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2013 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 January 3, 2013, including the American Taxpayer Relief Act of 2012 signed into law on January 2, 2013.

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.
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2013 Oregon tax rate

For tax years beginning January 1, 2013 and later, corporations calculate Oregon tax as follows:
  • If Oregon taxable income is $1 million or less, multiply Oregon taxable income by 6.6 percent. Enter -0- if the result is negative or zero.
  • If Oregon taxable income is more than $1 million, multiply the amount that is more than $1 million by 7.6 percent, and add $66,000.
  • Excise tax filers pay the greater of calculated tax above or Oregon minimum tax.
S corporations with federal taxable income, built-in gains, or excess net passive income calculate tax as shown above. Most S corporations don’t have Oregon calculated tax. S corporation excise tax filers pay the greater of calculated tax or $150 minimum tax.

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Minimum tax offset by credits

Per the Oregon Supreme Court decision issued May 31, 2013, Con-Way, Inc. & Affiliates v. Department of Revenue, all C corporation tax credits, except for the “Contributions of computers or scientific equipment for research” credit, are applied against the minimum tax of C corporations.
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Cancellation of debt (COD) income under IRC §108(i)

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)
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Charitable donations not allowed for Oregon

Effective October 7, 2013, a charitable organization may receive a disqualifying order from the Attorney General. Donations to the charitable organization receiving a disqualifying order aren’t deductible as charitable donations for Oregon tax purposes. An addition must be made on the Oregon return for donations to the charitable organization receiving a disqualifying order.

The charitable organization named in the order is required to provide a disclosure to a donor acknowledging that contributions to the organization aren’t deductible as charitable donations for Oregon tax purposes. The Attorney General will publish on the Internet and otherwise make publicly available information identifying the charitable organizations receiving a disqualification order. For more information, visit Oregon Department of Justice, Charitable Activities Section.
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Interest charge domestic international sales corporations (IC-DISCs)

If your corporation is an IC-DISCs, you’ll need to file Form 20. Across the top of your return, write “IC-DISC” in black or blue ink. For tax years beginning on or after January 1, 2013:
  • An IC-DISC formed on or before January 1, 2014 is exempt from minimum tax.
  • An IC-DISC formed after January 1, 2014, isn’t exempt from minimum tax.
  • Commissions received by an IC-DISC are taxed at 2.5 percent.
Additionally, a deduction is allowed for commission payments made to an IC-DISC that was formed on or before January 1, 2014.
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Intangible expense add-back and credit (Repeal of ORS 314.296)

For tax years beginning January 1, 2013 and later, the addition for intangible expenses paid to a related member not included in the same tax return and the credit for tax paid on the income by the related member previously required by ORS 314.296, don’t apply.

Retroactive to tax years beginning January 1, 2010 to December 31, 2012, the addition to federal taxable income and the credit provisions of ORS 314.296 don’t apply if the transaction giving rise to the intangible expense was undertaken by the taxpayer for a valid business purpose and the related member is a foreign corporation described in §1563(b)(2)(C) of the Internal Revenue Code.
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Alternative fuel vehicle fund (auction) credit and addition

If you received a tax credit through the Oregon Alternative Fuel Vehicle Revolving Fund tax credit auction conducted by us, in cooperation with the Department of Energy, you may be able to claim a tax credit for tax years beginning on or after January 1, 2013 and before January 1, 2015. Claim the credit on Schedule ASC-CORP as an “other credit.” The credit amount is shown on the certificate issued by the Department of Energy. You may carry forward unused credits for up to three years. If you claim any of the amount you paid for this credit as a deduction on your federal return, you must add back that amount to your Oregon income as an “other addition.”​
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Farmworker Housing Project changes

The Farmworker Housing Project has a new name: Agricultural Workforce Housing. In addition,  farmworkers are now Agricultural Workers and farmworker housing is Agricultural Workforce Housing. (ORS 315.164, ORS 315.167, ORS 315.169, ORS 315.172 and ORS 317.147)
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Looking ahead

Repeal of ORS 317.057 (Exemption for certain out-of-state financial institutions)
For tax years starting January 1, 2014 and later, exemption from corporation tax for certain out-of-state financial institutions is no longer available. (ORS 317.057)

Tax haven countries
For purposes of determining Oregon taxable income, the taxable income or loss of any corporation that is a member of a unitary group and that is incorporated in a tax haven country shall be added to federal consolidated taxable income. This will be an Oregon modification (addition or subtraction). This provision applies to tax years beginning on or after January 1, 2014. See ORS 317.715 (HB 2460) for a list of countries subject to the modification.

Biomass production or collection credit
Beginning on January 1, 2014, the biomass production or collection credit isn’t allowed for canola grown, collected or produced in the Willamette Valley. (ORS 315.141)

Oregon surplus rebate credit
Tax biennia beginning on or after July 1, 2013, Oregon surplus revenues will no longer be credited to corporate taxpayers when actual revenues exceed the revenue forecast for the biennium by more than 2 percent. Any future excess corporate revenues will be appropriated to the State School Fund. (ORS 291.349)

Qualified equity investment tax credit
You can carry forward unused credits for up to five years on investments made on or after January 1, 2014 and before July 1, 2016. For more information on qualifying investments and entities, visit oregon4biz.com. (ORS 315.533)

University venture development fund contribution credit
For tax years beginning on or after January 1, 2014, the university venture development fund contribution credit shall be claimed in three consecutive tax years beginning with the year in which the credit is initially allowed. (ORS 315.521)

Tax credit sunsets
Beginning January 1, 2014, the following tax credits aren’t available, except for applicable carryforward purposes:
  • Agricultural Workforce Housing Lender’s Credit, ORS 317.147
  • Contributions of Computers and Scientific Equipment Credit, ORS 317.151
  • Renewable Energy Development Fund Contributions, ORS 315.341
  • Workers’ Compensation Credit, ORS 317.122 (for 20-INS only)

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.
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