Oklahoma venture capital tax credits explained

The specialty companies — including Bank of Oklahoma subsidiary Cottonwood Valley Ventures Inc. — receive 20 percent of their investments back in the form of tax credits that can be used to avoid paying an identical amount in taxes.

The tax credits are transferrable. That means the specialty companies can sell or give them to individuals or companies that can use them to lower or eliminate their tax liabilities.

The specialty investment companies have five years to actually invest the money in Oklahoma companies once they receive it.

This particular tax credit generally excludes investments in oil and gas exploration, real estate sales, real estate development, farming, ranching, banking and certain other enterprises.

If unused in a single tax year, the credits can be carried over for three years before they expire.

The number of venture capital credits being claimed using the program has waned since 2007, according to records from the Tax Commission that are published by the Office of State Finance.

A late $800 million correction to Cottonwood Valley Ventures' tax return would create a resurgence in the tax credit that lawmakers let expire at the end of 2008. The tax credits historically have been claimed by some of the wealthiest Oklahomans to reduce a part or all of their tax liability.