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Oklahoma Supreme Court allows individual to take capital gain deduction for sale of s corporations’ goodwill

On June 27, 2017, in a unanimous decision, the Oklahoma Supreme Court reversed the Oklahoma Tax Commission and held that an individual taxpayer could take a capital gain deduction for the proceeds that he received when two S corporations in which he held an ownership interest sold substantially all of their assets. The Commission previously had disallowed the deduction for the amounts the companies received for selling intangible personal property such as goodwill. On appeal, the Supreme Court held that the taxpayer was entitled to take the capital gain deduction because the sale of goodwill qualified as the sale of an indirect ownership interest in an Oklahoma company.