The appellate court ruled the Oklahoma capital gains deduction, which took effect Jan. 1, 2006, violates the commerce clause of the U.S. Constitution. The court, in a 3-0 ruling, reversed an opinion by the Oklahoma Tax Commission, which denied an appeal from a California company stating it also should have received the deduction.
Tax Commission officials said earlier it was unknown how much money the state takes in from out-of-state companies paying the capital gains tax. It varies depending on the amount of capital gains claimed by out-of-state companies that pay corporate taxes in Oklahoma and whether they meet the criteria of the deduction.
Capital gains include money from the sale of real estate, stocks or personal property.
Oklahoma companies may claim the capital gain deduction if they own the assets being sold at least three years before the transaction. Out-of-state companies have to own the property for at least five years to claim the deduction, according to the law.
The appellate court found that the Oklahoma capital gains deduction discriminates against out-of-state companies because it affords Oklahoma companies different treatment for similar taxable events.