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2012 Corporate Tax Law Changes
Tie to federal tax law
In general, Oregon income tax law is based on federal income tax law. Oregon is tied to the federal definition of taxable income as of December 31, 2011, however Oregon is still disconnected from:
  • Federal subsidies for prescription drug plans (IRC §139A; ORS 317.401).
  • Domestic production activities (QPAI) (IRC §199; ORS 317.398).
Important: The disconnect from federal law for tax years 2009 and 2010 may have affected reporting differences between federal and Oregon expenses for subsequent years. If you had assets placed in service for a year beginning on or after January 1, 2009, and before January 1, 2011, and bonus depreciation on your federal return created an addition on your Oregon return, you will likely have modifications to Oregon income in later years.
Oregon tax rate
For tax years beginning January 1, 2011 and before January 1, 2013, corporations calculate Oregon tax as follows:
  • If Oregon taxable income is $250,000 or less, multiply Oregon taxable income by 6.6 percent (not below zero).
  • If Oregon taxable income is more than $250,000, multiply the amount that is more than $250,000 by 7.6 percent, and add $16,500.
  • Excise tax filers pay the greater of calculated tax above or Oregon minimum tax.

Agricultural and horticultural cooperatives
Retroactive to tax years beginning on or after January 1, 2005, the amount deducted for federal income tax purposes by agricultural and horticultural cooperatives under IRC §199 and passed through to cooperative patrons under IRC §199(d)(3)(A) is not subject to the add-back provisions of ORS 317.398.
Biomass production or collection credit
For tax years beginning on or after January 1, 2012, woody biomass is measured by its dry weight. For tax years beginning before January 1, 2012, woody biomass is measured by its wet (green) weight.
Film production development contribution credit
For tax years beginning on or after January 1, 2012, the maximum credit amount that the Oregon Film and Video Office can certify during a fiscal year is reduced from $7.5 million to $6 million.

Qualified equity investment tax credit
For investments made on or after July 1, 2012, and before July 1, 2016, a tax credit is allowed for qualified equity investments in low-income community businesses. The credit is certified by the Oregon Business Development Department.

For more information on qualifying investments and entities, visit Business Development Department (dba Business Oregon) or see Oregon Revised Statute (ORS) 315.533.

The credit is equal to 39 percent of the purchase price of the qualified equity investment. It must be taken over seven years, beginning with the year of investment. The credit cannot be more than your tax liability. You can carry forward any unused credits to any succeeding tax year. This credit cannot be transferred or sold.

The allowable tax credit for each of the seven years is:
  • -0- percent in the first and second years.
  • 7 percent of the purchase price in the third year.
  • 8 percent of the purchase price in each of the fourth through the seventh years.

Note: No credit may be claimed until tax year 2014 for qualified investments made in tax year 2012.
Qualified research activities credit
For tax years beginning on or after January 1, 2012, the maximum credit amount that can be claimed under ORS 317.152 or ORS 317.154 is reduced from $2 million to $1 million.

 
Wolf depredation credit
For tax years beginning on or after January 1, 2012, and before January 1, 2019, a tax credit is allowed for the current market value of any livestock that is killed by a wolf. You must obtain evidence that includes documentation by Department of Fish and Wildlife (ODFW) or by a peace officer that a wolf was the probable cause of the loss. Retain the documented findings with your records for audit verification. For corporation tax purposes the credit has a three year carryforward.

 
Tax credit sunsets
Beginning January 1, 2012, these tax credits are not available except for prior year carryovers:
  • Alternative Fuel Vehicle Fueling Stations Credit, ORS 317.115.
  • Crop Donation, ORS 315.156.
  • Diesel Engine Repower or Retrofit Credit, note following ORS 315.356.
  • Lender’s Credit: Energy Conservation, ORS 317.112.
  • Reforestation Credit, ORS 315.104.
  • Voluntary Removal of Riparian Land from Farm Production Credit, ORS 315.113.
  • Water Transit Vessel Manufacturing Credit, ORS 315.517.
 

Looking ahead

Oregon tax rate change beginning 2013

For tax years beginning January 1, 2013 and later, corporations calculate Oregon tax as follows:
  • If Oregon taxable income is $10 million or less, multiply Oregon taxable income by 6.6% (not below zero).
  • If Oregon taxable income is more than $10 million, multiply the amount that is more than $10 million by 7.6 percent, and add $660,000. 
  • Excise tax filers pay the greater of caculated tax above or Oregon minimum tax.

IRC §108(i) Income from cancellation of debt (COD)

Taxpayers with income that arose from cancellation of debt for the reacquisition of a debt instrument after December 31, 2008, and before January 1, 2011, for less than its adjusted issue price, were allowed to elect deferral of income recognition for federal purposes, but not for Oregon. The exclusion from federal income created an addition on the Oregon return. As this income is subsequently recognized on your federal return beginning as early as 2013, you may subtract for Oregon the amount that was previously included in Oregon income. ORS 317.301.

General questions? 

E-mail us at: corp.help.dor@state.or.us. We will answer most email inquiries within two business days.


Questions about minimum tax?

For specific questions relating to corporation minimum excise tax, please e-mail us at: minimumtax.help@state.or.us. We'll answer most inquiries within two business days.