Oklahoma § 68-3934 - Right to credit against entity's state tax liability –

§ 68-3934. Right to credit against entity's state tax liability –

Carry forward - Recapture.

Oklahoma Statutes - Title 68. Revenue and Taxation

A. Upon making a capital investment in a rural fund, a rural

investor shall have a right to a credit against such entity's state

tax liability that may be utilized on each credit allowance date of

such capital investment in an amount equal to the applicable

percentage for such credit allowance date multiplied by the purchase

price paid to the rural fund for the capital investment. The amount

of the credit claimed by a rural investor shall not exceed the

amount of such entity's state tax liability for the tax year for

which the credit is claimed. Any amount of credit that a rural

investor is prohibited from claiming in a tax year as a result of

this section may be carried forward for use in any of the five (5)

subsequent tax years, but shall not be carried back to prior tax

years. It is the intent of this act that a rural investor claiming

a credit under this act is not required to pay any additional tax

that may arise as a result of claiming such credit.

B. No credit claimed under the provisions of this act shall be

refundable or saleable on the open market. Credits earned by or

allocated to a partnership, limited liability company, or Scorporation may be allocated to the partners, members, or

shareholders of such entity for their direct use in accordance with

the provisions of any agreement among such partners, members, or

shareholders, and a rural fund shall notify the Department of the

names of the entities that are eligible to utilize transfer of a

capital investment upon such allocation, change, or transfer. Such

allocation shall not be considered a sale for the purpose of this

section.

C. The Department may recapture credits from a taxpayer that

claimed a credit authorized under this section if:

1. The rural fund does not invest sixty percent (60%) of its

capital investment authority in qualified investments in this state

within two (2) years of the credit allowance date, and one hundred

percent (100%) of its capital investment authority in qualified

investments in this state within three (3) years of the credit

allowance date; provided, that at least seventy percent (70%) of

these initial qualified investments must be made in eligible

businesses located in rural areas;

2. The rural fund fails to maintain qualified investments equal

to ninety percent (90%) of its capital investment authority from the

third anniversary until the sixth anniversary of the credit

allowance date, with seventy percent (70%) of such investments

maintained in eligible businesses located in rural areas. For each

year the rural fund fails to maintain such investments, the

Department may recapture an amount of such year's allowed credits

equal to the percentage difference between ninety percent (90%) of a

rural fund's capital investment authority and the actual amount of

qualified investments maintained for such year. For the purposes of

this subsection, a qualified investment is considered even if the

Oklahoma Statutes - Title 68. Revenue and Taxation

qualified investment was sold or repaid so long as the rural fund

reinvests an amount equal to the capital returned or recovered or

repaid by the rural fund from the original investment, exclusive of

any profits realized, in other qualified investments in this state

within twelve (12) months of receipt of such capital. Amounts

received periodically by a rural fund shall be treated as

continually invested in qualified investments if the amounts are

reinvested in one or more qualified investments by the end of the

following calendar year. A rural fund shall not be required to

reinvest capital returned from qualified investments after the fifth

anniversary of the credit allowance date, and such qualified

investments shall be considered held continuously by the rural fund

through the sixth anniversary of the credit allowance date;

3. Prior to the earlier of exiting the program in accordance

with this act or thirty (30) days after the sixth anniversary of the

credit allowance date, the rural fund makes a distribution or

payment that results in the rural fund having less than one hundred

percent (100%) of its capital investment authority invested in

qualified investments in the state or held in cash or other

marketable securities; or

4. The rural fund violates the provisions of Section 6 of this

act, in which case the Department may recapture an amount equal to

the amount of the rural fund's capital investment authority found to

be in violation of such provisions.

For the purposes of meeting and maintaining the objectives

established for investment in paragraphs 1 and 2 of this subsection,

a rural fund's qualified investments shall be multiplied by a factor

of one and one-quarter (1 1/4) in counties with less than thirty

thousand (30,000) in population and more than thirteen thousand

(13,000) in population and shall be multiplied by a factor of one

and one-half (1 1/2) in counties with a population of thirteen

thousand (13,000) or less.

D. Recaptured credits and related capital investment authority

shall revert to the Department and shall be reissued pro rata to

applicants whose capital investment allocations were reduced in

accordance with the application process provided under subsection D

of Section 3 of this act.

E. No recapture shall occur until the rural fund has been given

notice of noncompliance and afforded six (6) months from the date of

such notice to cure the noncompliance.

Added by Laws 2022, c. 354, § 5, eff. Nov. 1, 2022.