Or. Admin. R. 150-314-0510 - Definitions for Composite Tax Returns and Pass-through Entity Withholding

The following definitions apply for purposes of ORS 314.775 to 314.784, this rule, and OAR 150-314-0515 to 150-314-0525:

(1) "Apportionable income" means apportionable income as defined in ORS 314.610(1).

(2) "Corporate owner" is an owner that is a corporation taxed under ORS chapter 317 or 318.

(3) "Disregarded entity" is an entity that is not recognized as a separate entity for income tax purposes such that all items related to the entity are reported on the owner's income tax return. Examples of disregarded entities are:

(a) Single member limited liability company (LLC) that does not elect to be classified as an association under Treasury Regulation section 301.7701-2, and

(b) Grantor trusts.

(4) "Distributive income" means the net amount of income, gain, deduction, or loss of a pass-through entity (PTE) for the tax year of the PTE and includes those items directly related to the PTE that are considered in determining the federal taxable income of the owner or, in the case of an owner that is a corporation, would be included in its federal taxable income if the corporation were an individual.

(5) "Electing owner" means a nonresident owner that elects to participate in an Oregon composite tax return filed by a pass-through entity. When a disregarded entity owns an interest in the PTE, the "owner" refers to the owner of the disregarded entity.

(6) "Modified distributive income" means the PTE's distributive income as defined in section (4) of this rule, with the modifications provided in ORS chapter 316 and other Oregon law that directly relate to those items taken into consideration by the PTE in arriving at its distributive income. Such modifications include, but are not limited to, any Oregon modification necessary for depreciation, depletion, or gain or loss on the sale of depreciable property, and any modification for federal tax credits, and do not include the federal tax subtraction, itemized deductions, and the Oregon standard deduction. Guaranteed payments are treated as an apportionable income component of the PTE's distributive income and attributed directly to the owner receiving the payment.

(7) "Oregon-source distributive income" means the portion of the PTE's modified distributive income that is derived from or connected with Oregon sources. For PTEs operating in Oregon and one or more other states, Oregon-source distributive income is determined by attributing to Oregon sources that portion of the modified distributive income of the PTE, as defined in section (6) of this rule, determined in accordance with the allocation and apportionment provisions of ORS 314.280 or ORS 314.610 to 314.675.

(8) "PTE" means any entity that is recognized as a separate entity for federal income tax purposes, for which the owners are required to report income, gains, losses, deductions, or credits from the entity for federal income tax purposes. Examples include:

(a) A partnership;

(b) An S corporation;

(c) A limited liability company that is treated as one of the above for tax purposes; and

(d) A trust that has been established or maintained primarily for tax avoidance purposes, including: an abusive tax shelter as defined in ORS 314.402, an entity subject to a penalty for promoting an abusive tax shelter under IRC section 6700, and a tax shelter as defined under IRC section 6662 and related Treasury regulations.

Notes

Or. Admin. R. 150-314-0510

REV 3-2005, f. 12-30-05, cert. ef 1-1-06; REV 2-2006, f. & cert. ef. 7-31-06, Renumbered from 150-2005 OL, Ch. 387; REV 10-2010, f. 7-23-10, cert. ef. 7-31-10; REV 10-2013, f. 12-26-13, cert. ef. 1-1-14; Renumbered from 150-314.775, REV 34-2016, f. 8-12-16, cert. ef. 9/1/2016; REV 68-2017, amend filed 12/22/2017, effective 1/1/2018; REV 14-2019, amend filed 12/13/2019, effective 1/1/2020

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 314.775 & 314.778