68th OREGON LEGISLATIVE ASSEMBLY--1995 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 445
Minority Report
B-Engrossed
House Bill 2204
Ordered by the Senate May 24
Including House Amendments dated February 16 and Senate Minority
Report Amendments dated May 24
Sponsored by nonconcurring members of the Senate Committee on
Government Finance and Tax Policy: Senators GOLD, TROW
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Governs connection of Oregon personal income and corporate tax
and other laws to federal Internal Revenue Code. Applies
generally to tax years beginning on or after January 1, 1995, but
contains retroactive applications.
Changes applicable dates for certain provisions from January 1,
1995, to January 1, 1996. Specifies estimated tax that individual
is required to pay for tax years beginning on or after January 1,
1995, and before January 1, 1996. Makes technical changes.
{ + Establishes certain depreciation adjustments. + } { +
Requires that Employment Department advise individual filing new
claim for unemployment insurance benefits of certain facts
regarding federal and state income tax. Allows claimant to elect
to have amount withheld from benefits. + }
A BILL FOR AN ACT
Relating to federal tax law connection; creating new provisions;
amending ORS 305.230, 305.510, 305.690, 310.630, 314.011,
314.021, 314.290, 314.300, 314.330, 314.362, 314.402, 314.525,
314.720, 315.004, 315.356, 316.012, 316.083, 316.153, 316.279,
316.587, 316.680, 316.695, 316.729, 316.742, 317.010, 317.018,
317.152, 317.650 and 456.605; and repealing ORS 316.707,
316.723 and 317.368 and sections 18 and 36, chapter 726, Oregon
Laws 1993.
Be It Enacted by the People of the State of Oregon:
**************************** SECTION 1. ORS 316.012 is amended
to read:
316.012. Any term used in this chapter has the same meaning as
when used in a comparable context in the laws of the United
States relating to federal income taxes, unless a different
meaning is clearly required or the term is specifically defined
in this chapter. Any reference in this chapter to the laws of the
United States or to the Internal Revenue Code means the laws of
the United States relating to income taxes or the Internal
Revenue Code as they are amended on or before { - December 31,
1992 - } { + April 15, 1995 + }, even where the amendments take
effect or become operative after that date, except where the
Legislative Assembly has specifically provided otherwise.
**************************** SECTION 2. ORS 316.083 is amended
to read:
316.083. ORS 316.844 shall not apply in any case in which a
carryover basis for certain property acquired from a decedent
dying after December 31, 1976, is provided by section
{ - 1023 - } { + 1014 + } of the Internal Revenue Code
{ - (Tax Reform Act of 1976) - } .
**************************** SECTION 3. ORS 316.153 is amended
to read:
316.153. (1) As used in this section:
(a) 'Involuntary move' means a move forced on an owner due to
the termination of the owner's rental agreement for a facility
space resulting from the closure of the facility, or portion of
the facility, as defined in ORS 90.500.
(b) 'Mobile home' has the meaning given 'manufactured dwelling'
in ORS 446.003, and includes only a mobile home with a fair
market value of $50,000 or less on the date that the mobile home
is involuntarily moved.
(c) 'Qualified individual' means an individual who:
(A) Owns and occupies as a principal residence, on the date of
the involuntary move, a mobile home involuntarily moved; and
(B) Has a federal adjusted gross income, as described under ORS
316.013, of $30,000 or less for the tax year in which the mobile
home is involuntarily moved.
(2) A qualified individual is allowed a credit against the
taxes otherwise due under this chapter. The amount of the credit
is the lesser of:
(a) $1,500; or
(b) The actual cost of moving and setting up the mobile home
after subtracting any payments or reimbursements received by the
qualified individual under ORS 90.630 (4) and (5).
(3)(a) One-third of the total amount of credit allowed under
this section must be claimed by the qualified individual for the
tax year in which the mobile home is involuntarily moved and
one-third of the credit in each of the two tax years immediately
following.
(b) Any credit which is not used by the taxpayer in a
particular year may be carried forward and offset against the
taxpayer's tax liability for the next succeeding tax year. Any
credit remaining unused in the next succeeding tax year may be
carried forward and used in the second succeeding tax year, and
likewise any credit not used in that second succeeding tax year
may be carried forward and used in the third succeeding tax year,
and any credit not used in that third succeeding tax year may be
carried forward and used in the fourth succeeding tax year, and
any credit not used in that fourth succeeding tax year may be
carried forward and used in the fifth succeeding tax year, but
may not be carried forward for any tax year thereafter.
(c) The credit allowed to a qualified individual is available
for only one involuntary move of a mobile home.
(d) If the taxpayer is married at the close of the tax year,
the credit shall be allowed to only one taxpayer if the spouses
file separate returns for the tax year. Marital status shall be
determined as provided under section 21 { - (d)(3) and (4) - }
{ + (e)(3) and (4) + } of the Internal Revenue Code.
**************************** SECTION 4. ORS 316.279 is amended
to read:
316.279. A domestic or foreign business trust of the type
defined in ORS 128.560 is subject to tax under ORS chapter 317 or
318 and amounts distributed by it to its shareholders shall be
treated as distributions by a corporation for the purposes of ORS
chapters 316, 317 and 318 { + , except that distributions that
are treated as unrelated business taxable income under section
856(h)(3)(C) (pension-held REITs) of the Internal Revenue Code
for federal tax purposes shall also be treated as unrelated
business taxable income for state tax purposes + }.
**************************** SECTION 5. ORS 316.587 is amended
to read:
316.587. (1) Except as provided in subsection (5) of this
section, if an individual makes an underpayment of estimated tax,
interest shall accrue at the rate established under ORS 305.220
for each month, or fraction thereof, on the amount underpaid for
the period the estimated tax or any installment remains unpaid.
The penalty provisions contained in ORS chapter 314 for
underpayment of tax shall not apply to underpayments of estimated
tax under ORS 316.557 to 316.589.
(2) For purposes of subsection (1) of this section, the amount
of underpayment shall be the excess of the required installment
over the amount (if any) of the installment paid on or before the
due date for the installment.
(3) The period of underpayment shall run from the date the
installment was due to the earlier of the following dates:
(a) The 15th day of the fourth month following the close of the
taxable year; or
(b) With respect to any portion of the underpayment, the date
on which the portion is paid.
(4) For purposes of subsection (3)(b) of this section, a
payment of estimated tax shall be credited against unpaid
required installments in the order in which such installments are
required to be paid.
(5)(a) Interest accruing under subsection (1) of this section
shall not be imposed if the individual was a resident of this
state throughout the preceding taxable year and had no tax
liability for that year, and the preceding taxable year was a
taxable year of 12 months.
(b) Interest accruing under subsection (1) of this section
shall not be imposed with respect to any underpayment of
estimated tax to the extent that the department determines that
by reason of casualty, disaster or other unusual circumstances
the imposition of interest would be against equity and good
conscience.
(c) Interest accruing under subsection (1) of this section
shall not be imposed with respect to any underpayment of
estimated tax if the department determines that:
(A) In the tax year the estimated tax payment was required to
be made or in the tax year preceding such tax year, the taxpayer
(i) retired after having attained age 62 or (ii) became disabled;
and
(B) The underpayment was due to reasonable cause and not to
willful neglect.
(d) Interest accruing under subsection (1) of this section
shall not be imposed with respect to any underpayment of
estimated tax attributable to the pro rata share of a shareholder
of the income of an S corporation if:
(A) The income is taxable income for an initial year for which
S corporation status is elected for the corporation; and
(B) The shareholder is a nonresident or for the preceding
taxable year was a part-year resident for Oregon tax purposes.
(6) For purposes of this section, the estimated tax shall be
computed without any reduction for the amount of credit estimated
to be allowed to the individual for the taxable year under ORS
316.187. The amount of the credit allowed under ORS 316.187 for
the taxable year shall be considered a payment of estimated tax.
An equal part of the credit shall be considered paid on each
installment date for the taxable year, unless the taxpayer
establishes the date on which all amounts were actually withheld,
in which case the amount so withheld shall be considered payment
of estimated tax on the dates on which the amounts were actually
withheld.
(7) For purposes of subsections (5) and (8) of this section,
the term 'tax' means the tax imposed by this chapter minus any
credits against tax allowed for purposes of this chapter, other
than the credit against tax provided by ORS 316.187.
(8) For purposes of subsections (2) and (4) of this section,
the term 'required installment' means the amount of the
installment which would be due if the estimated tax were equal to
the lesser of:
(a) Ninety percent of the tax shown on the return for the
taxable year (or, if no return is filed, 90 percent of the tax
for such year); or
(b) One hundred percent of the tax shown on the return filed by
the individual for the preceding taxable year, and the preceding
taxable year was a taxable year of 12 months; or
(c) Ninety percent of the tax for the taxable year computed by
placing on an annualized basis the taxable income for the months
in the taxable year ending before the month in which the
installment is required to be paid.
(9)(a) For purposes of subsection (8) of this section, if an
amended return is filed on or before the return due date
(determined without regard to extensions), then the term '
return' means the amended return.
(b) For purposes of subsection (8) of this section, if during
initial processing of the return the department adjusts the
amount of tax due, then the term 'tax shown on the return' means
the tax as adjusted by the department. The preceding sentence
shall not apply if it is ultimately determined that the
adjustment was improper.
{ + (c)(A) In applying subsection (8)(b) of this section, if
the adjusted gross income of the return of the individual for the
preceding taxable year that is subject to Oregon taxation exceeds
$150,000, 'one hundred ten percent' shall be substituted for '
one hundred percent. '
(B) In the case of a married individual who files a separate
return for the taxable year for which the amount of the
installment is being determined, this paragraph shall be applied
by substituting '$75,000' for '$150,000.' + }
**************************** SECTION 6. { + (1) Section 36,
chapter 726, Oregon Laws 1993, is repealed.
