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

Line by Line Instructions for Determining Oklahoma Net Distributable Income

Part 5, continued...

Line 1b - Nonresident Share of Deductions

• Share of Net Operating Loss Carryover

Enter the amount of Net Operating Loss carryover

Oklahoma Credits

which is attributable to those nonresidents who did

and Withholding

not file a nonresident shareholder agreement

Enclose a detailed

(Form 512-SA) in the loss year.

Withholding

schedule.

Oklahoma income tax is withheld from oil and gas

• Oklahoma Capital Gain Deduction:

royalties paid to nonresident S corporations. Enter

Taxpayers can deduct qualifying gains receiving

each shareholder's portion of such withholding.

capital treatment which are included in Federal

The S corporation must enclose its Form 500-A,

taxable income. “Qualifying gains receiving capital

Form 1099-MISC, Form K-1 or other documenta-

treatment” means the amount of the net capital

tion to substantiate any Oklahoma withholding

gains, as defined under the Internal Revenue Code

passing through to its shareholders.

Section 1222(11). The qualifying gain must:

Note: If you have any nonresident shareholders

1) Be earned on real or tangible personal

who have not filed a withholding exemption affida-

property located within Oklahoma that you

vit (Form OW-15), Oklahoma income tax should

have owned, either directly or indirectly, for at

have been withheld on any distribution of Okla-

least five uninterrupted years prior to the date

homa taxable income. Such withholding is not

of the sale, or

reported here, instead you should have issued a

Form 500-B to your nonresident shareholder.

2) Be earned on the sale of stock or ownership

interest in an Oklahoma company, limited

Credits

liability company, or partnership where such

stock or ownership interest has been owned,

Enter and describe each shareholder's portion of

directly or indirectly, by you for at least three

credits. Enclose all forms required to substantiate

(two for individuals) uninterrupted years prior

the credit(s). See the instructions for Part 1 "Okla-

to the date of the sale.

homa Credits" for more detail on the credits avail-

able.

Form 561-S is used to determine the qualifying

Oklahoma net capital gain of the nonresident

shareholders whose income is reported on Form

Part 1

512-S, Part 1; those who did not file a nonresident

Part 1 is to be completed for those nonresident

shareholder agreement (Form 512-SA). Enclose

shareholders for whom the Nonresident Share-

Form 561-S and a copy of your Federal Schedule

holder Agreement (Form 512-SA) is not enclosed.

The S corporation will be taxed on the non-

resident's share of income.

• Oklahoma Depletion:

For each nonresident shareholder whose income is

reported in Part 1, line 1a, Oklahoma depletion on

Electronic Checks

oil and gas well production, at the option of the

taxpayer, may be computed at 22% of gross in-

come derived from each Oklahoma property during

Accepted through Web

the taxable year. Major oil companies, as defined

in Title 52 O.S. Section 288.2, when computing

Paper checks are not your only option when paying

Oklahoma depletion shall be limited to 50% of the

your balance due. You may pay directly from your

net income (computed without the allowance for

checking account electronically through the

depletion) from each property.

Oklahoma Tax Commission website.

Lease bonus received is considered income sub-

Log on to and visit the “Payment

ject to depletion. If depletion is claimed on a lease

Options” link to make a payment electronically.

bonus and no income is received as a result of

non-producing properties, upon expiration of the

Other tax types are also accepted through this

lease, such depletion must be restored. A complete

payment system, including estimated tax payments.

schedule by property must be furnished.

Form 512-S And Form 512-Sa - Oklahoma Small Business Corporation Income Tax - 2006 Page 9

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