State and Municipal Bond Interest
If you received income on bonds issued by any state or political subdivision thereof, exempt from Federal taxation but not exempt from taxation by the laws of the State of Oklahoma, the total of such income shall be added to Federal Adjusted Gross Income.
1) Income from all bonds, notes or other obligations issued by the State of Oklahoma, the Oklahoma Capital Improvement Authority, the Oklahoma Municipal Power Authority, the Oklahoma Student Loan Authority, and the Oklahoma Transportation Authority (formerly Turnpike Authority) is exempt from Oklahoma income tax. The profit from the sale of such bond, note or other obligation shall be free from taxation.
2) Income from local Oklahoma governmental obligations issued after July 1, 2001, other than those provided for in line 1, is exempt from Oklahoma income tax. The exceptions are those obligations issued for the purpose of providing financing for projects for nonprofit corporations. Local governmental obligations shall include bonds or notes issued by, or on behalf of, or for the benefit of Oklahoma educational institutions, cities, towns, or counties or by public trusts of which any of the foregoing is a beneficiary.
3) Income from Oklahoma Municipal Bonds issued prior to July 2, 2001, other than those provided for in line 1, is exempt from Oklahoma income tax only if so provided by the statute authorizing their issuance.
4) Income on bonds issued by another state or political subdivision thereof (non-Oklahoma), exempt from Federal taxation, is taxable for Oklahoma income tax.
Enclose a schedule of all municipal interest received by source and amount. If the income is from a mutual fund which invests in state and local government obligations, enclose documentation from the mutual fund to substantiate the percentage of income derived from obligations exempt from Oklahoma tax.
Note: If the interest is exempt, the capital gain/loss from the sale of the bond may also be exempt. The gain/loss from the sale of a state or municipal bond, other than those provided for in line 1, is exempt only if so provided by the statute authorizing its issuance. Enter exempt gains on Schedule 511-A, line 11 and exempt losses on Schedule 511-B, line 8.
If you incurred losses from the operation of an out-of-state business, or from the rental or sale of out-of-state property, any such losses must be added back to Federal Adjusted Gross Income. This includes partnership losses and losses sustained by Subchapter S Corporations attributable to other states.
Lump Sum Distributions
Lump sum distributions not included in the Federal Adjusted Gross Income shall be added to the Federal AGI. Rollovers are taxed in the same year as on the Federal return. Enclose a copy of Form 1099 and a complete copy of the Federal return.
Federal Net Operating Loss
Enter carryover(s) included on Federal Form 1040. See net operating loss section on page 4. Also see Schedule 511-A, line 9.
Recapture of Depletion Claimed on a Lease Bonus or Add Back of Excess Federal Depletion
Enter depletion claimed on a lease bonus if no income is received as a result of non-producing properties. Such depletion must be restored in the year the lease expires. A complete schedule by property must be furnished.
If the 22% Oklahoma option for computing depletion was used in a previous year, you must add back any Federal depletion being carried over from such year due to the 65% limitation. The full 22% Oklahoma depletion would have been allowed in such previous year. For the Oklahoma option for computing depletion see the instructions for Schedule 511-A, line 8. A complete schedule by property must be furnished.
Recapture of Contributions to Oklahoma 529 College Savings Plan
If an individual elects to take a rollover on a contribution within one year of the date of the contribution, for which a deduction was taken on the previous year’s return, the amount of such rollover is included in income. As used in this paragraph, “rollover” means the transfer of funds from the Oklahoma 529 College
Savings Plan or OklahomaDream 529 accounts to any other plan
under IRC Section 529.
An individual who makes a non-qualified withdrawal of contributions for which a deduction was taken in tax year 2005 or later, such non-qualified withdrawal and any earnings thereon are included in income. If any of the earnings have already been included in your Federal adjusted gross income, do not include those earnings again on this line.
Oklahoma Loss Distributed by an Electing PTE
If you are a member, either directly or indirectly, of an electing pass-through entity (PTE) add the Oklahoma loss covered by the election pursuant to the provisions of the Pass-Through Entity Act of 2019 (68 OS Sec 2355.1P-1 et seq.). Provide a schedule listing the electing PTE, federal identification number, federal taxable income (loss) and Oklahoma taxable loss in Form 511, line 1 that is covered by the election pursuant to this Act. Provide a copy of the OTC acknowledgement letter.