(2) The repeal of section 36, chapter 726, Oregon Laws 1993, by
subsection (1) of this section applies to tax years beginning on
or after January 1, 1996. + }
**************************** SECTION 7. { + The amendments to
ORS 316.587 by section 5 of this Act apply to tax years beginning
on or after January 1, 1995. + }
**************************** SECTION 7a. { + For tax years
beginning on or after January 1, 1995, and before January 1,
1996, the estimated tax an individual is required to pay shall be
the lesser of:
(1) The amount determined under ORS 316.587; or
(2) The amount determined under section 36, chapter 726, Oregon
Laws 1993. + }
**************************** SECTION 8. ORS 316.680 is amended
to read:
316.680. (1) There shall be subtracted from federal taxable
income:
(a) The interest or dividends on obligations of the United
States and its territories and possessions or of any authority,
commission or instrumentality of the United States to the extent
includable in gross income for federal income tax purposes but
exempt from state income taxes under the laws of the United
States. However, the amount subtracted under this paragraph shall
be reduced by any interest on indebtedness incurred to carry the
obligations or securities described in this paragraph, and by any
expenses incurred in the production of interest or dividend
income described in this paragraph to the extent that such
expenses, including amortizable bond premiums, are deductible in
determining federal taxable income.
(b) The amount of any federal income taxes accrued by the
taxpayer during the taxable year as described in ORS 316.685,
less the amount of any refunds of federal taxes previously
accrued for which a tax benefit was received.
(c)(A) If the taxpayer does not qualify for the subtraction
under subparagraph (B) of this paragraph, compensation (other
than pension or retirement pay) received for active service
performed by a member of the Armed Forces of the United States in
an amount not to exceed $3,000 per annum.
(B) For the tax year of initial draft or enlistment into the
Armed Forces of the United States or for the tax year of
discharge from or termination of full-time active duty for the
Armed Forces of the United States, compensation (other than
pension or retirement pay or pay for service when on military
reserve duty) paid by the Armed Forces of the United States for
services performed outside this state, if the taxpayer is on
active duty as a full-time officer, enlistee or draftee, with the
Armed Forces of the United States.
(d) For taxable years open to audit on October 5, 1973, the
amount of any deferred income which was added to federal taxable
income for state tax purposes under subsection (2)(e) of this
section in a prior taxable year and which is now added to federal
taxable income. For purposes of this paragraph, the amount
subtracted shall not exceed the amount of gain now reported on
the federal return. If the gain is a capital gain or subject to
capital gain treatment, the adjustments under this paragraph
shall be similar to the adjustments made under subsection (2)(e)
of this section in the prior year.
(e)(A) Any expenses under ORS 118.070 (6) that have not been
deducted in computing federal taxable income and have not been
and will not be claimed as deductions for Oregon inheritance tax
purposes under ORS 118.070.
(B) Amounts allowable under sections 2621 (a)(2) and 2622 (b)
of the Internal Revenue Code to the extent that the taxpayer does
not elect under section 642(g) of the Internal Revenue Code to
reduce federal taxable income by those amounts.
(2) There shall be added to federal taxable income:
(a) Interest or dividends, exempt from federal income tax, on
obligations or securities of any foreign state or of a political
subdivision or authority of any foreign state. However, the
amount added under this paragraph shall be reduced by any
interest on indebtedness incurred to carry the obligations or
securities described in this paragraph and by any expenses
incurred in the production of interest or dividend income
described in this paragraph.
(b) Interest or dividends on obligations of any authority,
commission, instrumentality and territorial possession of the
United States which by the laws of the United States are exempt
from federal income tax but not from state income taxes. However,
the amount added under this paragraph shall be reduced by any
interest on indebtedness incurred to carry the obligations or
securities described in this paragraph and by any expenses
incurred in the production of interest or dividend income
described in this paragraph.
(c) The amount of any federal estate taxes allocable to income
in respect of a decedent not taxable by Oregon.
(d) The amount of any allowance for depletion in excess of the
taxpayer's adjusted basis in the property depleted, deducted on
the taxpayer's federal income tax return for the taxable year,
pursuant to sections 613, 613A, 614, 616 and 617 of the Internal
Revenue Code.
(e) The amount of any gain which is deferred for tax
recognition purposes upon the voluntary or involuntary conversion
or exchange of tangible real or personal property as provided
under ORS 314.290.
(f) For taxable years beginning on and after January 1, 1972,
any expenses under ORS 118.070 (6) that have been or will be
claimed as deductions for Oregon inheritance tax purposes in an
amount not to exceed the deductions actually claimed by the
taxpayer on the federal income tax return for the same taxable
year.
(g) For taxable years beginning on or after January 1, 1985,
the dollar amount deducted under section 151 of the Internal
Revenue Code for personal exemptions for the taxable year. { +
(h) The amount taken as a deduction on the taxpayer's federal
return for unused qualified business credits under section 196 of
the Internal Revenue Code. + }
(3) Discount and gain or loss on retirement or disposition of
obligations described under subsection (2)(a) of this section
issued on or after January 1, 1985, shall be treated for purposes
of this chapter in the same manner as under sections 1271 to 1283
and other pertinent sections of the Internal Revenue Code as if
the obligations, although issued by a foreign state or a
political subdivision of a foreign state, were not tax exempt
under the Internal Revenue Code.
**************************** SECTION 9. ORS 316.695 is amended
to read:
316.695. (1) In addition to the modifications to federal
taxable income contained in this chapter, there shall be added to
or subtracted from federal taxable income:
(a) If, in computing federal income tax for a taxable year, the
taxpayer deducted itemized deductions, as defined in section
63(d) of the Internal Revenue Code, the taxpayer shall add the
amount of itemized deductions deducted (the itemized deductions
less an amount, if any, by which the itemized deductions are
reduced under section 68 of the Internal Revenue Code).
(b) If, in computing federal income tax for a taxable year, the
taxpayer deducted the standard deduction, as defined in section
63(c) of the Internal Revenue Code, the taxpayer shall add the
amount of the standard deduction deducted.
(c)(A) From federal taxable income there shall be subtracted
the larger of (i) the taxpayer's itemized deductions or (ii) a
standard deduction. Except as provided in subsection (9) of this
section, for purposes of this subparagraph, 'standard deduction '
means the sum of the basic standard deduction and the additional
standard deduction.
(B) For purposes of subparagraph (A) of this paragraph, the
basic standard deduction is:
(i) $3,000, in the case of joint return filers or a surviving
spouse;
(ii) $1,800, in the case of an individual who is not a married
individual and is not a surviving spouse;
(iii) $1,500, in the case of a married individual who files a
separate return; or
(iv) $2,640, in the case of a head of household.
(C) For purposes of subparagraph (A) of this paragraph, the
additional standard deduction is the sum of each additional
amount to which the taxpayer is entitled under subsection (8) of
this section.
(D) As used in subparagraph (B) of this paragraph, ' surviving
spouse' and 'head of household' have the meaning given those
terms in section 2 of the Internal Revenue Code.
(E) In the case of the following, the standard deduction
referred to in subparagraph (A) of this paragraph shall be zero:
(i) A husband or wife filing a separate return where the other
spouse has claimed itemized deductions under subparagraph (A) of
this paragraph;
(ii) A nonresident alien individual;
(iii) An individual making a return for a period of less than
12 months on account of a change in his or her annual accounting
period;
(iv) An estate or trust;
(v) A common trust fund; or
(vi) A partnership.
(d) For the purposes of paragraph (c)(A) of this subsection,
the taxpayer's itemized deductions are the sum of:
(A) The taxpayer's itemized deductions as defined in section
63(d) of the Internal Revenue Code (reduced, if applicable, as
described under section 68 of the Internal Revenue Code)
{ - plus any amount of medical deduction disallowed under
section 213(f) of the Internal Revenue Code and - } minus the
deduction for Oregon income tax (reduced, if applicable, by the
proportion that the reduction in federal itemized deductions
resulting from section 68 of the Internal Revenue Code bears to
the amount of federal itemized deductions as defined for purposes
of section 68 of the Internal Revenue Code); and
(B) The amount that may be taken into account under section
213(a) of the Internal Revenue Code, not to exceed seven and
one-half percent of the federal adjusted gross income of the
taxpayer, if the taxpayer has attained the following age before
the close of the taxable year, or, in the case of a joint return,
if either taxpayer has attained the following age before the
close of the taxable year:
(i) For taxable years beginning on or after January 1, 1991,
and before January 1, 1993, a taxpayer must attain 58 years of
age before the close of the taxable year.
(ii) For taxable years beginning on or after January 1, 1993,
and before January 1, 1995, a taxpayer must attain 59 years of
age before the close of the taxable year.
(iii) For taxable years beginning on or after January 1, 1995,
and before January 1, 1997, a taxpayer must attain 60 years of
age before the close of the taxable year.
(iv) For taxable years beginning on or after January 1, 1997,
and before January 1, 1999, a taxpayer must attain 61 years of
age before the close of the taxable year.
(v) For taxable years beginning on or after January 1, 1999, a
taxpayer must attain 62 years of age before the close of the
taxable year.
(2)(a) There shall be subtracted from federal taxable income
any portion of the distribution of a pension, profit-sharing,
stock bonus or other retirement plan, representing that portion
of contributions which were taxed by the State of Oregon but not
taxed by the Federal Government under laws in effect for tax
years beginning prior to January 1, 1969, or for any subsequent
year in which the amount that was contributed to the plan under
the Internal Revenue Code was greater than the amount allowed
under this chapter.
(b) Interest or other earnings on any excess contributions of a
pension, profit-sharing, stock bonus or other retirement plan not
permitted to be deducted under paragraph (a) of this subsection
shall not be added to federal taxable income in the year earned
by the plan and shall not be subtracted from federal taxable
income in the year received by the taxpayer.
(3)(a) Except as provided in paragraph (b) of this subsection
and subsections (4) and (5) of this section, in addition to the
adjustments to federal taxable income required by ORS 316.680,
there shall be added to federal taxable income the amount of any
federal income taxes in excess of $3,000, accrued by the taxpayer
during the taxable year as described in ORS 316.685, less the
amount of any refund of federal taxes previously accrued for
which a tax benefit was received.
