OAR 150-316-0565
Basis of Depreciable Assets Moved into Oregon

(1)

For purposes of this rule taxpayer means an individual, S corporation, or partnership.

(2)

Taxpayers not subject to the apportionment provision of ORS 314.280 (Allocation of income of financial institution or public utility from business within and without state) or 314.605 (Short title) to 314.675 (Apportionment of net loss).

(a)

For Assets First Brought into Oregon’s Taxing Jurisdiction in Tax Years Beginning After 1982 and Prior to Tax Years Beginning January 1, 1985.

(A)

If a taxpayer first brings a depreciable asset into Oregon’s taxing jurisdiction in tax years beginning after December 31, 1982 and prior to tax years beginning January 1, 1985, the asset shall be treated as if it is being converted from personal use to business use. The asset’s Oregon basis shall be the lower of the federal unadjusted basis or fair market value. However, in no instance shall the asset’s Oregon basis be greater than the lower of:
(i)
The federal unadjusted basis less Oregon depreciation previously allowed for Oregon tax purposes; or
(ii)
The fair market value less Oregon depreciation previously allowed for Oregon tax purposes.

(B)

The federal unadjusted basis of an asset is its original basis prior to any adjustments (including, but not limited to, reductions for investment tax credits, depreciation, depletion, amortization, or amounts properly expensed under IRC Section 179). The asset’s fair market value and its expected useful life shall be determined as of the time the asset was brought into Oregon’s taxing jurisdiction. The taxpayer shall depreciate the asset using a method consistent with federal tax law as of December 31, 1980.
Example 1: A nonresident taxpayer has a business in California. The taxpayer has a light truck that is used only for business purposes. The truck was purchased on June 1, 1981 at a cost of $10,000. The truck was depreciated in California over a life of three years. The taxpayer moved to Oregon on September 1, 1983. The fair market value of the truck was $6,000 on this date. The expected useful life of the truck on September 1, 1983 was four years. The taxpayer elected to depreciate the truck using the straight-line method for Oregon purposes over four years. The amount of depreciation the taxpayer can claim in 1983 for Oregon purposes is $500 (4⁄12 x 1⁄4 x 6,000).
Example 2: Assume the same facts as in Example 1 above. The taxpayer sold the asset for $11,000 on January 1, 1985. The taxpayer shall recognize a total Oregon gain of $7,000. The type and amount of gain the taxpayer shall recognize for Oregon purposes is computed as follows: [Formula not included. See ED. NOTE.]

(b)

For Assets First Brought into Oregon’s Taxing Jurisdiction in Tax Years Beginning After 1984. Assets first brought into Oregon’s taxing jurisdiction in tax years beginning after December 31, 1984, shall be allowed to use the Accelerated Cost Recovery System (ACRS) method of depreciation as defined and allowed in IRC Section 168 for Oregon purposes, if such assets were first placed in service in tax years beginning after December 31, 1984 pursuant to the conditions set forth in OAR 150-316-0567 (Property Subject to Accelerated Cost Recovery System). The basis of all assets first brought into Oregon’s taxing jurisdiction beginning after December 31, 1984, shall be computed as if the asset is being converted from personal use to business use. The asset’s Oregon basis shall be the lower of the federal unadjusted basis or fair market value. However, in no instance shall the asset’s Oregon basis be greater than the lower of:

(A)

The federal unadjusted basis less Oregon depreciation previously allowed for Oregon tax purposes; or

(B)

The fair market value less Oregon depreciation previously allowed for Oregon tax purposes. The allowable depreciation method for Oregon purposes shall be determined as of the time the asset was first placed in service as defined in OAR 150-316-0567 (Property Subject to Accelerated Cost Recovery System).
Example 3: Mike is a California resident. He has owned a beanery business in Yreka since 1984. Mike purchased an office building for $100,000 and placed it in service on April 1, 1984. For federal purposes, the building qualifies as 18-year real property and is being depreciated using the applicable percentages allowed under ACRS. On January 1, 1988, Mike purchased his only other asset, a light truck, for $10,000. For federal purposes, the truck qualifies as a 5-year property and is being depreciated using the applicable percentages allowed under MACRS. On January 1, 1990, Mike moved to Ashland, Oregon and continued his California business in Yreka. Since Mike has moved into Oregon’s taxing jurisdiction, Mike must determine his Oregon adjusted basis in the building and the truck in order to depreciate the assets for Oregon. The Oregon adjusted basis is computed as follows: [Formula not included. See ED. NOTE.]
The Oregon basis for depreciation of the building is the lesser of the net basis of $100,000 or fair market value of $115,000. The basis for Oregon depreciation is $100,000. Since Oregon did not adopt ACRS for assets first placed in service in tax years beginning before January 1, 1985, Mike must use an allowable depreciation method available for such assets using the federal laws in effect as of December 31, 1980. Mike elects for Oregon purposes to depreciate the building using the straight-line method over a useful life of 14 years.
Truck: The Oregon basis for depreciation of the truck is the lesser of the net basis of $10,000 or fair market value of $6,000. The basis for Oregon depreciation is $6,000. Since Oregon adopted ACRS for assets first placed in service in tax years beginning after December 31, 1984, and subsequently MACRS for assets placed in service in tax years beginning after December 31, 1986, Mike will use MACRS for his Oregon and federal depreciation deduction.

