(1) All
apportionable income of each trade or business of the taxpayer must be
apportioned to this state by use of the apportionment formula set forth in ORS
314.650.
The apportionment formula includes the property factor provided in ORS
314.655
and the rules thereunder, the payroll factor provided in ORS
314.660
and the rules thereunder, and the sales factor provided in ORS
314.665
and the rules thereunder.
(2) For
tax years beginning on or after July 1, 2005, apportionable income is
apportioned using only the sales factor.
(3) For tax years beginning on or after July
1, 2005, the apportionment formula for a taxpayer in the forest products
industry meeting the criteria provided in ORS
314.650(2)(a)
is the formula provided in sections (5) and (7) of this rule.
(4) For tax years beginning on or after May
1, 2003 and before July 1, 2005, the apportionment formula is 10 percent of the
property factor, plus 10 percent of the payroll factor, plus 80 percent of the
sales factor.
(5) For tax years
beginning on or after January 1, 1991 and before May 1, 2003, the numerator of
the apportionment formula is the sum of the property factor, plus the payroll
factor, plus two times the sales factor. The denominator of the apportionment
formula is four.
(6) For tax years
beginning before January 1, 1991, the numerator of the apportionment formula is
the sum of the property factor, plus the payroll factor, plus the sales factor.
The denominator of the apportionment formula is three.
(7) For tax years beginning on or after
January 1, 1989 and before May 1, 2003, if the denominator of the property,
payroll, or sales factor is zero, the denominator of the apportionment formula
is reduced by the number of factors with a denominator of zero.
(8) The apportionment factors of a
corporation that is a member of a partnership, limited liability company
treated as a partnership, or unincorporated joint venture (i.e. the "related
entity"), that is a part of the corporation's overall business operations, must
include the corporation's share of the property, payroll, and sales of the
related entity. For the purpose of computing the apportionment factors,
transactions between the corporation and the related entity must be eliminated
to the extent of the corporation's percentage of interest in the related
entity. The corporation's share of the related entity's property, payroll, and
sales are based on its percentage of interest in the related entity that is
equal to the ratio of its capital account plus its share of the related
entity's debt to the total of the capital accounts of all members of the
related entity plus total related entity debt. The capital accounts of the
members must reflect the average of the accounts for the period of the tax
return. The average of the capital accounts may be computed by averaging the
beginning and ending balances or monthly balances. Capital accounts of a
related entity must be adjusted to reflect a member's adjusted basis in
contributed property, rather than fair market value. The corporation's share of
a related entity's debt is determined under IRC 752(a) and 752(b) and the
regulations thereunder, irrespective of whether or not the related entity is a
true partnership.
(9) For the
purpose of computing the apportionment factors for a consolidated Oregon
return, inter-company transactions between a unitary affiliate of a partner or
member and the related entity described in section (8) of this rule are treated
the same as intercompany transactions directly between the affiliated
corporations, to the extent of the corporate partner's or member's ownership
share of the related entity. Inter-company transactions between affiliated
corporations filing a consolidated Oregon return are eliminated as provided in
section (3) of OAR
150-317-0620.
Example: Corporations A, B, and C file a
consolidated Oregon return. A and B each own 50 percent of partnership P. P is
part of the overall business operations of the three corporations. P buys 80
percent of its raw materials from C. The intercompany sales between P and C
must be eliminated from the apportionment formula for the consolidated Oregon
return of the corporations. Transactions between C and P are considered to be
directly between the three corporations.
Notes
Or. Admin. R.
150-314-0385
8-73; RD
7-1983, f. 12-20-83, cert. ef. 12-31-83; RD 7-1989, f. 12-18-89, cert. ef.
12-31-89; RD 9-1992, f. 12-29-92, cert. ef. 12-31-92; RD 5-1994, f. 12-15-94,
cert. ef. 12-31-94; REV 7-1998, f. 11-13-98 cert. ef. 12-31-98; REV 12-1999, f.
12-30-99, cert. ef. 12-31-99; REV 6-2004, f. 7-30-04, cert. ef. 7-31-04; REV
11-2004, f. 12-29-04, cert. ef. 12-31-04; REV 3-2005, f. 12-30-05, cert. ef.
1-1-06; Renumbered from 150-314.650,
REV
35-2016, f. 8-12-16, cert. ef.
9/1/2016;
REV
68-2017, amend filed 12/22/2017, effective
1/1/2018
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).
Statutory/Other Authority: ORS
305.100
Statutes/Other Implemented: ORS
314.650
