Oregon Administrative Rules › Chapter 150 - DEPARTMENT OF REVENUE › Division 314 - INCOME TAXATION GENERALLY GENERAL PROVISIONS › Section 150-314-0385 - Apportionment Formula

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