Or. Admin. R. 150-317-0060 - Capital Losses - Carrybacks and Carry-overs
Current through Register Vol. 61, No. 4, April 1, 2022
(1) This rule is effective July 31, 2010 and
is applicable to all tax years beginning on or after January 1, 1986 that are
open to examination.
(2) Federal
law applies to capital losses occurring in tax years beginning on or after
January 1, 1986.
(a) Capital losses are
deducted to the extent of capital gains in the same tax year.
(b) Capital losses in excess of capital gains
must be carried back three tax years. Capital losses that do not fully offset
capital gains for a year to which the losses are carried back may be carried
forward for up to five tax years after the tax year in which the capital losses
were incurred.
(c) Capital loss
carrybacks and carryovers can only be used to reduce capital gains in the tax
years to which they are carried.
(d) A capital loss carryback cannot be used
to create or increase a net loss in the tax year to which it is carried.
(e) If a capital loss is not
carried to tax years in the order provided in subsections (1)(b) through
(1)(d), the amount of net capital loss that should have been utilized to
decrease capital gain net income cannot be used to offset capital gains in
other taxable years.
(3) Oregon provisions, such as the
requirement that corporations be unitary to be included in the consolidated
Oregon return and the apportionment provisions, may result in differences
between the Oregon and federal capital loss deductions and carryovers.
(a) Capital losses in excess of capital gains
in tax years beginning prior to January 1, 1986, cannot be carried forward
since those losses were deductible in full in the tax year they occurred.
(b) When a corporation or
consolidated group of corporations is taxable within and without this state,
its Oregon net capital loss carryback and carryover must be computed using the
apportionment provisions. The Oregon capital loss is computed using the
apportionment factor for the tax year of the loss. The capital loss is applied
to the Oregon capital gains for the year of carryback or carryover. Oregon
capital gains are computed using the apportionment factor for the tax year of
the gain.
Example 1
:
Corporation X has a federal net capital loss of $3,000 for 2009. X's
apportionment factor for 2009 is 40 percent. In 2006, X had a federal net
capital gain of $1,000 and its Oregon apportionment factor was 50 percent. X
has a $1,200 ($3000 x 40 percent) Oregon net capital loss available for
carryback to 2006. X will deduct $500 ($1000 x 50 percent) on the 2006 return
and must carry the remaining $700 forward to other tax years.
(c) Oregon net capital losses that
are attributed to corporations that continue to be included in the same
consolidated Oregon return may be deducted fully against the Oregon
consolidated net capital gain of the tax years to which such losses are
carried.
Example 2: Corporations X and Y
filed a consolidated Oregon return in 2009 reporting a net capital loss of
$5,000 that is attributable to Y. The consolidated apportionment factor for
2009 is 40 percent. In 2006, X and Y filed a consolidated Oregon return
reporting a net capital gain of $10,000 attributable to X. The consolidated
Oregon apportionment factor in 2006 was 25 percent. The Oregon capital loss
carryback of $2,000 ($5,000 x 40 percent) from 2009 is fully deductible in 2006
because it does not exceed the Oregon consolidated net capital gain of $2,500
($10,000 x 25 percent).
(4) If a corporation is included in a
combined return, separate return or in a different consolidated return in the
year of the capital loss and the capital loss is carried into a year when a
consolidated Oregon return is filed, the Oregon capital loss carryover may be
subject to the federal separate return limitation year (SRLY) limitations in
Treas. Regs. 1.1502-22.
(a) If a net capital
loss is reported on a separate Oregon return by a corporation doing business
only in Oregon, the SRLY limitation applies if the loss is carried to a tax
year in which a consolidated return is filed, apportionment is not required,
and the corporation with the loss (the limited member) is not the parent
corporation. To compute the Oregon SRLY limitation, first recompute the
consolidated net capital gain by excluding the capital gains and losses and the
IRC section 1231 gains and losses of the limited member. Then subtract the
recomputed consolidated net capital gain from the total consolidated net
capital gain (computed without regard to any net capital loss carryover or
carrybacks).
Example 3
:
Corporation R filed a separate Oregon return for 2008 reflecting an Oregon net
capital loss of $3,000. Corporation R did not have net capital gains in any of
the prior three years. For 2009, Corporation R was included in a consolidated
Oregon return with Corporations S and T. The consolidated group was not subject
to the apportionment provisions. [Table not included. See ED. NOTE.]
(b) If a corporation is included
in a consolidated Oregon return in the year of the consolidated net capital
loss and files a separate Oregon return or is included in a different
consolidated Oregon return in the year to which the net capital loss is
carried, the Oregon consolidated net capital loss is attributed to the
corporations with net capital losses for purposes of determining the allowable
net capital loss carryover. The portion of an Oregon consolidated net capital
loss attributable to a member of a consolidated group is an amount equal to
such Oregon consolidated net capital loss multiplied by a fraction, the
numerator of which is the net capital loss of such member and the denominator
of which is the sum of the net capital losses of those members of the
consolidated group having net capital losses.
