OAR 150-314-0110
Allocation of Oregon Modifications to Passive Activity Losses

(1)

Oregon Passive Activity Loss. The Oregon passive activity loss shall be equal to the federal passive activity loss (defined in IRC Section 469(d)) as modified by the additions, subtractions, modifications or adjustments provided in ORS Chapters 314, 316, 317, and 318 as they relate to passive activities (defined in IRC Section 469(c)).

(2)

Intentionally left blank —Ed.

(a)

Modifications to Federal Passive Activity Losses. Modifications that may apply to passive activities of individuals include but are not limited to the following:

(A)

The addition provided in ORS 316.680 (Modification of taxable income)(2)(a) for interest or dividends on obligations of another state, provided the interest or dividends are derived in the ordinary course of the passive activity.

(B)

The addition or subtraction provided in ORS 316.707 (Computation of depreciation of property under federal law) for differences in depreciation of assets used in the passive activity.

(C)

The addition or subtraction provided in ORS 316.716 (Differences in basis on federal and state return) due to a difference in basis, upon the taxable sale, exchange or disposition by the taxpayer of an asset used in the passive activity.

(D)

The addition provided in ORS 316.723 for public utility stock dividends and the subtraction for gain or loss on the sale of public utility stock where dividends were reinvested, provided the dividends and gain or loss are derived in the ordinary course of the passive activity.

(E)

The addition provided by ORS 316.680 (Modification of taxable income)(2)(d) for depletion in excess of the adjusted basis of property if the property is used in the passive activity.

(F)

The subtraction provided in ORS 316.680 (Modification of taxable income)(1)(a) for interest or dividends on obligations of the U.S. government if the interest or dividends are derived in the ordinary course of the passive activity.

(G)

The subtraction for wage expense paid or accrued with respect to the passive activity but not deducted in arriving at federal taxable income because the federal targeted jobs credit under IRC Section 51 was claimed.

(H)

The subtraction provided by ORS 314.210 for the elimination of excess profits on government contracts if such profits were derived in the ordinary course of the passive activity.

(I)

The addition or subtraction provided in ORS 316.872 for deferral of gain on the sale of small business securities if the securities were held or sold in the ordinary course of the passive activity.

(J)

The addition or subtraction provided in ORS 316.873 for deferral of gain on the sale of capital assets, if the assets were held or sold in the ordinary course of the passive activity.

(K)

The subtraction provided in ORS 316.744 (Cash payments for energy conservation) for energy conservation payments if the energy conservation measure was undertaken with respect to the passive activity.

(L)

The addition provided in ORS 316.680 (Modification of taxable income)(2)(e) for deferred gain on involuntary conversions or exchanges of Oregon property, the proceeds of which are reinvested in property outside Oregon. This modification applies if the property disposed of was used in the passive activity.

(M)

The subtraction provided in ORS 316.056 (Interest or dividends on obligations of state or public bodies subtracted from federal taxable income) for interest or dividends on obligations of Oregon political subdivisions, provided the interest or dividends are derived in the ordinary course of the passive activity.
Example: Mary has a post-1987 nonrental passive activity loss for federal purposes of $13,500. She shows an addition for depreciation for Oregon of $1,000 and a subtraction for a jobs credit of $600. The computation of Mary’s passive loss for Oregon is shown below:
Federal loss — ($13,500)
Oregon addition for depreciation — 1,000
Oregon subtraction for jobs credit — (600)
Passive loss for Oregon — $13,100

(b)

Modifications that may apply to passive activities of a closely held corporation or personal service corporation include but are not limited to the following:

(A)

The addition or subtraction provided in ORS 317.368 for differences in depreciation of assets used in the passive activity.

(B)

The addition or subtraction provided in ORS 317.374 (Depletion) for differences in depletion if the property is used in the passive activity.

(C)

The addition or subtraction provided in ORS 317.356 (Basis on disposition of asset) due to a difference in basis, upon the taxable sale, exchange or disposition by the taxpayer of an asset used in the passive activity.

