OAR 150-317-0390
IRC Section 338: Application to Oregon

(1)

Internal Revenue Code (IRC) Section 338 applies when at least 80 percent of the voting power and total value of the stock of a target corporation is acquired by a purchasing corporation. Under the election provided by IRC 338(g), the acquiring corporation treats the purchase of the target corporation’s stock as the purchase of its assets. The target’s assets are given a stepped-up basis and the target reports gain as if its assets were sold at fair market value. The seller recognizes a gain on the sale of stock.

(2)

For all Oregon apportionment computations discussed in this rule, the gross receipts from the deemed sale of assets are not included in the target’s sales factor.

(3)

If the target filed a separate federal return for the period ending with the date of acquisition, the gain from the deemed sale of assets must be included in the separately filed final return of the target corporation for the period which ends on the date of acquisition.

(a)

For Oregon apportionment purposes, the apportionment factors computed on the separate Oregon return for the period ending with the date of acquisition must be used.

(b)

The deemed gain on sale of assets is subject to Oregon apportionment if the target is doing business in Oregon.

(c)

The gain on sale of stock is taxed by Oregon to the selling corporation through apportionment if the stock is considered a business asset and the seller is doing business in Oregon.

(d)

The gain on sale of stock is taxed by Oregon to the selling corporation through allocation if the stock is considered a nonbusiness asset and the seller’s commercial domicile is in Oregon.
Example: S Corporation, a calendar year filer, and its nonunitary subsidiary, T Corporation, file separate federal returns. T does business in Oregon. S does not. On July 31, 2002, P Corporation purchases all of T’s stock from S and makes an election under IRC 338. T files a separate short period Oregon return through July 31, 2002, and apportions income, including the deemed sale of assets, to Oregon using its apportionment factors for the year to date. S’s gain on the sale of T’s stock, an intangible, is not taxed by Oregon.

(4)

If the acquired target corporation is the common parent of an affiliated group, the group may elect to file a consolidated federal return. The final return of the common parent is also the final return of each subsidiary, which is considered to be acquired on the same date. The deemed sale of assets for each consolidated corporation must be reported on the consolidated return for the period ending on the date of acquisition. The apportionment factors computed on the Oregon return for the period ending with the date of acquisition must be used to apportion the income including the gain from the deemed sale of assets. The property factor must reflect the corporation’s basis prior to the step-up in basis under IRC 338.

(5)

If the acquired corporation was purchased from an affiliated group with which it was unitary and elects to file a consolidated federal return, it must be included in the consolidated Oregon return of the selling group through the date of acquisition. However, the deemed gain from the sale of assets must be included on a separately filed single transaction return unless an election is made under IRC 338(h)(10). (See Section 6 of this rule for further information concerning the IRC 338(h)(10) election). For Oregon purposes, the deemed gain must be attributed to Oregon using the apportionment factors from the consolidated Oregon return for the period ending with the date of acquisition.

(6)

An election may be made jointly by the selling and acquiring corporations under IRC 338(h)(10). If a corporation makes the election under IRC 338(h)(10) on its federal return, that election applies to the Oregon return.

(a)

If a selling corporation making the election under IRC 338(h)(10) files a consolidated Oregon return including the target corporation, that return must include the gain or loss from the deemed sale of the target’s assets in income to be apportioned. The gain or loss from the sale of the target’s stock will not be recognized. The apportionment factors for the target must be included through the date of the stock sale. The property factor must reflect the target’s basis in its assets prior to the step-up in basis under IRC 338.

(b)

If a selling corporation making an election under IRC 338(h)(10) does not file a consolidated Oregon return with the target corporation, and the target corporation is doing business in Oregon, the gain or loss from the target’s deemed sale of assets must be reported on the target’s separately filed Oregon return.

(c)

If the selling corporation has not made an election under IRC 338(h)(10) on its federal return, the election will not be accepted by Oregon.

Source: Rule 150-317-0390 — IRC Section 338: Application to Oregon, https://secure.­sos.­state.­or.­us/oard/view.­action?ruleNumber=150-317-0390.

