Or. Admin. R. 150-314-0078 - Modified Factors for Carriers of Freight or Passengers: Special Rules - Airlines
(1) In
General. Where an airline has income from sources both within and without this
state, the amount of apportionable income from sources within this state is
determined pursuant to ORS
314.610
to
314.665
except as modified by this rule.
(2) Apportionment of Apportionable Income.
Apportionable income is apportioned to this state by use of the formula
provided in ORS
314.650
as it applies to the tax year involved. For tax years beginning on or after
July 1, 2005, ORS
314.650
provides for apportionment using only the sales factor.
(a) General Definitions. The following
definitions are applicable to the terms used in the apportionment factor
descriptions.
(A) "Value" of owned real and
tangible personal property means its original cost. (ORS
314.655
and OAR 150-314-0398)
(B) "Cost of
aircraft by type" means the average original cost or value of aircraft by type
which are ready for flight.
(C)
"Original cost" means the initial federal tax basis of the property plus the
value of capital improvements to such property, except that, for this purpose,
it is assumed that Safe Harbor Leases are not true leases and do not affect the
original initial federal tax basis of the property.
(D) "Average value" of property means the
amount determined by averaging the values at the beginning and ending of the
income year, but the department may require the averaging of monthly values
during the income year if such averaging is necessary to properly reflect the
average value of the airline's property. (ORS
314.655
and OAR 150-314-0406)
(E) The
"value" of rented real and tangible personal property means the product of
eight (8) times the net annual rental rate. (ORS
314.655
and OAR 150-314-0400)
(F) "Net
annual rental rate" means the annual rental rate paid by the
taxpayer.
(G) "Property used during
the income year" includes property which is available for use in the taxpayer's
trade or business during the income year.
(H) "Aircraft ready for flight" means
aircraft owned or acquired through rental or lease (but not interchange) which
are in the possession of the taxpayer and are available for service on the
taxpayer routes.
(I) "Revenue
service" means the use of aircraft ready for flight for the production of
revenue.
(J) "Transportation sales"
means sales from transporting passengers, freight, and mail as well as liquor
sales, pet crate rentals, etc.
(K)
"Departures" for purposes of these regulations means all takeoffs, whether they
be regularly scheduled or charter flights, that occur during revenue
service.
(b) Property
Factor.
(A) Property valuation. Owned
aircraft must be valued at its original cost and rented aircraft must be valued
at eight (8) times the net annual rental rate in accordance with ORS
314.655
and OAR 150-314-0400. The use of the taxpayer's owned or rented aircraft in an
interchange program with another air carrier does not constitute a rental of
such aircraft by the airline to the other participating airline. Such aircraft
are accounted for in the property factor of the owner. Parts and other
expendables, including parts for use in contract overhaul work, are valued at
cost.
(B) The denominator and
numerator of the property factor. The denominator of the property factor is the
average value of all of the taxpayer's real and tangible personal property
owned or rented and used during the income year. The numerator of the property
factor is the average value of the tangible personal property owned or rented
and used in this state during the income year. In determining the numerator of
the property factor, all property except aircraft ready for flight are included
in the numerator of the property factor in accordance with ORS
314.655
and OAR 150-314-0396. Aircraft ready for flight are included in the numerator
of the property factor in the ratio calculated as follows: Departures of
aircraft from locations in this state weighted as to the cost and value of
aircraft by type compared to total departures similarly weighted.
(c) Payroll Factor. The
denominator of the payroll factor is the total compensation paid everywhere by
the taxpayer during the income year (ORS
314.660
and OAR 150-314-0415). The numerator of the payroll factor is the total amount
paid in this state during the income year by the taxpayer for compensation.
With respect to non-flight personnel, compensation paid to such employees is
included in the numerator as provided in ORS
314.660
and OAR 150-314-0417. With respect to flight personnel (the air crew aboard an
aircraft assisting in the operations of the aircraft or the welfare of
passengers while in the air), compensation paid to such employees is included
in the ratio that departures of aircraft from locations in this state, weighted
as to the cost and value of aircraft by type, compared to total departures
similarly weighted, multiplied by the total flight personnel
compensation.
(d) Sales
(Transportation Sales) Factor. The transportation sales derived from
transactions and activities in the regular course of the trade or business of
the taxpayer and miscellaneous sales of merchandise, etc., are included in the
denominator of the sales factor (ORS
314.665
and OAR 150-314-0425). Passive income items such as interest, rental income,
dividends, etc., are not included in either the numerator or the denominator
nor are the proceeds or net gains or losses from the sale of aircraft included.
The numerator of the sales factor is the total sales of the taxpayer in this
state during the income year. The total sales of the taxpayer in this state
during the income year is the result of the following calculation: The ratio of
departures of aircraft in this state weighted as to the cost and value of
aircraft by type, as compared to total departures similarly weighted,
multiplied by the total transportation revenue. The product of this calculation
is to be added to any nonflight sales directly attributable to this state.
[See PDF link below.]
(3) Records. The taxpayer must maintain the
records necessary to arrive at departures by type of aircraft as used in these
rules. Such records are to be subject to review by the state of Oregon or their
agents.
Notes
Publications: Contact the Oregon Department of Revenue to learn how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and 183.355(1)(b).
To view tables referenced in rule text, click here to view rule.
Statutory/Other Authority: ORS 305.100 & 314.280
Statutes/Other Implemented: ORS 314.280
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