(b) In the case of a husband and wife filing separate tax
returns, the amount added shall be in the amount of any federal
income taxes in excess of $1,500, less the amount of any refund
of federal taxes previously accrued for which a tax benefit was
received.
(4)(a) If federal income taxes are paid or determined, due to
additional assessments as described in ORS 316.685 (2), on income
for a taxable year beginning on or before December 31, 1986,
there shall be added to federal taxable income that portion of
the federal income tax due to additional assessments which, when
added to federal income tax previously paid and deducted for that
prior taxable year on the taxpayer's Oregon return, exceeds
$7,000.
(b) In the case of a husband and wife filing separate tax
returns, the amount to be added to federal taxable income under
this subsection shall be that portion of the federal income tax
due to additional assessments which, when added to federal income
tax previously paid and deducted for that prior year on the
taxpayer's Oregon return, exceeds $3,500.
(5)(a) In addition to the adjustments required by ORS 316.130,
a full-year nonresident individual shall add to taxable income a
proportion of any accrued federal income taxes as computed under
ORS 316.685 in excess of $3,000, or $7,000 if subsection (4)(a)
of this section is applicable, in the proportion provided in ORS
316.117.
(b) In the case of a husband and wife filing separate tax
returns, the amount added under this subsection shall be computed
in a manner consistent with the computation of the amount to be
added in the case of a husband and wife filing separate returns
under subsection (3) or (4) of this section, whichever is
applicable. The method of computation shall be determined by the
Department of Revenue by rule.
(6) Subsection (3)(b), subsection (4)(b) and subsection (5)(b)
of this section shall not apply to married individuals living
apart as defined in section 7703(b) of the Internal Revenue Code.
(7)(a) For tax years beginning on or after January 1, 1981, and
prior to January 1, 1983, income or loss taken into account in
determining federal taxable income by a shareholder of an S
corporation pursuant to sections 1373 to 1375 of the Internal
Revenue Code shall be adjusted for purposes of determining Oregon
taxable income, to the extent that as income or loss of the S
corporation, they were required to be adjusted under the
provisions of ORS chapter 317.
(b) For tax years beginning on or after January 1, 1983, items
of income, loss or deduction taken into account in determining
federal taxable income by a shareholder of an S corporation
pursuant to sections 1366 to 1368 of the Internal Revenue Code
shall be adjusted for purposes of determining Oregon taxable
income, to the extent that as items of income, loss or deduction
of the shareholder the items are required to be adjusted under
the provisions of this chapter.
(c) The tax years referred to in paragraphs (a) and (b) of this
subsection are those of the S corporation.
(d) As used in paragraph (a) of this subsection, an S
corporation refers to an electing small business corporation.
(8)(a) The taxpayer shall be entitled to an additional amount,
as referred to in subsection (1)(c)(A) and (C) of this section,
of $1,000:
(A) For himself or herself if he or she has attained age 65
before the close of his or her taxable year; and
(B) For the spouse of the taxpayer if the spouse has attained
age 65 before the close of the taxable year and an additional
exemption is allowable to the taxpayer for such spouse for
federal income tax purposes under section 151(b) of the Internal
Revenue Code.
(b) The taxpayer shall be entitled to an additional amount, as
referred to in subsection (1)(c)(A) and (C) of this section, of
$1,000:
(A) For himself or herself if he or she is blind at the close
of the taxable year; and
(B) For the spouse of the taxpayer if the spouse is blind as of
the close of the taxable year and an additional exemption is
allowable to the taxpayer for such spouse for federal income tax
purposes under section 151(b) of the Internal Revenue Code. For
purposes of this subparagraph, if the spouse dies during the
taxable year, the determination of whether such spouse is blind
shall be made immediately prior to death.
(c) In the case of an individual who is not married and is not
a surviving spouse, paragraphs (a) and (b) of this subsection
shall be applied by substituting '$1,200' for '$1,000. '
(d) For purposes of this subsection, an individual is blind
only if his or her central visual acuity does not exceed 20/200
in the better eye with correcting lenses, or if his or her visual
acuity is greater than 20/200 but is accompanied by a limitation
in the fields of vision such that the widest diameter of the
visual field subtends an angle no greater than 20 degrees.
(9) In the case of an individual with respect to whom a
deduction under section 151 of the Internal Revenue Code is
allowable for federal income tax purposes to another taxpayer for
a taxable year beginning in the calendar year in which the
individual's taxable year begins, the basic standard deduction
(referred to in subsection (1)(c)(B) of this section) applicable
to such individual for such individual's taxable year shall not
exceed the greater of:
(a) $500; or
(b) The individual's earned income.
**************************** SECTION 10. ORS 316.729 is amended
to read:
316.729. { - (1) Taxpayers taking advantage of the special
provisions in sections 472(d) and (f) and 474 of the Internal
Revenue Code to change to a last in, first out inventory
valuation method during the period of time sections 2 and 3,
chapter 613, Oregon Laws 1981, were in effect, shall add to or
subtract from federal taxable income the difference between the
1983 beginning inventory for federal income tax purposes and the
1982 ending inventory for Oregon tax purposes. - }
{ - (2) In addition to the modifications to federal taxable
income contained in ORS chapter 316, for tax years beginning
before January 1, 1984, there shall be subtracted from federal
taxable income interest on certain tax exempt savings
certificates which is required to be restored to federal taxable
income pursuant to section 128(e) of the Internal Revenue Code
and which has already been included in Oregon taxable income in a
previous year. - }
{ - (3) - } For taxable years that begin on or after January
1, 1981, section 2, chapter 613, Oregon Laws 1981, shall not
apply to the provisions of the Internal Revenue Code relating to:
{ - (a) - } { + (1) + } Sections { - 1371 and 1372 - }
{ + 1361 and 1362 + } of the Internal Revenue Code (pertaining
to subchapter S corporations).
{ - (b) - } { + (2) + } Sections 421 and 422A of the
Internal Revenue Code (concerning incentive stock options).
{ - (c) - } { + (3) + } Section 1034 of the Internal
Revenue Code (pertaining to the sale of a personal residence).
{ - (d) - } { + (4) + } Section 121 of the Internal Revenue
Code (pertaining to the one time exclusion of a gain from the
sale of a personal residence by an individual who has attained
age 55).
**************************** SECTION 11. ORS 316.742 is amended
to read:
316.742. (1) If the deduction described under section 162(l) of
the Internal Revenue Code (health insurance costs of
self-employed individuals) is not otherwise allowed, or to the
extent that the deduction is not allowed for purposes of this
chapter, in addition to the other modifications contained in this
chapter, in the case of an individual described under and to
which section 162(l) of the Internal Revenue Code applies, there
shall be subtracted from federal taxable income an amount equal
to an amount determined and limited as described under section
162(l) of the Internal Revenue Code { - , except that the
exclusions shall not be reduced as provided under section
162(l)(3)(B) - } .
(2) As used in this section, 'Internal Revenue Code' means the
federal Internal Revenue Code as amended and in effect on
{ - December 31, 1990 - } { + April 15, 1995 + }.
**************************** SECTION 12. ORS 317.010 is amended
to read:
317.010. As used in this chapter, unless the context requires
otherwise:
(1) 'Centrally assessed corporation' means every corporation
the property of which is assessed by the Department of Revenue
under ORS 308.505 to 308.660 and 308.705 to 308.730.
(2) 'Department' means the Department of Revenue.
(3)(a) 'Consolidated federal return' means the return permitted
or required to be filed by a group of affiliated corporations
under section 1501 of the Internal Revenue Code.
(b) 'Consolidated state return' means the return required to be
filed under ORS 317.710 (5).
(4) 'Doing business' means any transaction or transactions in
the course of its activities conducted within the state by a
national banking association, or any other corporation; provided,
however, that a foreign corporation whose activities in this
state are confined to purchases of personal property, and the
storage thereof incident to shipment outside the state, shall not
be deemed to be doing business unless such foreign corporation is
an affiliate of another foreign or domestic corporation which is
doing business in Oregon. Whether or not corporations are
affiliated shall be determined as provided in section 1504 of the
Internal Revenue Code.
(5) 'Excise tax' means a tax measured by or according to net
income imposed upon national banking associations, all other
banks, and financial, centrally assessed, mercantile,
manufacturing and business corporations for the privilege of
carrying on or doing business in this state.
(6) 'Financial institution' or 'financial corporation ' means a
bank or trust company organized under ORS chapter 707, national
banking association or production credit association organized
under federal statute, building and loan association, savings and
loan association, mutual savings bank, and any other corporation
whose principal business is in direct competition with national
and state banks.
(7) 'Internal Revenue Code' means the laws of the United States
relating to income taxes as they may be amended on or before
{ - December 31, 1992 - } { + April 15, 1995 + }, even where
the amendments take effect or become operative after that date.
(8) 'Oregon taxable income' means taxable income, less the
deduction allowed under ORS 317.476, except as otherwise provided
with respect to domestic insurers in subsection (11) of this
section and ORS 317.650 to 317.665.
(9) 'Oregon net loss' means taxable loss, except as otherwise
provided with respect to domestic insurers in subsection (11) of
this section and ORS 317.650 to 317.665.
(10) 'Taxable income or loss' means the taxable income or loss
determined, or in the case of a corporation for which no federal
taxable income or loss is determined, as would be determined,
under chapter 1, Subtitle A of the Internal Revenue Code and any
other laws of the United States relating to the determination of
taxable income or loss of corporate taxpayers, with the
additions, subtractions, adjustments and other modifications as
are specifically prescribed by this chapter except that in
determining taxable income or loss for any year, no deduction
under ORS 317.476 or 317.478 and section 45b, chapter 293, Oregon
Laws 1987, shall be allowed. If the corporation is a corporation
to which ORS 314.280 or 314.605 to 314.675 (requiring or
permitting apportionment of income from transactions or
activities carried on both within and without the state) applies,
to derive taxable income or loss, the following shall occur:
(a) From the amount otherwise determined under this subsection,
subtract nonbusiness income, or add nonbusiness loss, whichever
is applicable.