(3)

For taxpayers subject to the apportionment provisions of ORS 314.280 (Allocation of income of financial institution or public utility from business within and without state) or 314.605 (Short title) to 314.675 (Apportionment of net loss). The basis for depreciation on a previously acquired asset shall be computed as if the taxpayer had always been subject to Oregon tax. The original unadjusted basis shall be reduced by the depreciation allowable in previous years, using a method acceptable for Oregon tax purposes in the year the asset is placed in service. The remaining basis of the asset shall be depreciated over the remainder of its original useful life, using the same allowable method.
Example 4: Alpha, Ltd. is a partnership that started operation in Washington. On January 1, 1984, the partnership purchased a building in Seattle for $100,000. For federal purposes, the partnership is depreciating the building under ACRS as 15-year property. The partnership expanded and began doing business in Oregon on July 1, 1986. In 1984 Oregon did not allow the ACRS depreciation method. For Oregon purposes, the partnership elected to depreciate the building under the straight-line method over a 20-year life. Since the partnership is subject to the apportionment rules, the basis of the building for Oregon will be as if the building was depreciated for Oregon tax purposes using the straight-line method from the date of purchase.[See PDF link below.] For purposes of determining Oregon taxable income, the partnership will depreciate the building using an Oregon basis of $87,500 and the straight-line method over the remaining life. For purposes of determining federal taxable income, the partnership will continue to depreciate the building under ACRS.

(4)

Bringing assets into Oregon’s taxing jurisdiction. A taxpayer may bring assets into Oregon’s taxing jurisdiction in several different manners. First, a nonresident may become an Oregon resident and physically bring business assets into Oregon. Second, a nonresident taxpayer may become an Oregon resident and leave the assets in the other state. Third, a nonresident may open a business operation in Oregon and transfer business assets from a different state to the Oregon business.

(5)

Applicable dates. Section (2) of this rule applies to tax years beginning after December 31, 1982.

(6)

Five year provision. If for any period of five consecutive calendar years beginning on or after January 1, 1985, the Oregon and federal depreciation methods are identical, the Oregon basis for depreciation may be the same as the federal basis at the option of the taxpayer. This election applies only to assets first brought into Oregon’s taxing jurisdiction upon the expiration of the five-year period.
[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360 (Publication of rules and orders)(2) and 183.355 (Filing and taking effect of rules)(6).]
[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

Source: Rule 150-316-0565 — Basis of Depreciable Assets Moved into Oregon, https://secure.­sos.­state.­or.­us/oard/view.­action?ruleNumber=150-316-0565.

