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2011 Corporate Tax Law Changes

Tax changes

Oregon's corporate tax has changed for tax years beginning on or after January 1, 2011. Oregon corporate tax is the greater of either the computed tax or the minimum tax. (ORS 317.061, 317.090)

Computed tax

For tax years beginning on or after January 1, 2011, and before January 1, 2013:
  • For Oregon taxable income of $250,000 or less, multiply taxable income by 6.6 percent.
  • For Oregon taxable income greater than $250,000, multiply taxable income of more than $250,000 by 7.6 percent and add $16,500.

Minimum tax

Forms 20 and 20-S, Oregon corporation minimum tax is not subject to the state tax add back provision of ORS 317.314.

S corporations carrying on or doing business in Oregon are subject to $150 minimum tax. ORS 317.090
C corporations carrying on or doing business in Oregon are subject to minimum tax based on Oregon sales shown here:
  • Less than $500,000, minimum tax is $150. 
  • $500,000 or more, but less than $1 million, minimum tax is $500.
  • $1 million or more, but less than $2 million, minimum tax is $1,000.
  • $2 million or more, but less than $3 million, minimum tax is $1,500.
  • $3 million or more, but less than $5 million, minimum tax is $2,000.
  • $5 million or more, but less than $7 million, minimum tax is $4,000.
  • $7 million or more, but less than $10 million, minimum tax is $7,500.
  • $10 million or more, but less than $25 million, minimum tax is $15,000.
  • $25 million or more, but less than $50 million, minimum tax is $30,000.
  • $50 million or more, but less than $75 million, minimum tax is $50,000.
  • $75 million or more, but less than $100 million, minimum tax is $75,000.
  • $100 million or more, minimum tax is $100,000.

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Oregon sales

Nonapportioned returns. C corporations doing business only within Oregon will calculate Oregon sales by adding:
  • Gross receipts from sales of inventory (less returns and allowances), equipment, and other assets;
  • Gross rent and lease payments received;
  • Gross receipts from the performance of services;
  • Gross receipts from the sale, exchange, redemption, or holding of intangible assets derived from the tax-payer's primary business activity and included in the taxpayer's business income;
  • Net gain from the sale, exchange, or redemption of intangible assets not property if it's not derived from the taxpayer's primary business activity but included in the taxpayer's business income; and
  • Other income.
Generally, for purposes of determining minimum tax, the calculation for Oregon sales includes business income amounts from federal Form 1120, lines 1e, and 5 through 10. Include positive numbers only.

Apportioned returns. C corporations and insurance companies doing business in more than one state that apportion business income for Oregon tax purposes, use the "Oregon total sales" amount from Schedule AP.

Note:
  • Consolidated returns: the minimum tax is based on Oregon sales of the affiliated group of corporations filing an Oregon return.
  • Consolidated filers: one minimum tax applies to the affiliated group filing the consolidated return, not to each individual affiliate included in the consolidated return doing business in Oregon.
  • The minimum tax is not apportionable for a short tax year (except a change of accounting period).
  • The minimum tax is payable in full for any part of the year during which a taxpayer is subject to tax.

Agricultural cooperative minimum tax

For purposes of the corporate minimum tax, the Oregon sales of agricultural cooperatives doesn't include sales representing business done with or for members of the agricultural cooperative. If you’re an agricultural cooperative, write “Ag Co-op”, in black or blue ink only, across the top of your 2011 Oregon Form 20. Provide a schedule showing the calculation of Oregon gross sales not done with or for members of the co-op.


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Ties to federal tax law

In general, Oregon income tax law is based on federal income tax law.

With some exceptions, the 2011 Oregon Legislature reinstated a full rolling reconnect to federal taxable income, including:
  • Discharge of indebtedness [IRC section 108(i)].
  • Bonus depreciation [IRC section 168(k)].
  • Expensing provisions (IRC section 179). For tax years beginning on or after January 1, 2011, Oregon will have the same expensing limitations as federal.
For tax years beginning on or after January 1, 2011, Oregon is still disconnected from:
  • Federal subsidies for prescription drug plans (IRC section 139A; ORS 317.401).
  • Domestic production activities (QPAI) (IRC section 199; ORS 317.398).

Important: The disconnect from federal law for tax years 2009 and 2010 may have disallowed additional expenses on your Oregon return. If so, this will create modifications to compute Oregon taxable income in later years.

Any assets placed in service for a year beginning on or after January 1, 2009, and before January 1, 2011, that created an addition on your Oregon return will require a modification to income. Also, if you deferred reporting for federal purposes [IRC section 108(i)] and reported the income for Oregon purposes in the year of cancellation, then you may have an Oregon subtraction in the year you report the federal income.

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Business energy tax credit (BETC) changes

The BETC has a new name. It's now called energy manufacturing facility credit. The Oregon Business Development Department (dba Business Oregon) administers and certifies the credit. Claim the credit on line 24 of your Form 20, or as "other credits" on other corporate forms.

To claim the existing BETC for renewable and conservation projects, the Oregon Department of Energy must receive a preliminary certification before July 1, 2011. The existing BETC is referred to as the business energy credit and is claimed on line 23 of your Form 20, or as "other credits" on other corporate forms.

After July 1, 2011, the BETC is replaced with three energy credits:
  • The Renewable energy contribution credit, claimed on line 20 of your Form 20, or as "other credits" on other corporate forms;
  • The Energy conservation project credit, claimed on line 21 of your Form 20, or as "other credits" on other corporate forms; and
  • The Energy transportation project credit, claimed on line 22 of your Form 20, or as "other credits" on other corporate forms.

The Oregon Department of Energy certifies these new energy credits.

For tax years beginning on or after January 1, 2009, grants received from the federal government in connection with a facility certified by the Oregon Department of Energy will reduce the total costs-not the certified costs-of the facility on a dollar-for-dollar basis. 
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Farmworker housing project tax credit

(Does not apply to insurance companies)

The definition of farmworker now includes aquacultural crops. The definition of contributor now includes a person who has purchased or received the credit via a transfer. The definition of farmworker housing now includes housing limited to occupancy by farmworkers who are retired or disabled, and their immediate families.

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Diesel engine replacement tax credit

(Does not apply to insurance companies)

The sunset for the diesel engine tax credit was moved forward from January 1, 2014 to July 1, 2011. The Oregon Department of Environmental Quality cannot certify the credit after June 30, 2011.

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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%. Enter -0- if the result is negative or 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.

Qualified equity investment tax credit

For qualified 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 (dba Business Oregon) and shall equal 39 percent of the cost of a qualified equity investment.

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.
 
Film production development contribution credit
(Does not apply to insurance companies)
 
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.

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.

Tax credit sunsets

Beginning January 1, 2012, these tax credits are not available except for prior year carryovers:
  • Water Transit Vessel Manufacturing Credit, ORS 315.517.
  • Crop Donation, ORS 315.156.
  • Voluntary Removal of Riparian Lands Removed From Farm Production Credit, ORS 315.113.
  • Diesel Engine Repower or Retrofit Credit, note following ORS 315.356.
  • Alternative Fuel Vehicle Stations Credit, ORS 317.115.
  • Lender's Credit: Energy Conservation, ORS 317.112.
  • Reforestation Credit, ORS 315.104.
  • Workers' Compensation Assessments Credit (insurers), subsection (2) ORS 317.122.

Questions—General

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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