SECTION 5.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 2357.8A of Title 68, unless there is created a duplication in numbering, reads as follows:

A.  The provisions of this section shall only be applicable to investments in qualified venture capital companies made on or after the effective date of this act pursuant to Section 2357.7 of Title 68 of the Oklahoma Statutes.  As used in this section, "recapture event" means that with respect to an investment in an Oklahoma business venture by a qualified venture capital company:

1.  The Oklahoma 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 of the Oklahoma business venture within eighteen (18) months after the investment is made or within an extension of such period as provided in Section 2357.7 of Title 68 of the Oklahoma Statutes;

2.  The investment in the Oklahoma business venture is transferred, withdrawn or otherwise returned within five (5) years; provided, a "recapture event" shall not include the transfer, withdrawal or return of an investment as a result of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 this act, a "market-based liquidity event" means that an Oklahoma business venture:

a.         sells all or substantially all of its assets to, or is acquired by share acquisition, share exchange, merger, consolidation or other similar transaction by another person or entity other than a person or entity controlled by a person that made an investment in the qualified venture capital company that provided funds for use by the Oklahoma 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, or

c.         makes an amortization payment under the terms of a debt instrument; or

3.  The Oklahoma Tax Commission finds that the investment does not meet the requirements of Section 2357.7 of Title 68 of the Oklahoma Statutes.

B.  If a recapture event occurs with respect to an investment for which a credit authorized by Section 2357.7 of Title 68 of the Oklahoma Statutes was claimed, the tax imposed pursuant to the applicable provisions of Title 36 or Title 68 of the Oklahoma Statutes 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 2357.7 of Title 68 of the Oklahoma Statutes 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 Title 68 of the Oklahoma Statutes 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 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 Section 2357.7 or 2357.8 of Title 68 of the Oklahoma Statutes 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.

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