When a pass-through entity makes the Oklahoma PTE election, the entity is considered an Electing Pass-Through Entity. Basically, this means that the income or losses covered by that election are generally removed from the owner's Oklahoma tax calculation, as they are now elected to be handled at the entity-level.
In the case of a loss covered by the election, the loss would be added back on the Oklahoma return in order to prevent the taxpayer from receiving a personal state tax benefit from a loss that was already covered at the entity-level.
In the case of income covered by the election, that income would be subtracted from the Oklahoma return in order to prevent that income being taxed twice.
How to make the entry for Income:
- State
- Oklahoma
- Subtractions from Income
- Oklahoma Income Distributed by an Electing PTE
Note: You will need to 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.
You will not be able to attach documents regarding this addition when E-filing, so the return must be printed, signed, and mailed along with supporting documentation.