Okla. Stat. tit. 68, § 68-2357.74B

credit amount.

A. As used in this section, “recapture event” means that with

respect to a qualified investment in an Oklahoma rural small

business venture:

1. The Oklahoma rural small business venture fails to expend at

least fifty percent (50%) of the proceeds of qualified investments

for acquisition of tangible or intangible assets to be used in the

active conduct of the trade or business or for working capital for

the active conduct of the trade or business of the rural small

business venture within eighteen (18) months after the qualified

investment is made or within an extension of such period as provided

in Section 2357.72 of this title. For purposes of this paragraph,

“working capital” shall not include consulting, brokerage or

transaction fees;

2. The investment in the rural small business venture is

transferred, withdrawn or otherwise returned within five (5) years;

provided, a “recapture event” shall not include the transfer,

withdrawal or return of an investment as a result of a “market-based

liquidity event”. As used in the Rural Venture Capital Formation

Incentive Act, a “market-based liquidity event” means that an

Oklahoma rural small business venture:

a. sells all or substantially all of its assets to, or is

acquired by share acquisition, share exchange, merger,

Oklahoma Statutes - Title 68. Revenue and Taxation Page 857

consolidation or other similar transaction by another

person or entity other than:

(1) a person or entity controlled by a person that

made a qualified investment in the qualified

rural small business capital company that

provided funds for use by the Oklahoma rural

small business venture, or

(2) a person or entity controlled by a person that

made an investment in conjunction with a

qualified investment made by the qualified rural

small business capital company that provided

funds for use by the Oklahoma rural small

business venture,

b. conducts an initial public offering of a class of its

equity securities pursuant to the requirements of the

United States Securities and Exchange Commission or

other applicable federal law governing the sale of

securities in interstate commerce,

c. makes an amortization payment under the terms of a

subordinated debt instrument, or

d. repays indebtedness from net income as determined in

accordance with generally accepted accounting

principles or proceeds of the sale of assets in the

ordinary course of business; or

3. The Oklahoma Tax Commission finds that the qualified

investment does not meet the requirements of the Rural Venture

Capital Formation Incentive Act.

B. If a recapture event occurs with respect to a qualified

investment for which a credit authorized by either Section 2357.73

or Section 2357.74 of this title has been claimed, the tax imposed

pursuant to the applicable provisions of Title 36 or this title of

the Oklahoma Statutes against which the credit has been claimed

shall be increased to the extent of the recaptured credit amount.

C. For purposes of this section, the recapture amount shall be

equal to the sum of:

1. The aggregate decrease in the credits previously allowed to

the taxpayer pursuant to Section 2357.73 or Section 2357.74 of this

title for all prior taxable periods which would have resulted if no

credit had been authorized with respect to the qualified investment;

plus

2. Interest at the rate prescribed by Section 217 of this title

on the amount determined pursuant to paragraph 1 of this subsection

for each prior taxable period for the period beginning on the due

date for filing the applicable report or return for the prior

taxable period.

D. The tax for the taxable period shall be increased pursuant

to this section only with respect to credits which were used to

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reduce tax liability. In the case of credits not used to reduce tax

liability, the carryforwards allowed shall be adjusted accordingly.
for filing the applicable report or return for the prior

taxable period.

D. The tax for the taxable period shall be increased pursuant

to this section only with respect to credits which were used to

Oklahoma Statutes - Title 68. Revenue and Taxation Page 858

reduce tax liability. In the case of credits not used to reduce tax

liability, the carryforwards allowed shall be adjusted accordingly.

E. For any transaction that is audited by the Tax Commission

after such credits have been allowed, but which is subsequently

determined to constitute a recapture event, the Tax Commission shall

be required to disallow any and all credits claimed in violation of

the requirements of this section or any other provision of the Rural

Venture Capital Formation Incentive Act for a period of ten (10)

years after the date as of which any applicable tax report or return

utilizing such credits is filed.

F. The provisions of subsection E of this section shall

supersede any other provision of the Uniform Tax Procedure Code or

any other state tax law that would prohibit the disallowance of such

credits based upon an otherwise applicable statute of limitations.

G. Notwithstanding any other provision of this section, a

recapture event shall not occur with respect to qualified

investments made by a qualified rural small business capital company

that is also licensed as a rural business investment company under 7

U.S.C., Section 2009cc et seq., or any successor statute, at the

time of the qualified investment. The qualified rural small

business capital company shall include in its annual report proof of

a valid license under the federal statute.