Claim of Right Credit
(1)Credit qualifications. If you repaid income that was taxed in a prior year, you may be eligible for a credit on your Oregon return. This rule applies to repayments made on or after January 1, 2013 that are claimed on returns filed after the effective date of this rule. To claim the credit, you must:
(a)Claim a federal credit or deduction under Internal Revenue Code (IRC) section 1341; and
(b)Have paid Oregon tax in a prior year on the income that you repaid.
(2)Credit calculation. Your Oregon claim of right credit is the difference between the Oregon tax you paid in the prior year and the Oregon tax you would have paid without including the repaid income. Calculate your credit as follows:
(a)Refigure the Oregon tax before credits in the year the income was originally taxed by determining the tax for the year in which the income was originally taxed without the repaid income. Do not change the federal tax subtraction or any other items on the Oregon return.
(b)Subtract the refigured tax before credits from the Oregon tax before credits as filed (or amended or adjusted, if applicable). This is your claim of right credit.
(3)Federal deduction. If you claim a deduction under IRC § 1341 on your federal return, you can allow the deduction to flow through or you can claim a credit on your Oregon return. Determine by comparing the following amounts:
(a)Calculate Oregon tax before credits for the year of repayment with the deduction.
(b)Add back the federal deduction and figure your Oregon tax before credits. Then subtract the Oregon claim of right credit.
(c)If the tax in (a) is less, allow the deduction for Oregon also. If the tax in (b) is less, add back any deduction as required under ORS 316.680 (Modification of taxable income)(2)(i) and claim the Oregon credit.
Rule 150-315-0010 — Claim of Right Credit,