(b) Multiply the amount determined under paragraph (a) of this
subsection by the Oregon apportionment percentage defined under
ORS 314.280, 314.650 or 314.670, whichever is applicable. The
resulting product shall be Oregon apportioned income or loss.
(c) To the amount determined as Oregon apportioned income or
loss under paragraph (b) of this subsection, add nonbusiness
income allocable entirely to Oregon under ORS 314.280 or 314.625
to 314.645, or subtract nonbusiness loss allocable entirely to
Oregon under ORS 314.280 or 314.625 to 314.645. The resulting
figure is 'taxable income or loss' for those corporations
carrying on taxable transactions or activities both within and
without Oregon.
(11) As used in ORS 317.122 and 317.650 to 317.665, ' domestic
insurer' has the meaning defined by ORS 731.082 (1) and 731.142
(1) and (2) but does not include title insurers or health care
service contractors operating pursuant to ORS 750.005 to 750.095.
**************************** SECTION 13. ORS 317.018 is amended
to read:
317.018. It is the intent of the Legislative Assembly:
(1) To make the Oregon corporate excise tax law, insofar as it
relates to the measurement of taxable income, identical to the
provisions of the federal Internal Revenue Code, as amended on or
before { - December 31, 1992 - } { + April 15, 1995 + }, even
where the amendments take effect or become operative after that
date, to the end that taxable income of a corporation for Oregon
purposes is the same as it is for federal income tax purposes,
subject to Oregon's jurisdiction to tax, and subject to the
additions, subtractions, adjustments and modifications contained
in this chapter.
(2) To achieve the results desired under subsection (1) of this
section by application of the various provisions of the federal
Internal Revenue Code relating to the definitions for
corporations, of income, deductions, accounting methods,
accounting periods, taxation of corporations, basis and other
pertinent provisions relating to gross income. It is not the
intent of the Legislative Assembly to adopt federal Internal
Revenue Code provisions dealing with the computation of tax, tax
credits or any other provisions designed to mitigate the amount
of tax due.
(3) To impose on each corporation doing business within this
state an excise tax for the privilege of carrying on or doing
that business measured by its federal taxable income as adjusted
in this chapter.
**************************** SECTION 14. ORS 317.152 is amended
to read:
317.152. (1) A credit against taxes otherwise due under this
chapter shall be allowed to eligible taxpayers for increases in
qualified research expenses and basic research payments. The
credit shall be determined in accordance with section 41
(including section 41(h)) of the Internal Revenue Code, except as
follows:
(a) The applicable percentage specified in section 41(a) of the
Internal Revenue Code shall be five percent.
(b) 'Qualified research' and 'basic research' shall consist of
research in the fields of advanced computing, advanced materials,
biotechnology, electronic device technology or environmental
technology, but only to the extent that such research is
conducted in Oregon.
(2) As used in this section:
(a) 'Advanced computing' means leading edge technologies used
in the design and development of computing hardware and software.
This includes innovations in design of the full spectrum of
hardware from hand-held calculators to super computers, including
all peripheral equipment. It also includes innovations in design
and development software executing on all computing hardware for
any purpose.
(b) 'Advanced materials' means high value metals, new and
improved wood-based materials, composites and plastics.
(c) 'Biotechnology' means biochemistry, molecular biology,
genetics and engineering dealing with the transformation of
biological systems into useful processes and products.
(d) 'Electronic device technology' means the design and
development of electronic materials and devices such as advances
in integrated circuits and superconductivity.
(e) 'Environmental technology' means environmental assessment,
cleanup and alternative energy sources.
(3) For purposes of this section:
(a) 'Eligible taxpayer' means a corporation, other than
corporations excluded under Internal Revenue Code section
41(e)(7)(E), that is engaged in research in the fields of
advanced computing, advanced materials, biotechnology, electronic
device technology or environmental technology.
(b) 'Internal Revenue Code' means the Internal Revenue Code as
amended and in effect on { - December 31, 1993 - } { + April
15, 1995 + }.
(4) The Income Tax Regulations as prescribed by the Secretary
of the Internal Revenue Service under authority of section 41 of
the Internal Revenue Code shall also apply for purposes of this
section, except as modified by this section or as provided in
rules adopted by the Department { + of Revenue + }.
(5) The maximum credit under this section shall not exceed
$500,000 or one-third of the excise tax liability before credits
under this chapter, whichever is less.
(6) Any credit otherwise allowable under this section which is
not used in the tax year shall not be carried forward to any tax
year thereafter.
**************************** SECTION 15. { + Sections 16 and
17 of this Act are added to and made a part of ORS 317.267 to
317.329. + }
**************************** SECTION 16. { + There shall be
added to federal taxable income the amount taken as a deduction
on the taxpayer's federal return for unused qualified business
credits under section 196 of the Internal Revenue Code. + }
**************************** SECTION 17. { + There shall be
subtracted from federal taxable income the amount by which a
corporation must reduce its charitable contribution deduction
under section 170(d)(2) of the Internal Revenue Code (relating to
carryovers of excess contributions for corporations). + }
**************************** SECTION 18. { + Section 19 of
this Act is added to and made a part of ORS chapter 314. + }
**************************** SECTION 19. { + (1) If a taxpayer
excludes an amount from federal gross income by reason of the
discharge of indebtedness of the taxpayer under section
108(a)(1)(A) of the Internal Revenue Code (relating to discharge
of indebtedness in a bankruptcy declared under U.S.C. Title 11),
then, with respect to that portion of the excluded amount that is
apportioned to Oregon, the taxpayer shall apply the rules in 11
U.S.C. 346(j), as amended and in effect on April 15, 1995.
(2) If a taxpayer excludes an amount from federal gross income
by reason of the discharge of indebtedness of the taxpayer under
section 108(a)(1)(B) or (C) of the Internal Revenue Code
(relating to discharge of indebtedness in insolvency or discharge
of qualified farm indebtedness), then, with respect to that
portion of the excluded amount that is apportioned to Oregon, the
following paragraphs shall apply, in the following order:
(a) If the taxpayer has made the election under section
108(b)(5) of the Internal Revenue Code to first reduce the basis
of the depreciable property of the taxpayer, the election shall
also be effective for Oregon tax purposes. A corresponding
reduction in the basis of the depreciable property of the
taxpayer shall be made for Oregon tax purposes.
(b) The amount, if any, by which the following attributes are
reduced under section 108(b)(1) of the Internal Revenue Code for
federal tax purposes shall be added back for Oregon tax purposes:
(A) Federal net operating loss.
(B) Capital loss carryover.
(C) Basis of the property of the taxpayer, excluding amounts
subject to the election under section 108(b)(5) of the Internal
Revenue Code.
(D) Passive activity loss carryover.
(c) Excluding amounts subject to the election in section
108(b)(5) of the Internal Revenue Code:
(A) Any Oregon net operating loss of an individual or corporate
taxpayer, including a net operating loss carryover to the
taxpayer, shall be reduced by the amount of discharged
indebtedness.
(B) Any net capital loss for the taxable year of the discharge,
and any capital loss carryover to the taxable year, shall be
reduced by the amount of discharged indebtedness minus the total
amount taken into account under subparagraph (A) of this
paragraph.
(C) The basis of the property of the taxpayer shall be reduced
by the amount of discharged indebtedness minus the total amount
taken into account under subparagraphs (A) and (B) of this
paragraph.
(D) The passive activity loss carryover under section 469(b) of
the Internal Revenue Code from the taxable year of the discharge
shall be reduced by the amount of discharged indebtedness minus
the total amount taken into account under subparagraphs (A), (B)
and (C) of this paragraph. + }
**************************** SECTION 20. ORS 314.011 is amended
to read:
314.011. (1) As used in this chapter, unless the context
requires otherwise, 'department' means the Department of Revenue.
(2)(a) As used in this chapter, any term has the same meaning
as when used in a comparable context in the laws of the United
States relating to federal income taxes, unless a different
meaning is clearly required or the term is specifically defined
in this chapter.
(b) With respect to ORS 314.260, { + section 37 of this 1995
Act (relating to proxy tax on lobbying expenditures), + }
314.300, 314.302, 314.385, 314.712 to 314.722, 314.726 and
314.730 to 314.752, any reference in this chapter to the laws of
the United States or to the Internal Revenue Code means the laws
of the United States relating to income taxes or the Internal
Revenue Code as they are amended on or before { - December 31,
1992 - } { + April 15, 1995 + }, even where the amendments take
effect or become operative after that date.
(c) Except as specifically listed in paragraph (b) of this
subsection or as otherwise provided by law, any reference in this
chapter to the laws of the United States or to the Internal
Revenue Code means the laws of the United States relating to
income taxes or the Internal Revenue Code as they are amended and
in effect for the taxable year of the taxpayer.
(3) Insofar as is practicable in the administration of this
chapter, the department shall apply and follow the administrative
and judicial interpretations of the federal income tax law. When
a provision of the federal income tax law is the subject of
conflicting opinions by two or more federal courts, the
department shall follow the rule observed by the United States
Commissioner of Internal Revenue until the conflict is resolved.
Nothing contained in this section limits the right or duty of the
department to audit the return of any taxpayer or to determine
any fact relating to the tax liability of any taxpayer.
(4) When portions of the Internal Revenue Code incorporated by
reference as provided in subsection (2) of this section refer to
rules or regulations prescribed by the Secretary of the Treasury,
then such rules or regulations shall be regarded as rules adopted
by the department under and in accordance with the provisions of
this chapter, whenever they are prescribed or amended.
(5) When portions of the Internal Revenue Code incorporated by
reference as provided in subsection (2) of this section are later
corrected by an Act or a Title within an Act of the United States
Congress designated as an Act or Title making technical
corrections, then notwithstanding the date that the Act or Title
becomes law, those portions of the Internal Revenue Code, as so
corrected, shall be the portions of the Internal Revenue Code
incorporated by reference as provided in subsection (2) of this
section and shall take effect, unless otherwise indicated by the
Act or Title (in which case the provisions shall take effect as
indicated in the Act or Title), as if originally included in the
provisions of the Act being technically corrected. If, on account
of this subsection, any adjustment is required to an Oregon
return that would otherwise be prevented by operation of law or
rule, the adjustment shall be made, notwithstanding any law or
rule to the contrary, in the manner provided under ORS 314.135.
