Okla. Admin. Code § 710:50-19-1

Current through Vol. 42, No. 6, December 2, 2024

Section 710:50-19-1 - Partnership return

(a)General provisions. The Oklahoma distributive share of partnership income shall be the same portion of that reported for Federal Income Tax purposes. OTC Form 514 is used to report income. [See: 68 O.S. §§2358, 2362, 2363]

(1)Oklahoma source income or loss. When a partnership has source income or loss then that partnership must file a return showing the income or loss applicable to Oklahoma. The partnership shall also furnish a detailed schedule stating the amount of income distributable to each partner from Oklahoma sources.

(2)Duty to file and report; determination of shares. All resident partners must file individual income tax returns with Oklahoma if they are required to file individual Federal Income Tax Returns. All nonresident partners that have gross income of $1,000.00 must file an Oklahoma Return even though their net may actually be a loss. The partnership income for Oklahoma may be apportioned using the three factor formula unless its operations are from real and tangible personal property, such as rents, oil and mining production or royalties, and gains or losses from sales of such property; then the income or loss shall be allocated in accordance with the situs of such property. The partner's distributive share of Oklahoma income or loss shall be the same proportion to the partner's distributive share of income or loss shown on the Federal Partnership Return.

(3)No credit for income taxes paid other jurisdictions. Neither residents nor nonresidents are allowed a credit for income taxes paid to other jurisdictions on partnership income.

(4)Composite returns. For tax years beginning on or after January 1, 2013, Oklahoma will allow partnerships with two or more partners to file composite returns for nonresident partners as set forth in (A) through (D) of this paragraph.

(A)Individual partners and trust partners. Compute each nonresident individual or trust partner's share of Oklahoma distributive income and income tax as follows:

(i) Calculate the Oklahoma distributive share of each nonresident individual and trust partner's income as if all of the partnership income was earned in Oklahoma. In determining taxable income of individual partners filing a composite return, no deductions for the standard deduction, personal exemptions, federal income tax paid, or dependents is permitted.

(ii) Using the Oklahoma individual income tax rates for the applicable tax year, compute a base tax for each partner using the highest marginal tax rate, based on the taxable income from (i) of this subparagraph.

(iii) Calculate the actual Oklahoma distributive share of income of each partner.

(iv) The base tax determined from (ii) of this subparagraph is to be prorated to determine the Oklahoma income tax of each partner. Divide each partner's actual Oklahoma distributive share as determined in (iii) of this subparagraph, by each partner's distributive income from all sources as determined by (i) of this subparagraph. Multiply this percentage times the base tax to calculate the actual Oklahoma income tax of each partner. Nothing in this section shall be construed to allow for more than one hundred percent (100%) of a nonresident partner's income to be taxed.

(B)Corporate partners, S Corporation partners and Partnership partners. Compute each nonresident corporate, S corp or partnership partner's share of Oklahoma distributive income, using the partner's share of Oklahoma distributive income and the Oklahoma corporate income tax rates, to compute each partner's Oklahoma tax.

(C)Form. The income and tax of all partners included in the composite return must be combined on Oklahoma Tax Commission Form 514.

(D)Schedule to be provided. Oklahoma Tax Commission Form 514 PT must be enclosed with the Form 514 to show the computation of each nonresident partner's Oklahoma distributive income and Oklahoma tax. The schedule of nonresident partner's information may be provided on magnetic media, electronically, or in another format which meets Tax Commission guidelines.

(b)When electronic filing is required.

(1)Schedule K-1. For tax years beginning on or after December 31, 2004, partnerships with more than one hundred (100) partners are required to electronically file their Schedule K-1's with the Oklahoma Tax Commission. The format for filing electronically will be in either a spreadsheet format, such as Lotus 1-2-3 or Excel; or a database format, such as DBF or Access. A partnership is deemed to have "more than one hundred (100) partners" if, over the course of the partnership's tax year, the partnership had more than one hundred (100) partners at any time.

(2)Oklahoma partnership income tax return. For tax years beginning on or after January 1, 2020, all Oklahoma partnership income tax returns must be filed electronically in the format prescribed by the Commission.

(c)Waiver of electronic filing requirement for hardship. Partnerships may also obtain a waiver from the electronic filing requirement if the partnership demonstrates that a hardship would result if it were required to file electronically.

Okla. Admin. Code § 710:50-19-1

Amended at 20 Ok Reg 2165, eff 6-26-03 ; Amended at 21 Ok Reg 2571, eff 6-25-04 ; Amended at 22 Ok Reg 1532, eff 6-11-05 ; Amended at 24 Ok Reg 2359, eff 6-25-07 ; Amended at 30 Ok Reg 1859, eff 7-11-13

Amended by Oklahoma Register, Volume 37, Issue 24, September 1, 2020, eff. 9/11/2020