Example
4
: X Corp. and unitary subsidiaries Y and Z filed a
consolidated Oregon return for 2008, their first year in business. X had a
$3,000 capital loss, Y had a $2,000 capital gain and Z had a $1,000 capital
loss (consolidated net capital loss of $2,000). The 2008 Oregon apportionment
factor for the consolidated group is 75 percent. On December 31, 2008, X Corp.
sold 100 percent of Z's stock to an outside investor. The capital loss that can
be carried forward to the 2009 consolidated return of X and Y is computed as
follows: [Table not included. See ED. NOTE.]
(c) If corporations carry their net capital
losses to a tax year in which separate tax returns are filed, the net capital
losses can be deducted by each corporation only if a net capital gain is shown
on the separate tax return. The net capital loss deduction is further limited
by the amount of the net capital gain attributable to Oregon based on the
Oregon apportionment factor.
Example 5
: Assume the same facts as in Example 4. The 2009 separate Oregon
return of Z shows a net capital gain of $200 with an Oregon apportionment
factor of 50 percent. The net capital loss deduction allowed is $100 ($200 x 50
percent). Z has a net capital loss carryover to 2010 of $275.
(d) If a group of unitary
corporations, taxable within and without this state, filed a consolidated
return for the year of the net capital loss and carries the net capital loss
after apportionment back to a year in which a combined return is filed, the net
capital loss must be allocated among the corporations as provided under the
SRLY limitations in Treas. Reg. 1.1502-22. The net capital gain of the unitary
group in the combined year must be apportioned among the corporations based on
each corporation's Oregon apportionment percentage.
(5) If a corporation, taxable within and
without this state, filed a separate return or was included in a different
consolidated return for the year of the net capital loss and carries the net
capital loss after apportionment to a year in which a consolidated return is
filed, the net capital loss can be deducted only to the extent that the same
corporation has a net capital gain which is attributed to Oregon. If the
consolidated group in the carryover year is subject to the apportionment
provisions, the net capital gain of the member must be attributed to Oregon
based on the consolidated Oregon apportionment factor.
Example 6
: In its first tax
year 2008, B Corporation had a net capital loss of $6,000. Because of its 50
percent Oregon apportionment factor, $3,000 of the loss is apportioned to
Oregon. On January 1, 2009, 100 percent of B's stock was purchased by P
Corporation. Because they were unitary, P and B file a 2009 consolidated Oregon
return that includes B's net capital gain of $1,000 and P's net capital gain of
$3,000. The consolidated return apportionment factor is 35 percent. On the 2009
consolidated return, only $350 of B's $3,000 net capital loss carryover can be
deducted (the lesser of $1,000 x .35 or $4,000 x .35).
(6) If a corporation participated in Oregon's
tax amnesty program pursuant to Oregon Laws 2009, chapter 710 (SB 880), the
capital loss carried from another year is applied to the total Oregon capital
gains reported as if the taxpayer had not participated in the amnesty program.
A refund may be paid when a capital loss is applied to a year in which the
taxpayer participated in the amnesty program only to the extent that the
taxpayer paid taxes for that year other than under the amnesty program and in
excess of the statutory minimum tax. Whether or not a refund is paid, the
capital loss carried to subsequent years is reduced by the amount applied to
the amnesty year as if the taxpayer had not participated in the amnesty
program.
Example 7
: Corporation
X has a federal net capital loss of $3,000 for 2009. X's Oregon apportionment
factor for 2009 is 40 percent. X has a $1,200 ($3000 x 40 percent) Oregon net
capital loss available for carryback to 2006. For tax year 2006, X filed an
original Oregon corporate tax return under Oregon's amnesty program. The 2006
return reported a federal net capital gain of $1,000 and an Oregon
apportionment factor of 50 percent, resulting in an Oregon net capital gain of
$500. X must carry back the capital loss to tax year 2006 but cannot receive a
refund for any taxes paid because all taxes paid for tax year 2006 were paid
under the amnesty program. X must reduce the capital loss carried to subsequent
years to $700. The $500 capital loss that would have been allowed to offset
against the capital gains had the 2006 return not been filed under the Oregon
amnesty program is eliminated.
Example
8
: Corporation Y has a federal net capital loss of
$5,000 for 2009. Y's Oregon apportionment factor for 2009 is 30 percent. Y has
a $1,500 ($5,000 x 30 percent) Oregon net capital loss available for carryback
to 2006. For tax year 2006, Y filed a timely Oregon corporate tax return
showing no capital gain income and paying $50 Oregon net excise tax. During
Oregon's amnesty program, Y filed an approved amnesty amended return claiming
previously unreported federal net capital gain of $3,000 and a revised Oregon
apportionment factor of 60 percent, resulting in Oregon capital gains of
$1,800. Additional Oregon taxes paid were $119.
All of the $1,500 capital loss carryback is offset against the $1,800 capital gain income for tax year 2006. Any resulting refund is limited to taxes paid outside the amnesty program that exceed the statutory minimum tax. Y is entitled to a refund of $40 ($50 tax paid outside the amnesty program minus the $10 minimum tax for tax year 2006). Y does not have a remaining capital loss to carry to subsequent years.
Notes
Tables referenced are not included in rule text. #REV 7-2016, f. 8-10-16, cert. ef. #.
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 317.013
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