ORS 316.159
Subtraction for certain retirement distributions contributed to retirement plan during period of nonresidency; substantiation rules


(1)

(a) In addition to other modifications to federal taxable income contained in this chapter, there shall be subtracted from federal taxable income of a resident individual the distributions received by the individual from a plan or trust described under subsection (2) of this section to the extent that:

(A)

The distributions consist of contributions made in a tax period during which the individual was a nonresident; and

(B)

The distributions consist of contributions made in a tax period for which no deduction, exclusion or exemption for the contributions was allowed or allowable to the individual for purposes of a state personal net income tax imposed during the period by the state of which the individual was a resident; and

(C)

No deduction, exclusion, subtraction or other tax benefit has been allowed for the distributions by another state before the individual becomes a resident of this state.

(b)

For purposes of this section, if any distributions (lump sum or periodic) received by a resident individual from a plan or trust described in subsection (2) of this section meet the requirements of paragraph (a) of this subsection, then for purposes of the subtraction allowed by this section, those distributions shall be considered to be the distributions first received by the individual after the individual has become a resident of this state.

(c)

For purposes of ORS 316.082 (Credit for taxes paid another state) (credit for taxes paid to another state), any distributions received by a resident individual from a plan or trust described in subsection (2) of this section which meet the requirements of paragraph (a) of this subsection shall be considered income subject to tax under this chapter notwithstanding the exclusion under this section.

(2)

A plan or trust is described in this section if:

(a)

The plan or trust is an individual retirement account described in section 408 of the Internal Revenue Code;

(b)

The trust forms part of a pension or profit-sharing plan that provides contributions or benefits for employees, some or all of whom are owner-employees, as defined under section 401(c)(3) of the Internal Revenue Code;

(c)

The plan or trust is an annuity contract purchased on behalf of an employee of a charitable organization or public school as described under section 403(b) of the Internal Revenue Code; or

(d)

The plan or trust is an eligible deferred compensation plan established and maintained by an employer that is a state or local government, a political subdivision thereof, or a tax exempt organization, on behalf of an employee of the employer, as described under section 457 of the Internal Revenue Code.

(3)

The following contributions are not contributions to which the subtraction under subsection (1) of this section is accorded:

(a)

Contributions made during a tax period, or portion thereof, for which the taxpayer was a nonresident required to file an Oregon return, to the extent that a deduction or exclusion was allowable under this chapter for those contributions; or

(b)

Contributions for which the taxpayer was allowed a credit for taxes paid to another state under ORS 316.082 (Credit for taxes paid another state).

(4)

A subtraction shall not be allowed under this section for interest or other income arising from investment of contributions made to a plan or trust described in subsection (2) of this section.

(5)

For purposes of the subtraction allowed under subsection (1) of this section:

(a)

Distributions received by the taxpayer from a plan or trust described in subsection (2) of this section shall be considered to initially consist of a recovery of contributions.

(b)

Once the distributions equal the cumulative contributions, all further distributions shall constitute interest or other income arising from investment of the contributions.

(6)

The Department of Revenue may adopt rules requiring substantiation of the contributions and tax treatment upon which the subtraction under this section is based. Failure to provide substantiation as required under the rules shall result in denial of the subtraction otherwise allowed under this section. The requirement for substantiation may be waived partially, conditionally or absolutely, as provided under ORS 315.063 (Waiver of substantiation by Department of Revenue). [1991 c.838 §2; 1995 c.54 §11; 1995 c.815 §6]

Notes of Decisions

Subtraction for plan or trust distributions that consist of contributions for which taxpayer was not granted deduction, exclusion or exemption applies only if contributions were subject to taxation by other state. Leaf v. Dept. of Revenue, 15 OTR 53 (1999)

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