**************************** SECTION 21. ORS 314.021 is amended
to read:
314.021. { - ORS 314.021 to 314.080, 314.085, 314.260,
314.276, 314.280, 314.287, 314.290, 314.295, 314.300, 314.302,
314.355, 314.360, 314.370 to 314.400, 314.407, 314.410, 314.412,
314.415, 314.417 to 314.423, 314.425 to 314.440, 314.466, 314.605
to 314.675, 314.712 to 314.722, 314.726, 314.730 to 314.752,
314.805 to 314.855 and 314.991 are - } { + Except where the
context requires otherwise, this chapter is + } applicable to all
laws of this state imposing taxes upon or measured by net income.
**************************** SECTION 22. ORS 314.290 is amended
to read:
314.290. (1) Where laws relating to taxes imposed upon or
measured by net income make provision for deferral of tax
recognition of gain upon the voluntary or involuntary conversion
or exchange of tangible real or personal property, the provisions
shall be limited to those conversions or exchanges where or to
the extent that:
(a) The property voluntarily or involuntarily converted or
exchanged and the property newly acquired by the taxpayer both
have a situs within the jurisdiction of the State of Oregon.
(b) The property voluntarily or involuntarily converted or
exchanged has a situs outside the jurisdiction of the State of
Oregon.
(2) Subsection (1) of this section shall not apply to:
(a) A principal residence { + or its contents + }.
(b) Upon election of a resident individual, estate or trust
made in the manner provided by rule adopted by the Department
{ + of Revenue + }, to any property (without regard to situs)
except as follows:
(A) If the newly acquired property is outside the jurisdiction
of the State of Oregon, the gain shall be taken into account or
the deferral or nonrecognition of gain shall cease upon a change
of the taxpayer to nonresident status; or
(B) If, for federal income tax purposes, the gain is later
required to be taken into account, or the deferral or
nonrecognition ceases for any reason, the gain shall be taken
into account or the deferral or nonrecognition shall cease for
Oregon personal income tax purposes as well.
(3) In addition to other modifications to federal taxable
income required for purposes of this chapter and ORS chapter 316,
317 or 318, there shall be added to federal taxable income any
amount required to carry out the purposes of this section.
(4) If gain deferred under the Internal Revenue Code is
recognized under this section and for a later tax year is
required to be taken into account or for other reason the
deferral ceases under circumstances to which ORS 316.716 or
317.356 do not apply (including but not limited to the operation
of section 1031(f) and (g) of the Internal Revenue Code), then
for the tax year for which the gain is taken into account under
the Internal Revenue Code, there shall be subtracted from federal
taxable income the amount of the gain previously recognized.
(5)(a) In the case of partnership property or property owned by
an S corporation, the partnership or S corporation shall be
entitled to the election described in subsection (2)(b) of this
section.
(b) An election by a partnership or S corporation shall be on
behalf of each resident partner or shareholder, respectively,
that has consented to be included in the election.
(c) The amount of deferral allowed the partnership or S
corporation shall be that portion of the gain that is
proportionate to the aggregate distributive shares or pro rata
shares of its consenting resident partners or shareholders,
respectively, divided by the aggregate distributive shares or pro
rata shares of all partners or shareholders, respectively.
(d) The portion of the partnership or S corporation deferral
flowing through to a consenting resident partner or shareholder
shall be proportionate to that person's distributive share or pro
rata share of partnership or corporate income, respectively,
divided by the aggregate distributive shares or pro rata shares
of all consenting resident partners or shareholders,
respectively.
(e) That portion of the gain that the partnership or S
corporation does not defer shall flow through and be recognized
by each nonresident or nonconsenting partner or shareholder. The
gain recognized by each nonresident or nonconsenting partner or
shareholder shall be proportionate to that person's distributive
share or pro rata share of partnership or corporate income,
divided by the aggregate distributive shares or pro rata shares
of all nonresident and nonconsenting partners or shareholders.
(f) Upon a change of a partner or shareholder to nonresident
status, that person's share of deferral or nonrecognition of gain
shall cease and the gain shall be recognized by that person.
(g) The basis of the partnership or S corporation in the newly
acquired property shall be adjusted in a manner consistent with
federal income tax laws that provided for deferral of tax
recognition of gain upon the voluntary or involuntary conversion
or exchange of tangible real or personal property.
(h) The basis of the partnership or S corporation in the newly
acquired property shall be increased by that portion of the gain
that the partnership or S corporation did not defer. This
increase in basis shall constitute an adjustment to the basis of
the partnership or S corporation property only with respect to
nonresident or nonconsenting partners or shareholders.
(i) The distributive share of any partner shall reflect that
partner's share of the deferred, nonrecognized or recognized gain
attributable to the property voluntarily or involuntarily
converted or exchanged.
**************************** SECTION 23. ORS 314.300 is amended
to read:
314.300. For purposes of applying section 469 of the Internal
Revenue Code to the laws of this state imposing taxes upon or
measured by income:
(1) Passive activity loss shall be determined with respect to
the activities of the taxpayer under section 469 of the Internal
Revenue Code { + and related federal law + } and then shall be
adjusted by the additions, subtractions, modifications and other
adjustments as allocated to passive activity loss under
subsection (2) of this section.
(2) Those additions, subtractions, modifications and other
adjustments required to be made to federal taxable income under
this chapter or ORS chapters 316, 317 and 318, or other law
governing the imposition of state taxes imposed upon or measured
by income, shall be allocated to passive activity loss as
provided by rule of the Department { + of Revenue + }.
(3) Passive activity loss, as determined under subsections (1)
and (2) of this section, shall not be allowed for the taxable
year of the taxpayer. Passive activity loss shall be treated as a
deduction allocable to passive activity in the next succeeding
year, and except as otherwise adjusted under subsection (1) of
this section, shall be treated in the same manner as passive
activity loss is treated under section 469 of the Internal
Revenue Code, and related sections.
(4) For state personal income tax purposes, in the case of a
nonresident, passive activity loss attributable to Oregon sources
shall be treated in the same manner as described under
subsections (1) to (3) of this section.
**************************** SECTION 24. ORS 314.330 is amended
to read:
314.330. (1) If a final determination treats the grantor of a
trust or any other person as the owner of any portion of a trust
pursuant to sections 671 to { - 678 - } { + 679 + } of the
federal Internal Revenue Code or any other law, the lien of the
State of Oregon imposed by ORS 314.417 shall attach to all
property and rights to property, whether real or personal, of
that portion of the trust. The lien may be foreclosed pursuant
to ORS 314.419 or collected by warrant pursuant to ORS 314.430.
(2) For the purposes of subsection (1) of this section, ' final
determination' means:
(a) An assessment which has become final due to failure to
exercise or exhaust rights of appeal to the Director of the
Department of Revenue.
(b) An order of the Director of the Department of Revenue which
has become final.
(c) A decision of the Oregon Tax Court which has become final.
(d) A decision of the Oregon Supreme Court.
**************************** SECTION 25. ORS 314.362 is amended
to read:
314.362. (1) The information return and the employer's annual
return, described in ORS 314.360 and 316.202 (3) shall be filed
on magnetic media or other machine-readable form if the
corresponding federal return is required to be filed on magnetic
media or other machine-readable form by section 6011 (e) of the
Internal Revenue Code and the regulations, revenue rulings and
revenue procedures adopted pursuant to that section.
(2) The Department { + of Revenue + } may, by administrative
rule, adopt the regulations, revenue rulings or revenue
procedures which are adopted pursuant to section 6011 (e) of the
Internal Revenue Code whenever such regulations, revenue rulings
or revenue procedures may be adopted.
(3) The department may require that the magnetic media or other
machine-readable forms filed with it meet specifications
prescribed by the department. The department may allow an
alternative method of filing if the person filing the return is
unable to meet the specifications prescribed by the department.
(4) Any reference in this section to the Internal Revenue Code
means the Internal Revenue Code as amended on or before
{ - December 31, 1992 - } { + April 15, 1995 + }, even where
the amendments take effect or become operative after that date.
**************************** SECTION 25a. ORS 314.402 is
amended to read:
314.402. (1) If the department determines that there is a
substantial understatement of taxable income for any taxable year
under any law imposing a tax on or measured by net income, there
shall be added to the amount of tax required to be shown on the
return a penalty equal to 20 percent of the amount of any
underpayment of tax attributable to the understatement of taxable
income.
(2) A substantial understatement of taxable income exists for
any taxable year if the amount of the understatement for the
taxable year exceeds:
(a) Except as provided in paragraph (b) of this subsection,
$15,000.
(b) In the case of a corporation other than an S corporation,
as defined in section 1361 of the Internal Revenue Code, or a
personal holding company, as defined in section 542 of the
Internal Revenue Code, $25,000.
(3) In the case of any item attributable to an abusive tax
shelter:
(a) No reduction of the amount of the understatement shall be
made with regard to that item regardless of the existence of
substantial authority for the treatment of the item by the
taxpayer.
(b) No reduction of the amount of the understatement shall be
made with regard to that item regardless of the disclosure of the
facts affecting the tax treatment of the item unless, in addition
to the disclosure, the taxpayer reasonably believed that the tax
treatment of the item was more likely than not the proper
treatment.
(4) As used in this section:
(a) 'Abusive tax shelter' means any partnership, corporation or
other organization or entity, any investment plan or arrangement
or any other plan or arrangement, which has as its principal
purpose the evasion or improper avoidance of federal or state
income tax. 'Abusive tax shelter' includes any investment or
activity in connection with which tax benefits derived by
investors are not clearly intended under the tax laws or any
investment or activity that involves little or no economic
reality, making use of unrealistic allocations of income or
expenses, inflated appraisals of asset values, losses
substantially in excess of investment, mismatching of income and
expenses, financing techniques that do not conform to standard
commercial business practice or mischaracterization of the
substance of the investment or activity.
