ORS 316.045
Tax rate imposed on certain long-term capital gain from farming; requirements


(1)

As used in this section:

(a)

“Farming” means:

(A)

Raising, harvesting and selling crops;

(B)

Feeding, breeding, managing or selling livestock, poultry, fur-bearing animals or honeybees or the produce thereof;

(C)

Dairying and selling dairy products;

(D)

Stabling or training equines, including but not limited to providing riding lessons, training clinics and schooling shows;

(E)

Propagating, cultivating, maintaining or harvesting aquatic species and bird and animal species to the extent allowed by the rules adopted by the State Fish and Wildlife Commission;

(F)

On-site constructing and maintaining equipment and facilities used for the activities described in this subsection;

(G)

Preparing, storing or disposing of, by marketing or otherwise, the products or by-products raised for human or animal use on land employed in activities described in this subsection; or

(H)

Any other agricultural or horticultural activity or animal husbandry, or any combination of these activities, except that “farming” does not include growing and harvesting trees of a marketable species other than growing and harvesting cultured Christmas trees or certain hardwood timber described in ORS 321.267 (Lands not eligible for special assessment) (3) or 321.824 (Lands not eligible for special assessment) (3).

(b)

“Section 1231 gain” has the meaning given that term in section 1231 of the Internal Revenue Code.

(2)

Notwithstanding ORS 316.037 (Imposition and rate of tax), taxable income that consists of net long-term capital gain shall be subject to tax under this chapter at a rate of five percent if all of the following conditions apply:

(a)

The gain is:

(A)

Derived from the sale or exchange of capital assets consisting of ownership interests in a corporation, partnership or other entity in which, prior to the sale or exchange, the taxpayer owned at least a 10 percent ownership interest; or

(B)

Section 1231 gain.

(b)

The property that was sold or exchanged consisted of:

(A)

Ownership interests in a corporation, partnership or other entity that is engaged in the trade or business of farming; or

(B)

Property that is predominantly used in the trade or business of farming.

(c)

The sale or exchange is to a person who is not related to the taxpayer under section 267 of the Internal Revenue Code.

(d)

The sale or exchange constitutes a substantially complete termination of all of the taxpayer’s ownership interests in a trade or business that is engaged in farming or a substantially complete termination of all of the taxpayer’s ownership interests in property that is employed in the trade or business of farming. Ownership of a farm dwelling or farm homesite does not constitute ownership of property employed in the trade or business of farming.

(3)

If the taxpayer has net long-term capital gain derived in part from the sale or exchange of property described in subsection (2)(b) of this section and in part from the sale or exchange of all other property, the net long-term capital gain that is subject to tax under this section shall be determined as follows:

(a)

Compute the net long-term capital gain derived from all property described in subsection (2)(b) of this section that was sold or exchanged during the tax year.

(b)

Compute the net capital gain or loss from the sale or exchange of all other property during the tax year.

(c)

If the amount determined under paragraph (b) of this subsection is a net capital gain, the gain that is subject to tax under subsection (2) of this section shall be the amount determined under paragraph (a) of this subsection.

(d)

If the amount determined under paragraph (b) of this subsection is a net capital loss, the gain that is subject to tax under subsection (2) of this section shall be the amount determined under paragraph (a) of this subsection minus the amount determined under paragraph (b) of this subsection. [2001 c.545 §2; 2003 c.454 §123; 2003 c.621 §98a]
Chapter 316

Notes of Decisions

Unless the divorce decree specifically designates that payments are for child support, payments will be treated as alimony. Henderson v. Dept. of Rev., 5 OTR 153 (1972)

The goal of this chapter is to incorporate all of the provisions of the federal Internal Revenue Code; taxable income should be adjusted whenever the result of the adjustment is to give effect to the policies or principles of the federal Internal Revenue Code, even though no express authority for the adjustment is present in the statutes. Christian v. Dept. of Rev., 269 Or 469, 526 P2d 538 (1974); Smith v. Dept. of Rev., 270 Or 456, 528 P2d 73 (1974)

By its enactment of this chapter, the legislature intended to adopt §172 of the federal Internal Revenue Code allowing for the carryback and carryforward of net operating losses. Christian v. Dept. of Rev., 269 Or 469, 526 P2d 538 (1974)

Where plaintiff failed to appeal timely as required by this section, appeal rights were not preserved so that cause could be considered on merits. Dela Rosa v. Dept. of Rev., 11 OTR 201 (1989), aff’d 313 Or 284, 832 P2d 1228 (1992)

Where taxpayers paid foreign income taxes on foreign income and claimed foreign taxes paid as federal tax credit and as state business expense deduction, taxpayers who claim federal foreign tax credit are entitled only to foreign tax deduction provided in ORS 316.690. Whipple v. Dept. of Rev., 309 Or 422, 788 P2d 994 (1990)

For purposes of claim preclusion, all issues regarding taxpayer’s income tax liability for tax year constitute same claim. U.S. Bancorp v. Dept. of Revenue, 15 OTR 13 (1999)

Atty. Gen. Opinions

Political contributions as credit against Oregon tax return, (1974) Vol 37, p 159

Law Review Citations

57 OLR 309 (1978); 16 WLR 373 (1979)


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May. 15, 2020