Oklahoma: Capital Gains Exclusion Fix Legislation Prefiled

Share this
TEXT SIZE Text Bigger Text Smaller

By KPMG's Washington National Tax practice | Nov. 25, 2013


From TaxWatch

audio Listen to this podcast

On November 18, 2013, legislation (S.B. 1140) was prefiled that attempts to addresses infirmities with a statute providing a deduction for certain capital gains included in federal taxable income. Specifically, under current Oklahoma law a capital gains deduction applies for gain related to the sale of stock in an Oklahoma Company and the sale of certain tangible personal property, real property, and intangible property owned directly or indirectly by Oklahoma companies and held for a three year period.  An “Oklahoma company” is generally defined as an entity primarily headquartered in Oklahoma for at least three uninterrupted years prior to the date of the transaction giving rise to the capital gains. A non-Oklahoma company challenged the law on numerous grounds, including that it violated the Commerce Clause by favoring in-state companies over their out of state counterparts.  In CDR Systems Corp. v. Oklahoma Tax Commission, the Oklahoma Court of Appeals held that the disparate treatment of non-Oklahoma entities versus "Oklahoma" entities violated the Commerce Clause. The court held that the taxpayer was entitled to the capital gains deduction for the gains it realized from its asset sale. The Oklahoma Supreme Court subsequently granted the Tax Commission’s petition for review.

 

Senate Bill 1140, if enacted, would repeal the current capital gain deduction after the 2014 tax year. For taxable years beginning on or after January 1, 2015, the bill would allow a deduction for 50 percent of the amount of qualifying capital gains.  Capital gains qualifying for the deduction would include gains related to the sale of real property or tangible personal property located within Oklahoma and held for five or more uninterrupted years, and sales of stock or an ownership interest in any company held for two or more uninterrupted years. Stay tuned to TWIST for more information about S.B. 1140 and the litigation in CDR Systems Corp. v. Oklahoma Tax Commission.

——————————————————————————————————————————————

ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International.

 (0 user recommendations)

Comments

No comments found for this article.

Add a comment (Must be signed in.)

Want to participate in the discussion?

Or sign in to comment