(b) 'Understatement' means the excess of the amount of the
taxable income required to be shown on the return for the taxable
year over the amount of the taxable income which is shown on the
return, reduced by any portion of the understatement that is
attributable to:
(A) The tax treatment of any item by the taxpayer if there is
or was substantial authority for such treatment; or
(B) Any item with respect to which { + :
(i) + } The relevant facts affecting the item's tax treatment
are adequately disclosed in the return or in a statement attached
to the return { + ; and
(ii) There is a reasonable basis for the tax treatment of the
item by the taxpayer + }.
(5) The penalty imposed under this section is in addition to
any other penalty imposed by law. A penalty imposed under this
section shall be treated for all purposes as an additional
deficiency subject to the provisions of ORS 305.265, but shall
not bear interest.
(6) The department may waive all or any part of the penalty
imposed under this section on a showing by the taxpayer that
there was reasonable cause for the understatement, or any portion
thereof, and that the taxpayer acted in good faith.
**************************** SECTION 26. ORS 314.525 is amended
to read:
314.525. (1) An underpayment of estimated tax under ORS 314.505
to 314.525 will be considered to have occurred if the estimated
tax is not paid as required.
(2) Notwithstanding subsection (1) of this section, there shall
be no underpayment of estimated tax if the estimated tax paid
equals or exceeds the amount described in any one of the
following paragraphs:
(a) The amount which would be required to be paid if the
estimated tax liability were equal to { - 90 - } { + 100 + }
percent of the tax shown on the return for the taxable year or,
if no return was filed, { - 90 - } { + 100 + } percent of the
tax for such taxable year.
(b) The amount which would be required to be paid if the
estimated tax liability were equal to 100 percent of the tax
shown on the return for the preceding taxable year, and the
preceding taxable year was a taxable year of 12 months.
(c)(A) An amount equal to { - 90 - } { + 100 + } percent of
the tax for the taxable year computed by placing on an annualized
basis the taxable income:
(i) For the first three months of the taxable year, in the case
of the installment required to be paid in the fourth month;
(ii) For the first three months or for the first five months of
the taxable year, in the case of the installment required to be
paid in the sixth month;
(iii) For the first six months or for the first eight months of
the taxable year in the case of the installment required to be
paid in the ninth month; and
(iv) For the first nine months or for the first 11 months of
the taxable year, in the case of the installment required to be
paid in the 12th month of the taxable year.
(B) For purposes of this paragraph the taxable income shall be
placed on an annualized basis by:
(i) Multiplying by 12 the taxable income referred to in
subparagraph (A) of this paragraph; and
(ii) Dividing the resulting amount by the number of months in
the taxable year (3, 5, 6, 8, 9 or 11, as the case may be)
referred to in subparagraph (A) of this paragraph.
(d) An amount equal to { - 90 - } { + 100 + } percent of
the amount obtained by applying section 6655(e) (3)(C) of the
Internal Revenue Code to Oregon taxable income.
{ + (e) An election made under section 6655(e) (2)(C) of the
Internal Revenue Code (relating to annualization periods) for
federal tax purposes shall also apply for purposes of estimated
tax under ORS 314.505 to 314.525. + }
(3) Interest shall accrue on the underpayment of estimated tax
under ORS 314.505 to 314.525 at the rate established under ORS
305.220, for each month or fraction thereof during which period
the estimated tax or any installment thereof remains unpaid. The
penalty provisions contained in this chapter and ORS chapters 317
and 318 for underpayment of tax shall not apply to underpayments
of estimated tax under ORS 314.505 to 314.525.
(4) For purposes of subsection (3) of this section, the
underpayment of estimated tax shall be the excess of:
(a) The amount of the installment which would be required to be
paid if the estimated tax were equal to { - 90 - } { +
100 + } percent of the tax shown on the return for the taxable
year or, if no return was filed, { - 90 - } { + 100 + }
percent of the tax for such year, over
(b) The amount, if any, of the installment paid on or before
the last date prescribed for payment.
(5) In the case of a large corporation, subsection (2)(b) of
this section shall apply only to determine the amount of the
first required installment for any taxable year. Any reduction in
the first installment by reason of this subsection shall be added
to the amount of the next required installment determined without
regard to subsection (2)(b) of this section. For purposes of this
subsection, a 'large corporation' is any corporation that had
federal taxable income, determined without regard to any amount
carried to any of the three taxable years under section 172 or
1212(a) of the Internal Revenue Code, of $1 million or more in
any of the three taxable years immediately preceding the taxable
year involved.
(6) The application of this section to taxable years of less
than 12 months shall be in accordance with rules adopted by the
department.
**************************** SECTION 27. { + Section 18,
chapter 726, Oregon Laws 1993, is repealed. + }
**************************** SECTION 28. { + The amendments to
ORS 314.525 by section 26 of this Act and the repeal of section
18, chapter 726, Oregon Laws 1993, by section 27 of this Act
apply to tax years beginning on or after January 1, 1996. + }
**************************** SECTION 29. ORS 314.720 is amended
to read:
314.720. (1) Gain or loss shall not be recognized by a partner
upon a distribution by a partnership to that partner, except to
the extent provided in section 731 of the Internal Revenue Code.
(2) The character of gain or loss on the disposition by a
distributee partner of unrealized receivables or inventory items
shall be determined pursuant to section 735 of the Internal
Revenue Code.
(3) The basis of property (other than money) distributed by a
partnership to a partner shall be determined pursuant to sections
704(c)(1)(B)(iii) and 732 of the Internal Revenue Code, and shall
be increased or decreased as provided in ORS chapter 316.
(4) If a partnership makes the election to adjust the basis of
its assets under section 754 of the Internal Revenue Code, then
upon a distribution of property to a partner, that
{ - section - } { + election + } shall also be effective for
Oregon income tax purposes.
(5) Payments made by a partnership in liquidation of the
interest of a retiring partner or a deceased partner shall be
accorded the treatment provided under section 736 of the Internal
Revenue Code.
(6) Any decrease in a partner's share of partnership
liabilities or any decrease in a partner's individual liabilities
by reason of the assumption by the partnership of the partner's
individual liabilities, shall be considered to be a distribution
of money to the partner by the partnership under section 752 of
the Internal Revenue Code.
**************************** SECTION 30. ORS 305.230 is amended
to read:
305.230. Notwithstanding ORS 9.320:
(1) Any person who is duly qualified to practice law or public
accounting in this state or the authorized employee of a taxpayer
who is regularly employed by the taxpayer in tax matters may
represent the taxpayer before the Department of Revenue in any
conference or proceeding with respect to the administration of
any tax.
(2) Any person who is duly licensed by the State Board of Tax
Service Examiners or who is exempt from such licensing
requirement as provided for and limited by ORS 673.610 may
represent a taxpayer before the Department of Revenue in any
conference or proceeding with respect to the administration of
any tax on or measured by net income.
(3) Any { - stockholder - } { + shareholder + } of an S
corporation, as defined in section 1361 of the Internal Revenue
Code, may represent the corporation in any proceeding before the
Department of Revenue in the same manner as if the
{ - stockholder - } { + shareholder + } were a partner and the
S corporation were a partnership.
(4) Any person who is licensed as a real estate broker under
ORS 696.025 or is a state certified appraiser or state licensed
appraiser under ORS 674.310 may represent a taxpayer before the
Department of Revenue in any conference or proceeding with
respect to the administration of any ad valorem property tax.
(5) A general partner who has been designated by members of a
partnership as their tax matters partner under ORS 305.242 may
represent those partners in any conference or proceeding with
respect to the administration of any tax on or measured by net
income.
(6) Notwithstanding any other subsection of this section, where
the representative of a taxpayer is to present an argument on any
issue of constitutional or statutory interpretation raised by the
taxpayer, the department may require that the issue be presented
by an attorney duly qualified to practice law in this state.
(7) No person shall be recognized as representing a taxpayer
pursuant to this section unless there is first filed with the
department a written authorization, or unless it appears to the
satisfaction of the department that the representative does in
fact have authority to represent the taxpayer.
(8) A taxpayer represented by someone other than an attorney is
bound by all things done by the authorized representative, and
may not thereafter claim any proceeding was legally defective
because the taxpayer was not represented by an attorney.
(9) Prior to the holding of a conference or proceeding before
the department, written notice shall be given by the department
to the taxpayer of the provisions of subsections (6) and (8) of
this section.
**************************** SECTION 31. ORS 305.510 is amended
to read:
305.510. Notwithstanding ORS 9.320, any { - stockholder - }
{ + shareholder + } of an S corporation as defined in section
1361 of the Internal Revenue Code, may represent the corporation
in any proceeding before the Oregon Tax Court in the same manner
as if the { - stockholder - } { + shareholder + } were a
partner and the S corporation were a partnership.
**************************** SECTION 32. ORS 305.690 is amended
to read:
305.690. As used in ORS 305.690 to 305.753, unless the context
otherwise requires:
(1) 'Biennial years' means the two income tax years of
individual taxpayers that begin in the two calendar years
immediately following the calendar year in which a list is
certified under ORS 305.715.
(2) 'Commission' means the Oregon Charitable Checkoff
Commission.
(3) 'Department' means the Department of Revenue.
(4) 'Internal Revenue Code' means the federal Internal Revenue
Code as amended and in effect on { - December 31, 1992 - }
{ + April 15, 1995 + }.
**************************** SECTION 33. ORS 310.630 is amended
to read:
310.630. As used in ORS 310.630 to 310.690:
(1) 'Department' means the Department of Revenue.
(2) 'Director' means the Director of the Department of Revenue.
(3) 'Fuel and utility payments' include payments for heat,
lights, water, sewer and garbage made solely to secure those
commodities or services for the homestead of the taxpayer. '
Payments for heat' mean those payments made to secure the
commodities or services to be used as the principal source of
heat for the homestead of the taxpayer and includes payments for
natural gas, oil, firewood, coal, sawdust, electricity, steam or
other materials that are capable of use as a primary source of
heat for the homestead. 'Fuel and utility payments' do not
include telephone service.