150‑317‑0010
Procedure for Handling State Surplus Refund 150‑317‑0020
Substantial Nexus Guidelines 150‑317‑0030
Definition: “Doing Business” 150‑317‑0040
Taxable Income of Regulated Investment Companies and Real Estate Investment Trusts 150‑317‑0050
Foreign Corporations Subject to Tax 150‑317‑0060
Capital Losses — Carrybacks and Carry-overs 150‑317‑0070
Administrative and Judicial Interpretations 150‑317‑0080
Adoption of Federal Law 150‑317‑0090
Policy — Application of Various Provisions of the Federal Internal Revenue Code 150‑317‑0100
Periods of Less than 12 Months Are Tax Years 150‑317‑0110
Tax Reform Act of 1984 Adjustments 150‑317‑0120
Farm Capital Gain 150‑317‑0130
Tax on Homeowner’s Association Income 150‑317‑0140
Imposition of the Tax: Mercantile, Manufacturing and Business Corporations 150‑317‑0150
Adoption of Federal Exempt Organizations 150‑317‑0160
Exemption and Return Requirements 150‑317‑0170
Minimum Tax 150‑317‑0190
Affordable Housing Credit 150‑317‑0200
Commercial Lending Institution Loans for Underground Storage Tanks or Soil Remediation 150‑317‑0210
Carryover of the Lender’s Credit for Weatherization Loans 150‑317‑0220
Lender’s Credit: Loans to Wood Heat and Fuel Oil Heat Customers 150‑317‑0230
Lender’s Credit: Computation 150‑317‑0240
Lender’s Credit: Definitions 150‑317‑0245
Commencement of Long Term Enterprise Zone Tax Credit 150‑317‑0250
Long Term Enterprise Zone Distributions 150‑317‑0260
Lender’s Credit for Agriculture Workforce Housing 150‑317‑0270
Credit for Contributions of Computers, Scientific Equipment, and Research 150‑317‑0280
Qualified Research Credit 150‑317‑0290
Research Tax Credit: Notice of Election 150‑317‑0300
Research Tax Credit: Alternative Computation 150‑317‑0310
Bad Debt Reserve of Financial Institutions Not Qualifying as Large Banks that Have Differences in Reserve for Federal and Oregon Tax Purposes 150‑317‑0320
Modification of Federal Taxable Income: Dividends from Certain Subsidiaries 150‑317‑0330
Modification for Dividends Received 150‑317‑0340
Modification of Federal Taxable Income: Internal Revenue Code Subpart F Income 150‑317‑0350
Oregon Subtraction Where Charitable Contribution Is Reduced Under Federal Law 150‑317‑0360
Definition of “State” 150‑317‑0370
Bad Debt Reserve of Financial Institutions that Have Changed From Reserve Method to Specific Charge-off Method 150‑317‑0380
Taxes on Net Income or Profits Imposed by any State or Foreign Country 150‑317‑0390
IRC Section 338: Application to Oregon 150‑317‑0400
Payments Received Under Federal Safe Harbor Lease Agreements For Transactions Entered Into in Tax Years Beginning on or After January 1, 1983 150‑317‑0410
Payments Received Under Federal Safe Harbor Lease Agreements for Transactions Entered Into in Tax Years Beginning Prior to 1983 150‑317‑0420
Modification of Federal Taxable Income: Difference Between Oregon and Federal Bases on Assets Sold, Exchanged or Otherwise Disposed Of 150‑317‑0430
Modification of Federal Taxable Income: Timber Cut but Unsold 150‑317‑0440
Depletion Allowance 150‑317‑0450
Depletion of Metal Mines 150‑317‑0460
Limitation on Oregon Net Loss Deduction 150‑317‑0470
Pre-change and Built-in Losses 150‑317‑0480
Definition of “Premiums” in the Insurance Sales Factor 150‑317‑0490
Insurers 150‑317‑0500
Applicable Date 150‑317‑0510
Unitary Business 150‑317‑0520
Direct or Indirect Relationships 150‑317‑0530
Corporations Doing Business Outside the United States 150‑317‑0540
Consolidated Oregon Return: Format and Information Required 150‑317‑0550
Consolidated Oregon Return: Affiliated Group 150‑317‑0560
Consolidated Oregon Return: Credits 150‑317‑0570
Different Apportionment Factors for Purposes of ORS 317.710(5)(b) 150‑317‑0580
Consolidated Oregon Return: Copy of Federal Return Required 150‑317‑0590
Interinsurance and Reciprocal Exchanges 150‑317‑0600
Limitations on Deduction of Group Losses 150‑317‑0610
Modified Federal Consolidated Taxable Income 150‑317‑0620
Modified Federal Consolidated Taxable Income — Contribution Deduction for the Oregon Consolidated Group 150‑317‑0630
Oregon Return: Apportionment Formula 150‑317‑0640
Member of a Unitary Group Incorporated in a Listed Foreign Jurisdiction 150‑317‑0650
Stakeholder feedback regarding listed jurisdictions 150‑317‑0651
Repatriation Tax Credit 150‑317‑0652
Modification for Listed Jurisdiction Amounts Previously Included in Income 150‑317‑0660
Computation of Taxable Income 150‑317‑0670
Application for Relief 150‑317‑0680
Tax Imposed on Unrelated Business Income of Certain Exempt Corporations 150‑317‑1000
Definition of Commercial Activity 150‑317‑1010
Substantial Nexus Guidelines for the Corporate Activity Tax (CAT) 150‑317‑1020
Corporate Activity Tax Unitary Business Factors, Common Ownership and Filing Requirements for Unitary Groups 150‑317‑1025
Corporate Activity Tax: Election to Exclude Non-U.S. Members from Unitary Group 150‑317‑1030
Sourcing Commercial Activity to Oregon from Sales of Tangible Personal Property 150‑317‑1040
Sourcing Commercial Activity to Oregon of Other than Sales of Tangible Personal Property 150‑317‑1050
Sourcing of Commercial Activity for Financial Institutions in This State 150‑317‑1060
Definition of Insurers’ Gross Premiums Receipts 150‑317‑1070
Sourcing of Motor Carrier Transportation Services 150‑317‑1100
Agent Exclusion 150‑317‑1120
Exclusion for subcontracting payments 150‑317‑1130
Property Brought into Oregon 150‑317‑1140
Wholesale Sale of Groceries Exclusion 150‑317‑1150
Retail Sale of Groceries Exclusion 150‑317‑1160
Farmer’s Sales to Agricultural Cooperatives 150‑317‑1170
Farming Operations: Clarifying Definitions for Agricultural Commodities, Farming Operations, Out of State Sales Based on Industry Averages 150‑317‑1200
Cost Input or Labor Cost Subtraction 150‑317‑1220
Employee Compensation: Labor Cost Subtraction 150‑317‑1300
Estimated Tax: When Estimated Payments Are Required 150‑317‑1310
Estimated Tax Payments: Delinquent or Underestimated Payment or Both, Constitutes Underpayment 150‑317‑1320
Estimated Tax: Unitary Groups and Apportioned Returns 150‑317‑1330
Extension of Time to File 150‑317‑1400
Determining Property Resold Out of State, and Methods of Determining 150‑317‑1410
Motor Vehicle Resale Certificate – Documentation Required 150‑317‑1420
Damages Received as the Result of Litigation 150‑317‑1500
Good Faith Effort
Last Updated

Jun. 8, 2021

Rule 150-317-0390’s source at or​.us