(D)

The addition or subtraction provided in ORS 317.319 (Capital Construction Fund) for payments to or withdrawals from a capital construction fund if it is established in the ordinary course of the passive activity.

(E)

The addition provided in ORS 317.326 for deferred gain from the exchange or involuntary conversion of Oregon property, the proceeds of which are reinvested in property outside Oregon. This modification applies if the property disposed of was used in the passive activity.

(F)

The addition provided in ORS 317.309 (Interest and dividends received from obligations of state or political subdivision) for interest and dividends received from states and political subdivisions of states derived in the ordinary course of the passive activity.

(G)

The dividend-received deduction provided in ORS 317.267 (Dividends received by corporation from certain other corporations) if the securities were held in the ordinary course of the passive activity.

(3)

Intentionally left blank —Ed.

(a)

Modifications of Passive Losses by a Nonresident: In the case of a nonresident, losses resulting from passive activities derived from or connected with Oregon sources as defined in ORS 316.127 (Income of nonresident from Oregon sources) are deductible for Oregon purposes, subject to the provisions of IRC Section 469. The loss is modified by the modifications, additions and subtractions provided for in ORS Chapters 314 and 316 allocable to the passive activity. Sections (2) and (4) of this rule shall be followed regarding which additions, subtractions and modifications are allocable and how the transition rules and passive activity credits are applied. Section (7) of this rule shall be followed regarding the computation of the Oregon passive activity loss.
Example: John is a nonresident of Oregon and has rental property in both Oregon and California. His loss from all rentals is $50,000 and from his Oregon rental $10,000. Federal law allows a deduction of up to $25,000 for rentals. John would show $25,000 loss in the federal column of Form 40N and $10,000 loss in the Oregon column of Form 40N. John claims the $10,000 loss for Oregon because the loss for a nonresident from Oregon sources is treated in the same manner as a passive loss for a full-year resident.
In the case of a nonresident, losses resulting from passive activities derived from or connected with sources outside Oregon are not deductible for Oregon purposes, regardless of a later change in the taxpayer’s residency.
Example: Tony is currently a full-year resident of Oregon. He moved to Oregon from California on December 15th of the prior year. In his last year in California, Tony incurred a passive loss from a California based investment. He was unable to claim the loss in the year incurred due to the passive loss limitations. Tony may not carry his loss forward to his Oregon return, because he was not a resident of Oregon in the year the loss was incurred and nonresidents can only carry forward passive losses from Oregon sources.

(b)

Modification of Passive Losses by a Part-year Resident: In the case of a part-year resident, losses resulting from passive activities carried on during the period the taxpayer is a resident plus those derived from or connected with Oregon sources as defined in ORS 316.127 (Income of nonresident from Oregon sources) during the period the taxpayer is a nonresident are deductible for Oregon subject to the provisions of IRC Section 469. The loss is modified by additions, subtractions and modifications provided for in ORS Chapters 314 and 316 allocable to the passive activity. Sections (2) and (4) of this rule shall be followed regarding which additions, subtractions and modifications are allocable and how passive activity credits are applied. Section (7) of this rule shall be followed regarding the computation of the Oregon passive activity loss.
Example: Steve moved to Oregon on July 1 and is a part-year resident of Oregon. He has rentals in both Oregon and California. His loss from the California rental is $24,000 incurred ratably throughout the year ($2,000 per month). His loss from the Oregon rental is $10,000.
Steve would show the maximum $25,000 loss for rentals in the federal column of Form 40P. He would show $22,000 loss in the Oregon column of Form 40P. The Oregon loss consists of $10,000 loss for the Oregon rental and $12,000 loss ($2,000 x 6) for the California rental incurred from July 1 to December 31, the period in which Steve was a resident.

(4)

Passive Activity Credits: Taxpayers may offset in full the tax credits provided in ORS Chapters 315, 316, 317, and 318 related to a passive activity against Oregon tax liability for the taxable year.