(4) 'Gross rent' means contract rent paid plus the fuel and
utility payments made for the homestead in addition to the
contract rent, during the calendar year for which the claim is
filed.
(5) 'Homestead' means the taxable principal dwelling located in
Oregon, either real or personal property, whether owned or rented
by the taxpayer, and the taxable land area of the tax lot upon
which it is built.
(6) 'Household' means the taxpayer, the spouse of the taxpayer
and all other persons residing in the homestead during any part
of the calendar year for which a claim is filed.
(7) 'Household income' means the aggregate income of the
taxpayer and the spouse of the taxpayer who reside in the
household, that was received during the calendar year for which
the claim is filed. 'Household income' includes payments received
by the taxpayer or the spouse of the taxpayer under the federal
Social Security Act for the benefit of a minor child or minor
children who are members of the household.
(8) 'Income' means 'adjusted gross income' as defined in the
federal Internal Revenue Code, as amended on or before
{ - December 31, 1990 - } { + April 15, 1995 + }, even where
the amendments take effect or become operative after that date,
relating to the measurement of taxable income of individuals,
estates and trusts, with the following modifications:
(a) There shall be added to adjusted gross income the following
items of otherwise exempt income:
(A) The gross amount of any otherwise exempt pension less
return of investment, if any.
(B) Child support received by the taxpayer.
(C) Inheritances.
(D) Gifts and grants, the sum of which are in excess of $500
per year.
(E) Amounts received by a taxpayer or spouse of a taxpayer for
support from a parent who is not a member of the taxpayer's
household.
(F) Life insurance proceeds.
(G) Accident and health insurance proceeds, except
reimbursement of incurred medical expenses.
(H) Personal injury damages.
(I) Sick pay which is not included in federal adjusted gross
income.
(J) Strike benefits excluded from federal gross income.
(K) Worker's compensation, except for reimbursement of medical
expense.
(L) Military pay and benefits.
(M) Veteran's benefits.
(N) Payments received under the federal Social Security Act
which are excluded from federal gross income.
(O) Welfare payments, except as follows:
(i) Payments for medical care, drugs and medical supplies, if
the payments are not made directly to the welfare recipient;
(ii) In-home services authorized and approved by the Department
of Human Resources, or by any of its divisions; and
(iii) Direct or indirect reimbursement of expenses paid or
incurred for participation in work or training programs.
(P) Nontaxable dividends.
(Q) Nontaxable interest not included in federal adjusted gross
income.
(R) Rental allowance paid to a minister that is excluded from
federal gross income.
(S) Income from sources without the United States that is
excluded from federal gross income.
(b) Adjusted gross income shall be increased due to the
disallowance of the following deductions:
(A) The amount of the net loss, in excess of $1,000, from all
dispositions of tangible or intangible properties.
(B) The amount of the net loss, in excess of $1,000, from the
operation of a farm or farms.
(C) The amount of the net loss, in excess of $1,000, from all
operations of a trade or business, profession or other activity
entered into for the production or collection of income.
(D) The amount of the net loss, in excess of $1,000, from
tangible or intangible property held for the production of rents,
royalties or other income.
(E) The amount of any net operating loss carryovers or
carrybacks included in federal adjusted gross income.
(F) The amount, in excess of $5,000, of the combined deductions
or other allowances for depreciation, amortization or depletion.
(G) The amount added or subtracted, as required within the
context of this section, for adjustments made under ORS 316.680
(2)(d) and 316.707 to 316.737.
(c) 'Income' does not include any of the following:
(A) Any governmental grant which must be used by the taxpayer
for rehabilitation of the homestead of the taxpayer.
(B) The amount of any payments made pursuant to ORS 310.630 to
310.690.
(C) Any refund of Oregon personal income taxes that were
imposed under ORS chapter 316.
(9) 'Contract rent' means rental paid to the landlord for the
right to occupy a homestead, including the right to use the
personal property located therein. 'Contract rent' does not
include rental paid for the right to occupy a homestead that is
exempt from taxation, unless payments in lieu of taxes of 10
percent or more of the rental exclusive of fuel and utilities are
made on behalf of the homestead. 'Contract rent' does not include
advanced rental payments for another period and rental deposits,
whether or not expressly set out in the rental agreement, or
payments made to a nonprofit home for the elderly described in
ORS 307.375. If a landlord and tenant have not dealt with each
other at arm's length, and the department is satisfied that the
contract rent charged was excessive, it may adjust the contract
rent to a reasonable amount for purposes of ORS 310.630 to
310.690. 'Contract rent' for purposes of payments made to
fraternities, sororities or cooperative housing organizations
shall be as provided in ORS 307.460 (6).
(10) 'Owned' includes being purchased under a recorded
instrument of sale.
(11) 'Rent constituting property taxes' means 17 percent of the
contract rent actually paid in any calendar year by a taxpayer
and the household of the taxpayer for the right to occupy their
homestead in the calendar year, and which rent constitutes the
basis of a claim for property tax refund submitted in the
succeeding calendar year for relief under ORS 310.630 to 310.690
by the taxpayer.
(12) 'Statement of contract rent for which refund is claimed'
means a declaration by the applicant, under penalties of false
swearing, that the amount of contract rent designated is the
actual amount both incurred and paid during the year for which a
refund is claimed.
(13) 'Taxpayer' means an individual whose homestead as of
December 31, if the taxpayer is an owner, or if the taxpayer is a
renter, during all or a portion of the year for which refund is
claimed is the subject, directly or indirectly, of property tax
levied by this state or a political subdivision or of payments
made in lieu of taxes. If the taxpayer is a renter, the taxpayer
must be residing in this state on December 31 of the year for
which refund is claimed.
**************************** SECTION 34. ORS 315.004 is amended
to read:
315.004. (1) Except when the context requires otherwise, the
definitions contained in ORS chapters 314, 316, 317 and 318 are
applicable in the construction, interpretation and application of
the personal and corporate income and excise tax credits
contained in this chapter.
(2)(a) For purposes of the tax credits contained in this
chapter, any term has the same meaning as when used in a
comparable context in the laws of the United States relating to
federal income taxes, unless a different meaning is clearly
required or the term is specifically defined for purposes of
construing, interpreting and applying the credit.
(b) With respect to the tax credits contained in this chapter,
any reference to the laws of the United States or to the Internal
Revenue Code means the laws of the United States relating to
income taxes or the Internal Revenue Code as they are amended on
or before { - December 31, 1992 - } { + April 15, 1995 + },
even where the amendments take effect or become operative after
that date.
(3) Insofar as is practicable in the administration of this
chapter, the Department { + of Revenue + } shall apply and
follow the administrative and judicial interpretations of the
federal income tax law. When a provision of the federal income
tax law is the subject of conflicting opinions by two or more
federal courts, the department shall follow the rule observed by
the United States Commissioner of Internal Revenue until the
conflict is resolved. Nothing contained in this section limits
the right or duty of the department to audit the return of any
taxpayer or to determine any fact relating to the tax liability
of any taxpayer.
(4) When portions of the Internal Revenue Code incorporated by
reference as provided in subsection (2) of this section refer to
rules or regulations prescribed by the Secretary of the Treasury,
then such rules or regulations shall be regarded as rules adopted
by the department under and in accordance with the provisions of
this chapter, whenever they are prescribed or amended.
(5) When portions of the Internal Revenue Code incorporated by
reference as provided in subsection (2) of this section are later
corrected by an Act or a Title within an Act of the United States
Congress designated as an Act or Title making technical
corrections, then notwithstanding the date that the Act or Title
becomes law, those portions of the Internal Revenue Code, as so
corrected, shall be the portions of the Internal Revenue Code
incorporated by reference as provided in subsection (2) of this
section and shall take effect, unless otherwise indicated by the
Act or Title (in which case the provisions shall take effect as
indicated in the Act or Title), as if originally included in the
provisions of the Act being technically corrected. If, on account
of this subsection, any adjustment is required to an Oregon
return that would otherwise be prevented by operation of law or
rule, the adjustment shall be made, notwithstanding any law or
rule to the contrary, in the manner provided under ORS 314.135.
**************************** SECTION 35. ORS 315.356 is amended
to read:
315.356. (1) If a taxpayer obtains a grant or tax credit from
the Federal Government other than an investment { + tax + }
credit
{ - granted under section 46 of the Internal Revenue Code of
1986 as it reads on December 31, 1992, - } or a low income
housing tax credit
{ - granted under section 42 of the Internal Revenue Code as it
reads on December 31, 1992, - } in connection with a facility
which has been certified by the Director of the Department of
Energy, the certified cost of the facility shall be reduced on a
dollar for dollar basis. Any income or excise tax credits which
such taxpayer would be entitled to under ORS 315.354 and 469.185
to 469.225 after any such reduction shall not be reduced by such
federal grants or tax credits. A taxpayer applying for a federal
grant or credit shall notify the Department { + of Revenue + }
by certified mail within 30 days after each application, and
after the receipt of any grant.
(2) If a facility eligible for a credit under ORS 315.354 is
financed in part by any governmental or quasi-governmental body
or municipal corporation, as defined in ORS 297.405, a tax credit
may be claimed only on the portion of the cost that is privately
financed.
(3) A taxpayer is eligible to participate in both this tax
credit program and low interest, government-sponsored loans.
(4) A taxpayer who receives a tax credit or ad valorem tax
relief on a pollution control facility or an alternate energy
device under ORS 307.405, 315.304 or 316.116 is not eligible for
a tax credit on the same facility or device under ORS 315.354 and
469.185 to 469.225.
(5) No credit shall be allowed under ORS 315.354 if the
taxpayer has received a tax credit on the same facility or device
under ORS 315.324.
