Taxes Imposed Upon or Measured by Net Income

ORS 314.610
Definitions for ORS 314.605 to 314.675


As used in ORS 314.605 (Short title) to 314.675 (Apportionment of net loss), unless the context otherwise requires:

(1)

“Apportionable income” means:

(a)

(A) Income arising from transactions and activity in the regular course of the taxpayer’s trade or business;

(B)

Income arising from the acquisition, management, employment, development or disposition of tangible and intangible property if the acquisition, management, employment, development or disposition is related to the operation of the taxpayer’s trade or business; and

(C)

Any other income that is apportionable under the Constitution of the United States and not allocated under the laws of this state; and

(b)

Any income that would be allocable to this state under the Constitution of the United States, but that is apportioned rather than allocated pursuant to the laws of this state.

(2)

“Commercial domicile” means the principal place from which the trade or business of the taxpayer is directed or managed.

(3)

“Compensation” means wages, salaries, commissions and any other form of remuneration paid to employees for personal services.

(4)

“Financial institution” means a person, corporation or other business entity that is any of the following:

(a)

A bank holding company under the laws of this state or under the federal Bank Holding Company Act of 1956, 12 U.S.C. 1841 et seq., as amended.

(b)

A savings and loan holding company under the National Housing Act, 12 U.S.C. 1701 et seq., as amended.

(c)

A national bank organized and existing as a national bank association under the National Bank Act, 12 U.S.C. 21 et seq., as amended.

(d)

A savings association, as defined in 12 U.S.C. 1813(b)(1), as amended.

(e)

A bank or thrift institution incorporated or organized under the laws of any state.

(f)

An entity organized under the provisions of 12 U.S.C. 611 to 631, as amended.

(g)

An agency or branch of a foreign bank, as defined in 12 U.S.C. 3101, as amended.

(h)

A state credit union with loan assets that exceed $50,000,000 as of the first day of the taxable year of the state credit union.

(i)

A production credit association subject to 12 U.S.C. 2071 et seq., as amended.

(j)

A corporation, more than 50 percent of the voting stock of which is owned, directly or indirectly, by a person, corporation or other business entity described in paragraphs (a) to (i) of this subsection, provided that the corporation is not an insurer taxable under ORS 317.655 (Taxable income of insurer).

(k)

An entity that is not otherwise described in this subsection, that is not an insurer taxable under ORS 317.655 (Taxable income of insurer) and that derives more than 50 percent of its gross income from activities that a person, corporation or entity described in paragraph (c), (d), (e), (f), (g), (h), (i) or (L) of this subsection is authorized to conduct, not taking into account any income derived from nonrecurring extraordinary sources.

(L)

A person that derives at least 50 percent of the person’s annual average gross income, for financial accounting purposes for the current tax year and the two preceding tax years, from finance leases, excluding any gross income from incidental or occasional transactions. For purposes of this paragraph, “finance lease” means:

(A)

A lease transaction that is the functional equivalent of an extension of credit and that transfers substantially all of the benefits and risks of the ownership of the leased property;

(B)

A direct financing lease or a leverage lease that meets the criteria of Financial Accounting Standards Board Statement No. 13; or

(C)

Any other lease that is accounted for as a financing by a lessor under generally accepted accounting principles.

(5)

“Nonapportionable income” means all income other than apportionable income.

(6)

“Public utility” means any business entity whose principal business is ownership and operation for public use of any plant, equipment, property, franchise, or license for the transmission of communications, transportation of goods or persons, or the production, storage, transmission, sale, delivery, or furnishing of electricity, water, steam, oil, oil products or gas.

(7)

“Sales” means all gross receipts of the taxpayer that are not allocated under ORS 314.615 (When allocation and apportionment of net income from business activity required) to 314.645 (Allocation to this state of patent and copyright royalties) and that are received from transactions and activity occurring in the regular course of the taxpayer’s trade or business, except:

(a)

(A) Receipts from hedging transactions and from the maturity, redemption, sale, exchange, loan or other disposition of cash or securities;

(B)

Property or money received or acquired by an agent, intermediary, fiduciary or other person acting in a similar capacity on behalf of another in excess of the recipient’s commission, fee or other remuneration; or

(C)

Amounts received from others and held in trust by the taxpayer; or

(b)

Other exceptions designated by rule by the Department of Revenue.

(8)

“State” means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, and any foreign country or political subdivision thereof. [1965 c.152 §2; 1997 c.631 §452; 2009 c.403 §1; 2017 c.43 §1; 2017 c.622 §1]

Notes of Decisions

Interest income obtained from funds held in trust for plaintiff's customers by plaintiff was income arising from transactions in regular course of taxpayer's trade or business under this section. Gelderman and Company, Inc. v. Dept. of Rev., 10 OTR 249 (1985)

Where business asset is involuntarily converted, whether compensation paid for conversion is "business income" depends on taxpayer's disposition of compensation. Simpson Timber Company v. Dept. of Revenue, 13 OTR 315 (1995), aff'd 326 Or 370, 953 P2d 366 (1998)

Interest received as delay compensation for involuntary conversion of business asset is "business income." Simpson Timber Company v. Dept. of Revenue, 13 OTR 315 (1995), aff'd 326 Or 370, 953 P2d 366 (1998)

Whether income arises from transactions and activities in regular course of business and whether income from property is integral part of taxpayer's regular trade or business are separately applied tests for identifying business income. Pennzoil Co. v. Dept. of Revenue, 15 OTR 101 (2000), aff'd 332 Or 542, 33 P3d 314 (2001)

§§ 314.605 to 314.670

Notes of Decisions

Interest income from long-term investments of an interstate corporation is not attributable to Oregon unless it arises from transactions in the regular course of the taxpayer's business within the state. Sperry & Hutchinson v. Dept. of Rev., 270 Or 329, 527 P2d 729 (1974)

It was not abuse of discretion for Revenue Department to require corporations to file combined rather than consolidated corporate excise tax returns where one corporation owned at least 95 percent of voting stock of other. Caterpillar Tractor Co. v. Dept. of Rev., 8 OTR 236 (1979), aff'd 289 Or 895, 618 P2d 1261 (1980)

The Supremacy Clause gives Congress the authority to impose a brief moratorium on the collection of taxes for "insured depositories" in order to permit the development of a uniform state taxing system. Pac. First Fed. Savings & Loan v. Dept. of Revenue, 8 OTR 466 (1980), aff'd 293 Or 138, 645 P2d 27 (1982)

Plaintiff's use of apportionment method was proper because separate accounting would not fairly represent extent of plaintiff's business activities in Oregon. Lane v. Dept. of Rev., 10 OTR 168 (1985)

Intangible drilling and development costs (IDCs) should be included in property factor for purposes of apportioning income to Oregon. Atlantic Richfield Co. v. Dept. of Rev., 301 Or 242, 722 P2d 727 (1986)

Exclusion of intangible property from formula to determine Oregon business income of California financial organization engaged in owning, leasing and financing tangible personal property did not represent fair apportionment of taxpayer's business activity in Oregon. Crocker Equipment Leasing, Inc. v. Dept. of Rev., 314 Or 122, 838 P2d 552 (1992)

Law Review Citations

17 WLR 487 (1981)

Chapter 314

Law Review Citations

9 WLJ 249 (1973); 5 EL 516 (1975)


Source

Last accessed
Jun. 26, 2021