Form 512-S And Form 512-Sa - Oklahoma Small Business Corporation Income Tax

Line by Line Instructions for Determining Oklahoma Net Distributable Income

Computation of Allocable and/or

If you are the Refinery -

(Part 2, Column B, line 19, or Part 4, line 3 as a deduction)

Apportionable Income

To make the election to expense the cost of qualified

refinery property located in Oklahoma in the tax year in

Part 2, Column A and Part 3, Column A are to be

which the expense is incurred, deduct the cost of the

completed by all S corporations. All S corporations

property on a timely filed return, unless a second

start with Part 2.

election is made by the refinery to allocate all or a

portion of the deduction to its owners. If the second

Part 2, Column B and Part 3, Column B, lines 1

election is made, do not deduct such portion on Form

through 14 are to be completed by S corporations

512-S. Each owner will report their allowable share of

deriving all of their income from within Oklahoma

the deduction on their own income tax return; see “The

or by S corporations whose business within and

election to allocate expense to owners” below.

without Oklahoma is oil and gas production, min-

ing, farming, or rental. This should be completed

If you are the Refinery -

using the direct accounting method.

(Part 2, Column B, line 5 or Part 4, line 2 as an addition

)

Part 4 is to be completed by S corporations

If the election was made to expense the cost of qualified

conducting a business of a unitary nature. A unitary

refinery property located in Oklahoma on this year or on

business is one whose income is derived from the

a previous year’s Oklahoma return, the depreciation

conduct in more than one state of a single

deduction claimed on the Federal return for such

business enterprise, all the factors of which are

property must be added back to arrive at Oklahoma

essential to the realization of an ultimate gain

taxable income. This addition must be made regardless

derived from the enterprise as a whole, and not

of whether the expense is claimed on the corporate

from its component parts which are too closely

return or allocated to its owners.

connected and necessary to each other to justify

division or separate allocation.

• The election to allocate expense to owners

The refinery may elect to allocate all or a portion of the

Safety Pays OSHA Consultation Service

deduction to its owners. The allocation for each person

Exemption:

is equal to the ratable share of the total amount

(Part 2, Column B, line 19 or Part 4, line 3)

allocated, determined on the basis of the ownership

interest of the person. If this election is made, such

An employer that is eligible for and utilizes the Safety

portion of the cost of the qualified refinery property is

Pays OSHA Consultation Service provided by the

not deducted as an expense on Form 512-S. Each

Oklahoma Department of Labor shall receive a $1,000

owner reports their allowable share of the deduction on

exemption for the tax year the service is utilized.

the designated line on their own income tax return. The

Employers must be able to substantiate their

refinery must attach a schedule stating the qualified

participation in the Oklahoma Department of Labor’s

refinery property(ies), the date(s) placed in service, the

Safety Pays Consultation Service upon request.

total cost being expensed, and the portion of such

Qualified Refinery Property:

expense allocated to each owner; including the owner’s

(Title 68 O.S. Section 2357.204)

name and Federal identification number.

If you are the owner -

• The election to expense instead of depreciate

(Part 2, Column B, line 19, or Part 4, line 6 as a deduction)

A refinery may elect to treat 100% of the cost of

Deduct the portion of the cost of the qualified refinery

qualified refinery property located in Oklahoma as an

property allocated to you as an owner in the refinery.

expense that is not chargeable to a capital account. Any

Attach a schedule stating your corporate name and FEI

cost so treated is allowed as a deduction for the year

number, the refinery/company name and FEI number,

in which the qualified refinery property expense is

the qualified refinery property(ies), the date(s) placed in

incurred. Once made, the election is irrevocable without

service, and the portion of cost allocated to you.

the consent of the Oklahoma Tax Commission.

The depreciation deducted on the Federal return for

such property must be added back in this and in all

subsequent years.

Note: A report must be attached to certify that the

provisions of Title 68 O.S. Section 2357.204(E) & (F)

have been met. No deduction under this section will be

allowed unless this certification is enclosed with the

refinery’s income tax return.

Form 512-S And Form 512-Sa - Oklahoma Small Business Corporation Income Tax - 2006 Page 5

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