(5)

Active Participants in Rental Real Estate Activities: The $25,000 offset for rental real estate activities provided in IRC Section 469(i) is not reduced by deduction equivalents (defined in IRC Section 469(j)(5)).

(6)

Special Rules for Taxpayers in Real Property Business: Taxpayers who qualify under IRC 469(d)(7)(B) to treat any rental real estate activity as a non-passive activity for federal tax purposes shall use the same treatment for Oregon tax purposes.

(7)

Computation of the Oregon Passive Activity Loss: Modify the federal passive activity loss by the additions, subtractions and modifications applicable to the passive activity. Apply the passive activity loss limitations specified in IRC Section 469 to the recomputed Oregon passive activity loss. Modify the Oregon return for the difference between the federal passive activity loss deducted and the allowable Oregon passive activity loss. Any amount of the Oregon passive activity loss not allowed in the tax year as a result of the application of the federal loss limitations may be carried forward to the following tax year.
Example 1: Tom has an adjusted gross income of under $100,000. He has a $26,000 passive activity loss from rental property acquired in 1987. The passive loss limitations in IRC Section 469 will allow Tom to use $25,000 of this loss to offset current year income from other sources. The remaining $1,000 will be carried forward for federal purposes.
Tom has $2,000 less depreciation for Oregon than for federal on the rental property. His Oregon passive activity loss is reduced to $24,000 (26,000 – 2,000). An addition of $1,000 is required on the Oregon return. This represents the difference between the allowable federal deduction of $25,000 and the allowable Oregon deduction of $24,000. The $1,000 addition is shown as an “Other addition … Oregon passive loss” on the Oregon return. Tom does not show an addition for depreciation. He will not carry forward any of the loss for Oregon purposes.
Example 2: Larry has an adjusted gross income of under $100,000. He has a $40,000 passive activity loss from rental property acquired in 1987. For federal purposes, Larry may use $25,000 of the loss to offset income from other sources. He carries forward the $15,000 balance.
Larry has $3,000 less depreciation for Oregon than for federal on the rental property. His Oregon passive activity loss is reduced to $37,000 (40,000 – 3,000). Larry then applies the federal passive loss limitations of section 469 of the Internal Revenue Code, and shows the maximum $25,000 loss on his Oregon return. Because this is the same passive loss shown on the federal return, no modification is needed. Larry may carry forward the $12,000 balance of the loss (37,000 – 25,000). Larry does not show an addition for depreciation on the return.
[Publications: Publications referenced are available from the agency.]

Source: Rule 150-314-0110 — Allocation of Oregon Modifications to Passive Activity Losses, https://secure.­sos.­state.­or.­us/oard/view.­action?ruleNumber=150-314-0110.

