Beginning January 1, 2008 Oregon disconnects from the federal income exclusion allowed under IRC 139A for federal subsidies for prescription drug plans. For Oregon purposes, this federally excluded income is an addition on the Oregon return.
There is a retroactive connection to federal changes made since December 31, 2002, to the definition of federal taxable income, with two exceptions:
No connection to the qualified production activities income (QPAI) deduction. An addition to the Oregon return is required, effective January 1, 2005; and
No connection to certain subsidies excluded under IRC 139A for prescription drug plans. An addition to the Oregon return is required, effective January 1, 2008.
Effective January 1, 2005, an automatic connection to future changes to the federal definition of taxable income applies in Oregon, unless a specific Oregon law provides for different treatment.
Oregon's computation of taxable income for C corporations begins with federal taxable income, with modifications required under Oregon tax law.