150‑316‑0006
Application of Capital Losses and Capital Loss Carryforwards 150‑316‑0007
Policy — Application of Various Provisions of the Federal Internal Revenue Code 150‑316‑0009
Policy — Application of Various Provisions of Tax Law to Domestic Partners 150‑316‑0015
Adoption of Federal Law 150‑316‑0020
Tax Reform Act of 1984 Adjustments 150‑316‑0025
Definition: “Resident” 150‑316‑0027
Status of Individuals in a Foreign Country 150‑316‑0035
Oregon Net Operating Losses — Treatment After 1984 150‑316‑0040
Administrative and Judicial Interpretations 150‑316‑0043
Qualified Business Income Reduced Tax Rate (QBIRTR) 150‑316‑0045
Taxable Income of Nonresidents and Part-year Residents 150‑316‑0050
Farm Capital Gain 150‑316‑0055
Transitional Provision to Prevent Doubling Income or Deductions 150‑316‑0060
Taxable Income of Resident 150‑316‑0065
Social Security and Railroad Retirement Benefits Eligible for Subtraction 150‑316‑0080
Credit for Income Taxes Paid to Another State 150‑316‑0082
Credit for Taxes Paid to Another State When Paid by a Pass-Through Entity 150‑316‑0084
Credit for Income Taxes Paid to Another State — Computation 150‑316‑0086
Credit for Income Taxes Paid to Other States — Proof Required and Procedure for Obtaining the Credit 150‑316‑0088
Addition of Taxes Paid to Another State Claimed as an Itemized Deduction 150‑316‑0090
Credit for Duplicative State Taxation Relating to Different Years 150‑316‑0115
Disabled Child Exemption Credit 150‑316‑0120
Credit for Political Contributions 150‑316‑0125
Credit for the Gain on the Sale of a Residence Taxed by Another State 150‑316‑0130
Credit for Installation of Alternative Energy Devices 150‑316‑0135
Proration of Income and Deductions for Nonresidents and Part-Year Residents 150‑316‑0145
Proration for Pass-through Entity Income of Part Year Oregon Residents 150‑316‑0150
Separate or Joint Federal Returns for Spouses in a Marriage 150‑316‑0155
Nonresident Partners: Guaranteed Payments 150‑316‑0157
Nonresident Partners: Other Methods of Allocation and Apportionment 150‑316‑0165
Gross Income of Nonresidents 150‑316‑0167
Gross Income of Nonresidents 150‑316‑0169
Gross Income of Nonresidents 150‑316‑0171
Gross Income of Nonresidents 150‑316‑0173
Gross Income of Nonresidents 150‑316‑0175
Gross Income of Nonresidents 150‑316‑0179
Student Loan Interest Deduction — for Part-Year and Nonresidents 150‑316‑0181
Moving Expense Deduction — for Part-year and Nonresidents 150‑316‑0183
Gross Income of Nonresidents 150‑316‑0185
Gross Income of Nonresidents: Waterway Workers 150‑316‑0195
Alimony Deduction — for Part-Year and Nonresidents 150‑316‑0197
Nonresident Deduction for Contributions to IRA, Keogh, or Qualified Medical Savings Accounts 150‑316‑0205
Credit for Taxes Paid to State of Residence 150‑316‑0225
Retirement Income Credit 150‑316‑0230
Subtraction for Previously Taxed Contributions 150‑316‑0234
“Withholding Statement” and “Exemption Certificate” 150‑316‑0235
Withholding: Basis of Amount Withheld 150‑316‑0237
Employees Exempt from Withholding 150‑316‑0239
Withholding on Fringe Benefits 150‑316‑0241
Independent Contractor Definition 150‑316‑0243
Personal Liability of Responsible Officers, Members, or Employees for Taxes Withheld 150‑316‑0250
Bonding Requirements for Delinquent Withholding Employers 150‑316‑0255
Withholding by Employers 150‑316‑0257
Employer’s Election of Method of Computing Withholding 150‑316‑0265
Withholding Payments: Cash Basis 150‑316‑0267
Additional Time to File Reports 150‑316‑0275
Treatment of Payroll Based Program Overpayments 150‑316‑0282
Exemptions for Military Personnel 150‑316‑0284
Penalty 150‑316‑0290
Procedure for Correcting the Filing of Withholding Certificates 150‑316‑0295
Credit for Tax Withheld 150‑316‑0297
Where Taxpayer Reports on Fiscal Year Basis 150‑316‑0305
Withholding Income Taxes on IRAs, Annuities, and Compensation Plans 150‑316‑0307
Withholding Income Taxes on IRAs, Annuities, and Compensation Plans 150‑316‑0315
Alternative Withholding Payment Method for Employers to Avoid Undue Burden 150‑316‑0320
Voluntary Withholding for Retired Members of the Uniformed Services 150‑316‑0325
Voluntary Withholding for Civil Service Annuitants 150‑316‑0330
Semiannual Reports and Payments 150‑316‑0332
Withholding: Payment Due Dates 150‑316‑0334
Withholding Tax Payment Requirements for Agricultural Employers 150‑316‑0336
Employee’s Rights 150‑316‑0345
Requirement to use Electronic Funds Transfer 150‑316‑0347
Electronic Funds Transfer. Payroll taxes and corporation estimated income and excise taxes not combined in determining mandate. Payments to be included. 150‑316‑0355
Withholding: Payment and Reports 150‑316‑0357
Waiver of Termination Reports 150‑316‑0359