150‑314‑0005
Period of Computation of Taxable Income 150‑314‑0010
Mitigation of Effect of Limitations and Other Provisions 150‑314‑0012
Determination by Agreement 150‑314‑0025
Pollution Control Facilities: Revocation of Certificate 150‑314‑0027
Pollution Control Facilities: Facilities Not Eligible for Tax Credit 150‑314‑0035
Formula for Apportionment of Lobbying Expenses Subject to Proxy Tax 150‑314‑0040
Withholding on Real Property Conveyances 150‑314‑0045
REMIC Filing Requirements 150‑314‑0047
REMIC Income Taxable to Nonresidents 150‑314‑0055
Change in Methods of Accounting or Reporting 150‑314‑0060
Election to Use Alternative Apportionment Weightings by Taxpayers Engaged in Utilities or Telecommunications 150‑314‑0062
Apportionment and Allocation of Income of Financial Organizations and Public Utilities from Business Activities Within and Without Oregon 150‑314‑0064
Definitions 150‑314‑0066
Apportionment and Allocation of Income Generally 150‑314‑0068
Allocation of Income 150‑314‑0070
Apportionment Factors Generally 150‑314‑0072
Apportionment Factors 150‑314‑0074
Modified Factors for Carriers of Freight or Passengers: General Rule 150‑314‑0076
Modified Factors for Carriers of Freight or Passengers: Special Rules — Railroads 150‑314‑0078
Modified Factors for Carriers of Freight or Passengers: Special Rules — Airlines 150‑314‑0080
Modified Factors for Carriers of Freight or Passengers: Special Rules — Trucking Companies 150‑314‑0082
Modified Factors for Companies Engaged in Sea Transportation Service 150‑314‑0084
Modified Factors for Companies Involved in Interstate River Transportation Service 150‑314‑0086
Other Methods: Limited Application 150‑314‑0088
Modified Factors for Financial Institutions 150‑314‑0090
Public Utilities: Sale of Commodities 150‑314‑0100
Disallowance of Certain Intercompany Transactions Involving Intangible Assets 150‑314‑0105
Farm Income Averaging 150‑314‑0110
Allocation of Oregon Modifications to Passive Activity Losses 150‑314‑0115
Interest on Deferred Oregon Tax Liability with Respect to Installment Obligations 150‑314‑0120
Reduction of Tax Attributes after Discharge of Debt 150‑314‑0125
Listed Transaction Reporting Requirement 150‑314‑0130
Definition: Final Determination 150‑314‑0135
Returns When Accounting Period Changed 150‑314‑0140
Information Returns 150‑314‑0142
Brokers’ Information Returns 150‑314‑0150
Requirement to File Returns Electronically (Corporation E-file Mandate) 150‑314‑0152
Requirement to File Returns Electronically 150‑314‑0160
Report of Changes in Federal Taxable Income 150‑314‑0165
Filing Returns of Income: Due date 150‑314‑0167
Filing Returns of Income: Extensions, Chapters 316, 317 and 318 150‑314‑0169
Standards for Substitute Tax Forms 150‑314‑0171
Alternative Filing Methods 150‑314‑0173
Time Limitations Affected by Military Service 150‑314‑0175
Time Limitations for Persons Outside United States 150‑314‑0185
Payment of Tax 150‑314‑0187
Responsibility for Tax Payments 150‑314‑0195
Delinquency Penalty 150‑314‑0197
Failure to File Penalty 150‑314‑0199
Interest on Deficiencies and Delinquencies 150‑314‑0205
Substantial Understatement Penalty (SUP) 150‑314‑0207
Waiver of 20 Percent Substantial Understatement of Net Tax Penalty Imposed under ORS 314.402 150‑314‑0209
Substantial Authority, Adequate Disclosure and Reasonable Basis 150‑314‑0215
Listed Transaction Understatement 150‑314‑0220
Additional Assessments 150‑314‑0222
Five-Year Statute of Limitations 150‑314‑0224
Time Limit to Make Adjustment 150‑314‑0226
Notification of Gain Realized Upon the Sale or Exchange of a Principal Residence 150‑314‑0228
Extension of Period for Assessment 150‑314‑0230
Effect of Federal Extension of Period for Assessment 150‑314‑0240
Refunds Generally 150‑314‑0242
Refunds 150‑314‑0244
Minimum Offset Amount 150‑314‑0246
Interest Computation — Offset 150‑314‑0248
Refund Offset Priority 150‑314‑0250
