be claimed in the year in

which investments were made.

Note: If a pass-through entity is entitled to the credit, the pass-through entity shall provide to each partner, shareholder or

member, documentation showing their share of the “total credit allowable in 2011”. This documentation must be provided

with the partner’s, shareholder’s or member’s income tax return when their share of the credit is being claimed.

Form 526-A Draft - Rural Small Business Capital Company Report For Investors - 2011 Page 2

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