Oregon Administrative Rules › Chapter 150 - DEPARTMENT OF REVENUE › Division 314 - INCOME TAXATION GENERALLY GENERAL PROVISIONS › Section 150-314-0337 - Apportionable and Nonapportionable Income; Application of Definitions

Current through Register Vol. 63, No. 7, July 1, 2024
(1) This rule
			 adopts a model regulation recommended by the Multistate Tax Commission to
			 promote uniform treatment of this item by the states. This rule is applicable
			 to tax years beginning on or after January 1, 2018, and applies the principles
			 provided in OAR 150-314-0335 for determining whether particular income is
			 apportionable or nonapportionable income. (The examples used throughout this
			 rule are illustrative only and are limited to the facts they
			 contain.)
(2) Rents from real and
			 tangible personal property. Rental income from real and tangible property is
			 apportionable income if the property with respect to which the rental income
			 was received is or was used in the taxpayer's trade or business and therefore
			 is includable in the property factor under OAR 150-314-0390.
Example 1
:
The taxpayer operates
			 a multistate car rental business. The income from car rentals is apportionable
			 income.
Example 2
:
The
			 taxpayer is engaged in the heavy construction business in which it uses
			 equipment such as cranes, tractors, and earth-moving vehicles. The taxpayer
			 makes short-term leases of the equipment when particular pieces of equipment
			 are not needed on any particular project. The rental income is apportionable
			 income.
Example 3
:
The
			 taxpayer operates a multistate chain of men's clothing stores. The taxpayer
			 purchases a five-story office building for use in connection with its trade or
			 business. It uses the street floor as one of its retail stores and the second
			 and third floors for its general corporate headquarters. The remaining two
			 floors are held for future use in the trade or business and are leased to
			 tenants on a short-term basis in the meantime. The rental income is
			 apportionable income.
Example
			 4
:
The taxpayer operates a multistate chain of grocery
			 stores. It purchases as an investment an office building in another state with
			 surplus funds and leases the entire building to others. The net rental income
			 is not apportionable income of the grocery store trade or business. Therefore,
			 the net rental income is nonapportionable income.
Example 5
:
The taxpayer operates
			 a multistate chain of men's clothing stores. The taxpayer invests in a 20-story
			 office building and uses the street floor as one of its retail stores and the
			 second floor for its general corporate headquarters. The remaining 18 floors
			 are leased to others. The rental of the 18 floors is not done in furtherance of
			 but rather is separate from the operation of the taxpayer's trade or business.
			 The net rental income is not apportionable income of the clothing store trade
			 or business. Therefore, the net rental income is nonapportionable
			 income.
Example 6
:
The
			 taxpayer constructed a plant for use in its multistate manufacturing business
			 and 20 years later the plant was closed and put up for sale. The plant was
			 rented for a temporary period from the time it was closed by the taxpayer until
			 it was sold 18 months later. The rental income is apportionable income and the
			 gain on the sale of the plant is apportionable income.