Refunds 150‑314‑0252
Effect of Federal Extension of Period for Assessment 150‑314‑0254
Separate Refunds When a Joint Return Has Been Filed 150‑314‑0256
Refunds of Tax Overpayments to Spouse or Heirs 150‑314‑0265
Model Recordkeeping and Retention 150‑314‑0267
Requirement to Provide Copies of Documents 150‑314‑0275
Definition: Collection Charge 150‑314‑0277
Payment Secured by Bond, Deposit or Otherwise 150‑314‑0279
Statute of Limitation on Tax Collection 150‑314‑0285
Assessment of Withholding Tax Against Liable Officers 150‑314‑0290
Estimated Tax: When Estimates Are Required 150‑314‑0292
Estimated Tax: When Estimates Are Required For Tax Exempt Corporations 150‑314‑0294
Estimated Tax: Affiliated Corporations 150‑314‑0300
Estimated Tax: Due Dates of Payments for Short-Period Returns 150‑314‑0302
Estimated Tax: Application of Payments 150‑314‑0310
Requirement to Use Electronic Funds Transfer 150‑314‑0315
Corporation Estimated Tax: Delinquent or Underestimated Payment or Both, Constitutes Underpayment 150‑314‑0317
Estimated Tax: Consolidated Return Underpayments 150‑314‑0319
Estimated Tax: Apportioned Returns 150‑314‑0321
Estimated Tax: Application of Net Loss, Annualized Income Exception 150‑314‑0323
Estimated Tax: Interest on Underpayment 150‑314‑0325
Estimated Tax: Computation of Underpayment 150‑314‑0327
Underpayment of Estimated Tax 150‑314‑0335
Apportionable and Nonapportionable Income Defined 150‑314‑0337
Apportionable and Nonapportionable Income 150‑314‑0339
Proration of Deductions 150‑314‑0345
Apportionment and Allocation of Income Generally 150‑314‑0347
Application of ORS 314.610 to 314.667: Allocation 150‑314‑0349
Apportionment and Allocation for a Taxpayer Carrying on a Unitary Business 150‑314‑0351
Two or More Businesses of a Single Taxpayer 150‑314‑0353
Apportionment for Long-Term Construction Contracts 150‑314‑0355
Special Rules: Installment Sales 150‑314‑0357
Modified Factors for Motion Picture and Television Film Producers 150‑314‑0365
Taxable in Another State 150‑314‑0367
Taxable in Another State 150‑314‑0369
Taxable in Another State 150‑314‑0371
Taxable in Another State 150‑314‑0380
Allocation of Interest and Dividends 150‑314‑0385
Apportionment Formula 150‑314‑0390
Property Factor 150‑314‑0392
Property Factor 150‑314‑0394
Property Factor 150‑314‑0396
Property Factor 150‑314‑0398
Property Factor 150‑314‑0400
Property Factor 150‑314‑0402
Property Factor 150‑314‑0404
Property Factor 150‑314‑0406
Property Factor 150‑314‑0415
Payroll Factor 150‑314‑0417
Payroll Factor 150‑314‑0425
Sales Factor 150‑314‑0427
Sales Factor 150‑314‑0429
Sales Factor 150‑314‑0431
Sales Factor 150‑314‑0435
Sales Factor 150‑314‑0437
Gross Receipts Related to Deferred Gain or Loss 150‑314‑0455
Modified Factors for Publishing 150‑314‑0460
Apportionment of Net Loss 150‑314‑0465
Sales Factor for Interstate Broadcasters 150‑314‑0470
Interstate Broadcasters: Net Income Attributable to this State 150‑314‑0475
Consistent Treatment of Partnership Items 150‑314‑0480
Publicly Traded Partnerships Taxed as Corporations 150‑314‑0485
Partnership Information Returns 150‑314‑0487
Partnership Penalty 150‑314‑0495
Corporation Tax Credits — Converting a C Corporation to an S Corporation 150‑314‑0497
Corporation Tax Credits — Converting an S Corporation to a C Corporation 150‑314‑0510
Definitions for Composite Tax Returns and Pass-through Entity Withholding 150‑314‑0515
Oregon Composite Tax Return 150‑314‑0520
Pass-through Entity Withholding Requirements 150‑314‑0525
Exceptions to Pass-through Entity Withholding Requirements 150‑314‑0530
Divulging Particulars of Returns and Reports Prohibited 150‑314‑0535
Information That May Be Furnished 150‑314‑0540
Rewards for Information 150‑314‑0545
Combat Zone Benefits 150‑314‑0733
Partnership Pays Election After Federal Centralized Partnership Audit Adjustments
Last Updated

Jun. 8, 2021

Rule 150-314-0110’s source at or​.us