Oregon Administrative Rules › Chapter 150 - DEPARTMENT OF REVENUE › Division 314 - INCOME TAXATION GENERALLY GENERAL PROVISIONS › Section 150-314-0076 - Modified Factors for Carriers of Freight or Passengers: Special Rules - Railroads

Current through Register Vol. 63, No. 7, July 1, 2024
(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.