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

Line by Line Instructions for Determining Oklahoma Net Distributable Income

Part 3, continued...

Enclose a schedule of all municipal interest received by

Line 4 -

source and amount. If the income is from a mutual fund

Accounts receivable interest income and interest

which invests in government obligations, enclose a

income from investments held to generate working

detailed schedule from the mutual fund showing the

capital shall be allocated to Oklahoma on the basis

amount of monies received from each government

of direct expense. See line 1 on page 6.

obligation or the percentage of funds received from

each obligation.

All other intangible income (loss) shall be allocated

in accordance with the situs of the S corporation.

Note: If the interest is exempt, the capital gain/loss from

Gains or losses from the sale of leases and gains

the sale of the bond may also be exempt. The gain/loss

or losses from the sale of real and tangible per-

from sale of a state or municipal bond, other than those

sonal property, shall be allocated in accordance

provided for in line 1, is exempt only if so provided by

with the situs of the property.

the statute authorizing its issuance.

Line 4b - State and Municipal Bond Interest:

S Corporations domiciled in Oklahoma that receive

Line 4c - Interest on U.S. Government Obligations:

income on bonds issued by any state or political

If you report interest on bonds, notes, and other obliga-

subdivision thereof, exempt from Federal taxation but

tions of the U.S. on your Federal return, it may be

not exempt from taxation by the laws of the State of

excluded from your Oklahoma income if a detailed

Oklahoma, shall add the total of such income to arrive

schedule is furnished, accompanied with 1099s showing

at Oklahoma income.

the amount of interest income and the name of the

obligation from which the interest is earned. If the

1) Income from all bonds, notes or other obligations

interest is from a mutual fund which invests in govern-

issued by the State of Oklahoma, the Oklahoma

ment obligations, enclose a detailed schedule from the

Capital Improvement Authority, the Oklahoma

mutual fund showing the amount of monies received

Municipal Power Authority, the Oklahoma Student

from each obligation or the percentage of funds received

Loan Authority, and the Oklahoma Transportation

from each obligation. Interest from entities such as

Authority (formerly Turnpike Authority) is exempt

FNMA & GNMA does not qualify.

from Oklahoma income tax. The profit from the

sale of such bond, note or other obligations shall

Lines 7 through 9 -

be free from taxation.

Gains or losses from the sale of the following shall be

allocated in accordance with the situs of the property:

2) Income from local Oklahoma governmental

•

real or tangible personal property,

obligations issued after July 1, 2001, other than

•

lease, royalty or bonus income from oil and

those provided for in line 1, is exempt from

gas properties.

Oklahoma income tax. The exceptions are those

obligations issued for the purpose of providing

Line 10 -

financing for projects for nonprofit corporations.

The gain on property, for which a section 179 expense

Local governmental obligations shall include

deduction was passed through to shareholders and

bonds or notes issued by, or on behalf of, or for

which is reported as Supplemental Information on

the benefit of Oklahoma educational institutions,

the Federal K-1, is to be reported on this line for Okla-

cities, towns, or counties or by public trusts of

homa purposes. Enclose the following: description of

which any of the foregoing are beneficiary.

the property, date the property was acquired, date the

property was sold, gross sales price, cost or other basis

3) Income from Oklahoma State and Municipal

plus expense of sale (including the S corporation’s basis

Bonds issued prior to July 2, 2001, other than

reduction in the property due to the section 179 ex-

those provided for in line 1, is exempt from

pense deduction), depreciation allowed or allowable

Oklahoma income tax only if so provided by the

(not including the section 179 expense deduction), and

statute authorizing their issuance.

amount of section 179 expense deduction (if any)

passed through to each shareholder for the property

4) Income on bonds issued by another state or

and the S corporation’s tax year(s) in which the amount

political subdivision thereof (non-Oklahoma),

was passed through.

exempt from Federal taxation, is taxable for

Oklahoma income tax.

Lines 12 through 17 -

Expenses relative to the income above shall be

allocated directly to that income.

Form 512-S And Form 512-Sa - Oklahoma Small Business Corporation Income Tax - 2006 Page 7

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