Withholding: Annual Report by Employer 150‑316‑0361
Combined Reports and Statewide Transit Tax Reports: Agricultural Employers 150‑316‑0370
Liability for Unpaid Withholdings 150‑316‑0372
Officer Liability: Joint Determination of Liability Conference 150‑316‑0380
Withholding Penalties 150‑316‑0385
Nonresident Alternate Filing 150‑316‑0390
Deductions Allowed on Either the Inheritance Tax Return or the Fiduciary Income Tax Return 150‑316‑0395
Tax Treatment of Unincorporated Organization 150‑316‑0400
Resident and Nonresident Estates and Trusts 150‑316‑0402
Oregon Qualified Trust Tax Return 150‑316‑0410
Fiduciary Adjustment 150‑316‑0415
Accumulation Distribution Credit for Oregon Taxes Paid by Trust During Income Accumulation Years 150‑316‑0420
Taxable Income of Nonresident Estate or Trust 150‑316‑0425
Oregon Multiple Funeral Trust Tax Return 150‑316‑0427
Persons Required to Make Returns 150‑316‑0435
Petitioning Department to Equally Split Joint Liability 150‑316‑0440
Innocent Spouse, Separation of Liability, and Equitable Relief Provisions 150‑316‑0445
Liability of Fiduciaries 150‑316‑0450
Decedent’s Estate: Request for a Final Tax Determination 150‑316‑0452
Decedents’ Estate: Application for Discharge from Personal Liability for Tax on Decedent’s Income 150‑316‑0465
Estimated Tax 150‑316‑0470
Allocation of Joint Estimated Tax Payments 150‑316‑0475
Estimated Tax: Farmer’s and Fisher’s 150‑316‑0480
Estimated Tax: Application of Prior Year Overpayment (Refund) 150‑316‑0485
Tax Used to Compute Underpayment of Estimated Tax 150‑316‑0487
Estimated Tax: Underpayment Interest Not Imposed if There is a Casualty, Disaster or Other Unusual Circumstances 150‑316‑0489
Estimated Tax: Underpayment Interest Not Imposed If There Is Reasonable Cause 150‑316‑0491
Estimated Tax: Partnership and S Corporation Income of Part-year Residents and Nonresidents 150‑316‑0493
Required Installments for Estimated Tax 150‑316‑0495
Estimated Tax: Joint Return to Single or Separate Return 150‑316‑0497
Estimated Tax: Single or Separate Returns to Joint Return 150‑316‑0505
Oregon Lottery Winnings and Losses 150‑316‑0507
Modification of Federal Taxable Income: Interest and Dividends 150‑316‑0509
U.S. Government Obligations 150‑316‑0511
Addition for Original Issue Discount (OID) 150‑316‑0513
Modification of Federal Taxable Income: Adding Interest or Dividends of the United States Exempted by Federal Income Tax Law 150‑316‑0515
Modification of Federal Taxable Income: Adding Federal Estate Tax Attributable to Income in Respect of a Decedent Not Taxable by Oregon 150‑316‑0519
Gain or Loss Upon the Sale of State and Municipal Bonds of Other States (Foreign States) 150‑316‑0525
U.S. Government Interest in Retirement Accounts 150‑316‑0530
Pool of Assets that Qualify to Pay State Exempt-Interest Dividends 150‑316‑0535
Federal Tax Deduction: Accrual Method of Accounting Required 150‑316‑0537
Adjustment of Federal Tax Liability 150‑316‑0545
Election to Include Child’s Unearned Income — Addition Required 150‑316‑0550
Special Oregon Medical Subtraction 150‑316‑0555
Modification of Federal Taxable Income: Itemized vs. Standard Deduction 150‑316‑0557
Modification of Federal Taxable Income: Oregon Income Tax Claimed as an Itemized Deduction 150‑316‑0559
Modification of Federal Taxable Income: Previously Taxed Contributions to Pension or Annuity 150‑316‑0565
Basis of Depreciable Assets Moved into Oregon 150‑316‑0567
Property Subject to Accelerated Cost Recovery System 150‑316‑0569
Adjustment to Income for Basis Differences 150‑316‑0575
Amount Specially Taxed Under Federal Law to Be Included in Computation of State Taxable Income: Accumulation Distributions 150‑316‑0580
Definition for Severely Disabled Exemption 150‑316‑0585
Exemption for Blind and Severely Disabled 150‑316‑0590
Substantiation for Permanently Severely Disabled 150‑316‑0595
Exempt Income of Native Americans 150‑316‑0600
Oregon Investment Advantage Apportionable Income Exemption 150‑316‑0605
Military Pay Subtraction 150‑316‑0607
First-time Home Buyer Savings Account 150‑316‑0610
Road Construction Worker’s Travel Expenses 150‑316‑0615
Substantiation Required for Construction Worker and Loggers Expenses 150‑316‑0625
(Miscellaneous) Valuation of Forest Land or “Farm Use” Land for Oregon Inheritance Tax Purposes 150‑316‑0630
Scholarship Awards used for Housing Expenses 150‑316‑0635
Subtraction for Land Contributed to Educational Institutions 150‑316‑0640
Subtraction for Qualified Investment of Severance Pay 150‑316‑0650
Waiver of Frivolous Return Penalty Imposed Under ORS 316.992 150‑316‑0652
Frivolous Return Penalty
Last Updated

Jun. 8, 2021

Rule 150-316-0565’s source at or​.us