Or. Admin. Code § 150-314-0076 - Modified Factors for Carriers of Freight or Passengers: Special Rules - Railroads
(1) In
General. Where a railroad has income from sources both within and without this
state, the amount of apportionable income from sources within this state must
be determined pursuant to ORS
314.610 to
314.665 except as modified by
this rule. In such cases, the first step is to determine what portion of the
railroad's income constitutes apportionable income and which portion
constitutes nonapportionable income under ORS
314.610 and OAR 150-314-0335 and
150-314-0337. Nonapportionable income is directly allocable to specific states
under ORS 314.625 to
314.645. Apportionable income is
apportioned among the states in which the business is conducted pursuant to the
property, payroll, and sales apportionment factors set forth in this rule. The
sum of (1) the items of nonapportionable income directly allocated to this
state, plus (2) the amount of apportionable income attributable to this state
constitutes the amount of the taxpayer's entire net income which is subject to
tax by this state.
(2)
Apportionable and Nonapportionable Income. For definitions, rules, and examples
for determining apportionable and nonapportionable income, see OAR 150-314-0335
and 150-314-0337.
(3) 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) In General. The property factor must be
determined in accordance with ORS
314.655, the payroll factor in
accordance with ORS 314.660, and the sales factor in
accordance with ORS 314.665, except as modified in
this rule.
(b) The Property Factor.
(A) Property Valuation. Owned property is
valued at its original cost and property rented from others is to be valued at
eight (8) times the net annual rental rate in accordance with ORS
314.655 and OAR 150-314-0400.
Railroad cars owned and operated by other railroads and temporarily used by the
taxpayer in its business and for which a per diem or mileage charge is made are
not included in the property factor as rented property. Railroad cars owned and
operated by the taxpayer and temporarily used by other railroads in their
business and for which a per diem charge is made by the taxpayer are included
in the property factor of the taxpayer.
(B) General Definitions. The following
definitions are applicable to the numerator and denominator of the property
factor:
(i) "Original cost" is deemed to be
the basis of the property for federal income tax purposes (prior to any federal
income tax adjustments except for subsequent capital additions, improvements
thereto or partial dispositions); or, if the property has no such basis, the
valuation of such property for Interstate Commerce Commission purposes. If the
original cost of property is unascertainable under the foregoing valuation
standards, the property is included in the property factor at its fair market
value as of the date of acquisition by the taxpayer. (OAR
150-314-0398)
(ii) "Rent" does not
include the per diem and mileage charges paid by the taxpayer for the temporary
use of railroad cars owned or operated by another railroad.
(iii) The "value" of owned real and tangible
personal property means its original cost. (ORS
314.655 and OAR
150-314-0398)
(iv) "Average value"
of property means the amount determined by averaging the values at the
beginning and ending of the tax period, but the department may require the
averaging of monthly values during the tax period or such averaging as
necessary to properly reflect the average value of the railroad's property.
(ORS 314.655 and OAR
150-314-0406)
(v) 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)
(vi) "Net annual
rental rate" means the annual rental rate paid by the taxpayer less any annual
rental rate received by the taxpayer from subrentals.
(vii) "Property used during the tax period"
includes property which is available for use in the taxpayer's trade or
business during the tax period.
(viii) A "locomotive-mile" is the movement of
a locomotive (a self-propelled unit of equipment designed solely for moving
other equipment) a distance of one mile under its own power.
(ix) A "car-mile" is a movement of a loaded
or unloaded unit of car equipment a distance of one mile.
(C) 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 tax period. The numerator of the property factor is the average
value of the taxpayer's real and tangible personal property owned or rented and
used in this state during the tax period. In determining the numerator of the
property factor, all property except mobile or movable property such as
passenger cars, freight cars, locomotives, and freight containers which are
located within and without this state during the tax period is included in the
numerator of the property factor in accordance with ORS
314.655 and OAR 150-314-0396.
Mobile or movable property such as passenger cars, freight cars, locomotives,
and freight containers which are located within and without this state during
the tax period is included in the numerator of the property factor in the ratio
which "locomotive-miles" and "car-miles" in the state bear to the total
everywhere.
(c) The
Payroll Factor. The denominator of the payroll factor is the total compensation
paid everywhere by the taxpayer during the tax period for the production of
apportionable income (ORS
314.660 and OAR 150-314-0415).
The numerator of the payroll factor is the total amount paid in this state
during the tax period by the taxpayer for compensation. With respect to all
personnel except the engine crew and train crew performing services on
interstate trains, compensation paid to such employees is included in the
numerator as provided in ORS
314.660 and OAR 150-314-0417.
With respect to the engine crew and train crew performing services on
interstate trains, compensation paid to such employees is included in the
numerator of the payroll factor in the ratio which their services performed in
this state bear to their services performed everywhere. Compensation for
services performed in this state is deemed to be the compensation reported or
required to be reported by such employees for determination of their income tax
liability to this state.
(d) The
Sales Factor.
(A) In General. All sales
derived from transactions and activities in the regular course of the trade or
business of the taxpayer which produces apportionable income are included in
the denominator of the sales factor. (ORS
314.665 and OAR 150-314-0425)
Per diem and mileage charges that are collected by the taxpayer are excluded
from both the numerator and denominator of the sales factor. The numerator of
the sales factor is the total sales of the taxpayer in this state during the
tax period. The total sales of the taxpayer in this state during the tax
period, other than sales from hauling freight, passengers, mail, and express,
are attributable to this state in accordance with ORS
314.665 and OAR
150-314-0429.
(B) Numerator of
Sales Factor from Freight, Mail, and Express. The total sales of the taxpayer
in this state during the tax period for the numerator of the sales factor from
hauling freight, mail, and express are attributable to this state as follows:
(i) All sales from shipments which both
originate and terminate within this state; and
(ii) That portion of the sales from each
movement or shipment passing through, into, or out of this state is determined
by the ratio which the miles traveled by such movement or shipment in this
state bears to the total miles traveled by such movement or shipment from point
of origin to destination.
(C) Numerator of Sales Factor from
Passengers. The numerator of the sales factor includes:
(i) All sales from the transportation of
passengers (including mail and express handled in passenger services) which
both originate and terminate within this state; and
(ii) That portion of sales from the
transportation of interstate passengers (including mail and express handled in
passenger service) determined by the ratio which revenue passenger miles in
this state bear to the total everywhere.
Notes
Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.280
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