To calculate the amount of tax due, the pass-through entity (PTE) must first determine the sum of each member's share of distributive proceeds attributable to the pass-through entity for the taxable year. The tax is then imposed in accordance with the following: The first $250,000 is 9%, and then any amount over $250,000 is 9.9%.
Example 1: PTE A has two Oregon resident member/owners with net income of $100,000, interest of $15,000, and gains of $50,000 all sourced to Oregon. The distributive proceeds total $165,000 and are allocated to member/owner A $82,500 and member/owner B $82,500.
Using the table above the total tax is calculated as follows:
$165,000 x 9% = $14,850. This is allocated to member/owner A $7,425 and member/owner B $7,425.
Example 2: PTE B has two member/owners each owning 50% of the company with net income of $1,200,000, rents of $40,000 and guaranteed payments $80,000. The net income is 80% sourced to Oregon. The rents are not sourced to Oregon and the guaranteed payments are all sourced to Oregon. Member/owner A is an Oregon resident and member/owner B is a nonresident. Member/owner A & B distributive proceeds is
$600,000 net income, $20,000 of rents and $40,000 of guaranteed payments each.
What is A's taxable income? $660,000 all income is taxable to an Oregon resident
What is B's taxable income? $520,000, ($600,000 x 80% = $480,000 + $40,000) only Oregon source income is taxable for a nonresident
Using the table above the total tax is calculated as follows:
Owner/Member A ‐ $250,000 x 9% = $22,500 plus $660,000 ‐ $250,000 = $410,000 x 9.9% = $40,590 + $22,500 =
$63,090 total tax due.
Owner/Member B ‐ $250,000 x 9% = $22,500 plus $520,000 ‐ $250,000 = $270,000 x 9.9% = $26,730 + $22,500 =
$49,230 total tax due.