**************************** SECTION 36. { + Section 37 of
this Act is added to and made a part of ORS chapter 314. + }
**************************** SECTION 37. { + (1) If a tax is
imposed upon an organization under section 6033(e) of the
Internal Revenue Code (proxy tax on lobbying expenditures) for
any tax year, a like tax is imposed for the tax year upon the
same amount as taxed for federal tax purposes, as allocated or
apportioned to Oregon. The rate of the tax shall be the rate
specified in ORS 317.061. The tax shall be assessed and collected
under the applicable provisions of this chapter and ORS chapter
305.
(2) Any organization that is required to include on a federal
return the information described in section 6033(e)(1) of the
Internal Revenue Code shall file a copy of the federal return
containing the information with the Department of Revenue.
(3) The department may determine by rule the method by which
the tax described in subsection (1) of this section is allocated
and apportioned to Oregon.
(4) If section 6033(e) of the Internal Revenue Code (relating
to the proxy tax on lobbying expenditures), as amended and in
effect on April 15, 1995, is repealed or otherwise eliminated by
Act of the United States, this section is repealed as of the
applicable date of the repeal or elimination of the proxy tax
under section 6033(e) of the Internal Revenue Code. + }
**************************** SECTION 38. { + Section 37 of
this Act (relating to the proxy tax on lobbying expenditures)
applies to tax years beginning on or after January 1, 1995. + }
**************************** SECTION 39. { + (1) Except as
provided in subsection (2) of this section and sections 7, 7a,
28, 38, 40 and 42 of this Act, the new material enacted and
amendments and repeals made by this Act apply to transactions or
activities occurring on or after January 1, 1995, in tax years
beginning on or after January 1, 1995.
(2) The effective and applicable dates, and the exceptions,
special rules and coordination with the Internal Revenue Code, as
amended, relative to those dates, contained in the Revenue
Reconciliation Act of 1993 (P.L. 103-66), the Uruguay Round
Agreements Act (P.L. 103-465) or P.L. 104-7 shall apply for
Oregon personal income and corporate excise and income tax
purposes, to the extent they can be made applicable, in the same
manner as they are applied under the federal Internal Revenue
Code and related federal law.
(3)(a) If a deficiency is assessed against any taxpayer for a
tax year beginning before January 1, 1995, and the deficiency, or
any portion thereof, is attributable to any retroactive treatment
under this Act, then any interest or penalty assessed under ORS
chapter 305, 314, 315, 316, 317 or 318 with respect to the
deficiency or portion thereof shall be canceled.
(b) If a refund is due any taxpayer for a tax year beginning
before January 1, 1995, and the refund or any portion thereof is
due the taxpayer on account of any retroactive treatment under
this Act, then notwithstanding ORS 314.415 or other law, the
refund or portion thereof shall be paid without interest.
(c) Any changes required on account of this Act for a tax year
beginning before January 1, 1995, shall be made by filing an
amended return within the time prescribed by law.
(d) If a taxpayer fails to file an amended return under
paragraph (c) of this subsection, the Department of Revenue shall
make any changes under paragraph (c) of this subsection on the
return to which the change or changes relate within the period
specified for issuing a notice of deficiency or claiming a refund
as otherwise provided by law with respect to that return, or
within one year after a 1995 return is filed, whichever period
expires later. + }
**************************** SECTION 40. { + Section 17 of
this Act (relating to carryovers of excess contributions for
corporations) applies to taxable years beginning on or after
January 1, 1991. + }
**************************** SECTION 41. { + Section 42 of
this Act is added to and made a part of ORS chapter 314. + }
**************************** SECTION 42. { + (1) If, for
taxable years beginning on or after January 1, 1993, and before
January 1, 1995, a taxpayer made the election described in
section 179(c) of the Internal Revenue Code, as amended by the
Revenue Reconciliation Act of 1993 (P.L. 103-66), on the
taxpayer's federal income tax return, the taxpayer may amend the
taxpayer's corresponding Oregon return. The amendment shall
conform the return to the taxpayer's federal income tax return
with respect to amounts subject to the section 179(c) election.
Notwithstanding the provisions in section 179(c) and the
regulations thereunder that set forth the time for making the
election, the taxpayer's amended return must be filed on or
before April 15, 1998.
(2) Notwithstanding ORS 314.415 or other law, if a taxpayer has
made one or both elections under Treas. Reg. �1.197-1T for
federal income tax purposes, the election or elections shall
apply for Oregon tax purposes. The taxpayer shall amend the
taxpayer's Oregon return to conform the return with the
corresponding federal return affected by the election or
elections. The amendment must be made on or before April 15,
1998.
(3) This section is repealed June 30, 2008. + }
**************************** SECTION 43. { + ORS 316.723 is
repealed. + }
**************************** SECTION 44. ORS 456.605 is amended
to read:
456.605. (1) The { + Housing and Community Services + }
Department may establish and implement mortgage credit
certificate programs to make available income tax credits for
indebtedness incurred on acquisition, improvement or
rehabilitation of a principal residence. Under this program, the
department may issue tax credit certificates to persons and
families with incomes equal to or lower than the median family
income as calculated under ORS 456.620 (4).
(2) If the department elects to issue federal income tax credit
certificates, the director shall certify that each mortgage
credit certificate program meets the requirements of Section
{ - 103A - } { + 25 + } of the Internal Revenue Code as
amended { - by the 98th Congress of the United States - } { +
and in effect on April 15, 1995 + }. The department shall make
the determination of the amount of qualified mortgage bonds that
will not be issued so as to allow the issuance of mortgage credit
certificates.
(3) If the director of the department determines that the
mortgage credit certificate program is not effective with the
median family income limitation established in subsection (1) of
this section, the director may issue tax credit certificates to
persons and families with incomes up to a percent of median
family income determined appropriate by the Emergency Board, if
the person or families otherwise qualify for the program.
**************************** SECTION 45. { + The amendments to
ORS 456.605 by section 44 of this Act apply to mortgage credit
certificate programs certified by the director of the Housing and
Community Services Department on or after January 1, 1988. + }
**************************** SECTION 46. { + Notwithstanding
ORS 314.011, 316.012, 317.010 and 317.018, any reference in ORS
chapters 305, 314, 316, 317 and 318 to the laws of the United
States or to the Internal Revenue Code includes section 162(e) of
the Internal Revenue Code (relating to certain lobbying and
political expenditures) as it may be in effect for the taxable
year of the taxpayer. + }
**************************** SECTION 47. { + Section 48 of
this Act is added to and made a part of ORS chapter 316. + }
**************************** SECTION 48. { + (1) In the case
of property described under ORS 316.707 (1), notwithstanding ORS
316.707 there shall be added to or subtracted from federal
taxable income, whichever is applicable, an amount equal to the
difference in the adjusted basis of the property for federal tax
purposes and the adjusted basis of the property for state tax
purposes that is attributable to ORS 316.707 (1).
(2) The adjustment described under subsection (1) of this
section shall be made on the return for the taxpayer's first tax
year beginning after December 31, 1995. For each tax year
thereafter there shall be no modification to federal taxable
income for the depreciation of the property under either ORS
316.707 or this section. + }
**************************** SECTION 49. { + Section 50 of
this Act is added to and made a part of ORS 317.310 to
317.386. + }
**************************** SECTION 50. { + (1) In the case
of property described under ORS 317.368, notwithstanding ORS
317.368 there shall be added to or subtracted from federal
taxable income, whichever is applicable, an amount equal to the
difference in the adjusted basis of the property for federal tax
purposes and the adjusted basis of the property for state tax
purposes that is attributable to ORS 317.368.
(2) The adjustment described under subsection (1) of this
section shall be made on the return for the taxpayer's first tax
year beginning after December 31, 1995. For each tax year
thereafter there shall be no modification to federal taxable
income for the depreciation of the property under either ORS
317.368 or this section.
(3) This section is applicable to domestic insurers. + }
**************************** SECTION 51. { + ORS 316.707 and
317.368 are repealed on December 31, 2003. + }
**************************** SECTION 52. ORS 317.650 is amended
to read:
317.650. ORS 317.356 { - and 317.368 - } , relating to
depreciation and basis, shall be applicable to every domestic
insurer.
**************************** SECTION 53. { + Sections 54 to 56
of this Act are added to and made a part of ORS chapter 657. + }
**************************** SECTION 54. { + An individual
filing a new claim for benefits under this chapter shall, at the
time the claim is filed with the Employment Department, be
advised that:
(1) Benefits are subject to federal and state income tax;
(2) Federal and state law may require that a recipient of
benefits make quarterly estimated tax payments during the tax
year in which the benefits are received;
(3) Federal and state law may impose penalties on a recipient
of benefits for the failure to timely make estimated tax
payments; and
(4) A recipient of benefits may elect under section 55 of this
1995 Act to have amounts withheld from the recipient's payment of
benefits for federal income tax purposes at the amount specified
in the federal Internal Revenue Code for the voluntary
withholding of unemployment benefits. + }
**************************** SECTION 55. { + (1) A claimant
may elect to have an amount withheld from benefits otherwise
payable to the claimant.
(2) An election made under this section shall be on such form
and in such manner as prescribed by the Employment Department.
(3) A claimant making an election under this section may
terminate the election at any time.
(4) The amount to be withheld by the Employment Department from
a payment of benefits to a claimant making the election under
this section shall be determined under the rules of the federal
Internal Revenue Code relating to the voluntary withholding of
amounts from unemployment benefits.
(5) Amounts withheld by the Employment Department pursuant to
an election made under this section shall remain in the
Unemployment Compensation Trust Fund established under ORS
657.805 and shall be transferred by the Employment Department to
the federal Internal Revenue Service in the time and manner
provided by federal law. + }
**************************** SECTION 56. { + For purposes of
sections 54 and 55 of this 1995 Act, the Employment Department
shall follow the procedures and regulations adopted by the United
States Department of Labor and the federal Internal Revenue
Service that relate to the collection and payment of withholding
amounts on benefits paid to individuals under this chapter. + }
**************************** SECTION 57. { + Sections 54 to 56
of this Act apply to benefits paid under ORS chapter 657 on or
after January 1, 1997. + }
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