A. Except as provided in Section 4 of this act, for taxable years beginning after December 31, 2000, and before January 1, 2012, there shall be allowed a credit against the tax imposed by Section 2355 or, effective January 1, 2001, Section 2370 of this title or, effective July 1, 2001, against the tax imposed by Section 624 or 628 of Title 36 of the Oklahoma Statutes, for qualified investment in qualified rural small business capital companies. No amount of a qualified investment made in a qualified rural small business capital company which has not been invested in one or more Oklahoma rural small business ventures prior to the effective date of the moratorium provided for in Section 4 of this act shall be eligible for any credit otherwise authorized pursuant to this section. No qualified investment made in a qualified rural small business capital company or qualified investment made by a qualified rural small business capital company in one or more Oklahoma rural small business ventures during the period of the moratorium pursuant to Section 4 of this act shall be eligible for any credit otherwise authorized pursuant to this section.

B. The credit provided for in subsection A of this section shall be thirty percent (30%) of the amount of a qualified investment in qualified rural small business capital companies which is subsequently invested in an Oklahoma rural small business venture by the qualified rural small business capital company and may only be claimed for a taxable year during which the qualified rural small business capital company makes the qualified investment in an Oklahoma rural small business venture if the funds are used in pursuit of a legitimate business purpose of the Oklahoma rural small business venture consistent with its organizational instrument, bylaws or other agreement responsible for the governance of the rural small business venture. The qualified rural small business capital company shall issue such reports as the Oklahoma Tax Commission may require attributing the source of funds of each qualified investment it makes in an Oklahoma rural small business venture. If the tax credit exceeds the amount of taxes due or if there are no state taxes due of the taxpayer, the amount of the claim not used as an offset against the taxes of a taxable year may be carried forward for a period not to exceed three (3) taxable years.

C. No taxpayer may claim the credit provided for in this section for qualified investments in qualified rural small business capital companies made prior to January 1, 2001.

D. No taxpayer may claim the credit provided for in this section if the capital provided by a qualified rural small business capital company is used by an Oklahoma rural small business venture for the acquisition of any other legal entity.

E. No financial lending institution shall be eligible to claim the credit provided for in this section except with respect to qualified investments in a qualified rural small business capital company.

F. No taxpayer may claim the credit authorized by this section for the same qualified investment amount for which any credit is claimed pursuant to either Section 2357.62 or 2357.63 of this title.

G. If a pass-through entity is entitled to a credit under this section, the pass-through entity shall allocate such credit to one or more of the shareholders, partners or members of the pass-through entity; provided, the total of all credits allocated shall not exceed the amount of the credit to which the pass-through entity is entitled. The credit may only be claimed for funds borrowed by the pass-through entity to make a qualified investment if a shareholder, partner or member to whom the credit is allocated has an unlimited and continuing legal obligation to repay the borrowed funds but the allocation may not exceed such shareholder’s, partner’s or member’s pro-rata equity share of the pass-through entity even if the taxpayer’s legal obligation to repay the borrowed funds is in excess of such amount. For purposes of the Rural Venture Capital Formation Incentive Act, “pass-through entity” means a corporation that for the applicable tax years is treated as an S corporation under the Internal Revenue Code, general partnership, limited partnership, limited liability partnership, trust, or limited liability company that for the applicable tax year is not taxed as a corporation for federal income tax purposes.

Added by Laws 2000, c. 339, § 3, eff. Jan. 1, 2001. Amended by Laws 2001, c. 382, § 8, emerg. eff. June 4, 2001; Laws 2004, c. 508, § 5, emerg. eff. June 9, 2004; Laws 2005, c. 299, § 5, eff. July 1, 2006; Laws 2006, c. 281, § 19, emerg. eff. June 7, 2006; Laws 2008, c. 440, § 8; Laws 2010, c. 433, § 5.