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Dissecting Oklahoma's Capital Formation Incentive Act

We provide the entire context of the law here, however if you prefer you can download an official copy of the Act from the Oklahoma state Website and follow along. Download

This is a draft version with much more to come.

The cover-up.

Denying the public the right to know.

Section 1.C.27

See where the law strips the public of its constitutional protection against wrong in government.

Kept hidden from the public, all state officials, lawmakers, including but not limited to how much the program is costing the public, where the money is going, who is involved, who is benefiting, what if any benefit the public is receiving.
Loophole element A.

Loopholes are ambiguities and this is a significant ambiguity. Where is states "a qualified investment shall be… two hundred percent (200%) of any qualified investment"



Section 20.B.4.a & b Rural Capital Formation Incentive Act
Loophole element A, part 2.

Authorizing the use of borrowed funds

Subtley changing the investment requirement from cash (money at risk) to a new term "qualified investment" and defining "qualified investment" to include using borrowed money. What was "not illegal" was using artificial loans to inflate the claimed investment up to nearly 7 times the actual money invested at risk.

Section 2.B & G     Section 19.B & G     Section 20.B & E

Loophole element A, part 3.

Failing to prevent the use of artificial loans.

An act of omission -- failure to include language clarifying how a loan can to be used. Leaving it "not illegal" to use artificial loans to inflate the claimed investment. artificial, dummy or fake loans

Loopholes are ambiguities and this is a significant ambiguity. Where is states "a qualified investment shall be… two hundred percent (200%) of any qualified investment."

Limiting who can participate and benefit to ?????

Odd Venture Capital Company qualifications

By establishing qualifying criteria unrelated to the core needs and performance of venture capital success the law eliminated every successful Venture Capital Company known to exist. By disregarding any meaningful criteria and background checks for past financial wrong doings in favor of applying non germane eliminates all but a very small few, possible one. Placing the states entire economic funding program in the hands of highly questionable and non proven parties. Section 2
Section 20.C None organized after to January 1, 2001
A public subsidized monoply The law restricts ownership of the venture to the ????? venture capital sole or few oddly qualifying VCCs
Grandfathering Section 25 Rural Capital Formation Incentive Act

Shown elsewhere were this was abused to slip in another $330 million in tax credits.

The so called "Grandfather clause." As written is reasonable, but was used as a cover for misuse.

Only required to invest 50% Section 5

What does Oklahoma get?

Section 2.B.2.d fifty percent (50%) of the proceeds of the investment for the acquisition of tangible or intangible assets which are used in the active conduct of the trade or business of the Oklahoma business venture.

Only 25% or one-fourth of the money taken in tax credits are required to be invested in Oklahoma.

Only 12% or one-eigth of the money taken in tax credits are required to go to creating jobs in Oklahoma.

Section 2.B.2.d 12 % or one-eighth of the tax credits Means on 25% of the tax credits are required to go toward creating jobs Only required to actually invest 50% of the investment Only 50% of the employees Section 5

Recapture or Clawback

Previously given monies or benefits that are taken back due to specially arising circumstances, but not for violations.

Section 2.B.2.d In the event of violations Section 1.C.27 & G Harsh penalty for disclosing public information.
Section 4.C Meaningless penalty for wrongful acts by Venture Capital Company
Section 4.G Meaningless penalty for tax credit users.

Section 22.G Special recapture exemption for certain rural business investment company.

Note: Automatically allows keeping tax credits under regardless of any violation of the law!

Rural small business capital Section 19
Section 20
Basic Tax credits allowed Section 19.B 30% allowed for Rural Capital Formation Incentive Act
Section 20.B 30% allowed for Rural Capital Formation Incentive Act
Period tax credits can be carried forward Section 19.B Accelerated from 10 years to 3 years
Reports Section 1.D & E    Section 3    Section 4.B & E    Section 27
Determination Letters Section 21.F All
Section 24 Rural Capital Formation Incentive Act
Definitions Section 21 New Defines qualified rural small business capital company and rural small business venture
Definitions Section 18 Rural Capital Formation Incentive Act
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