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The Oregon Administrative Rules contain OARs filed through November 15, 2014
 
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DEPARTMENT OF REVENUE

 

DIVISION 315

PERSONAL INCOME TAX CREDITS

150-315.068

Claim of Right Credit

(1) Credit qualifications. If you repaid income that was taxed in a prior year, you may be eligible for a credit on your Oregon return. This rule applies to repayments made on or after January 1, 2013 that are claimed on returns filed after the effective date of this rule. To claim the credit, you must:

(a) Claim a federal credit or deduction under Internal Revenue Code (IRC) section 1341; and

(b) Have paid Oregon tax in a prior year on the income that you repaid.

(2) Credit calculation. Your Oregon claim of right credit is the difference between the Oregon tax you paid in the prior year and the Oregon tax you would have paid without including the repaid income. Calculate your credit as follows:

(a) Refigure the Oregon tax before credits in the year the income was originally taxed by determining the tax for the year in which the income was originally taxed without the repaid income. Do not change the federal tax subtraction or any other items on the Oregon return.

(b) Subtract the refigured tax before credits from the Oregon tax before credits as filed (or amended or adjusted, if applicable). This is your claim of right credit.

Example 1: In 2012, Jerry was required to repay $10,000 of the unemployment compensation he had received in 2011. He claimed the claim of right credit on his federal return, so he can also claim the credit for Oregon. For 2011, Jerry had federal adjusted gross income (AGI) of $50,000 and Oregon tax before credits of $3,568. Jerry refigures his 2011 Oregon tax before credits without the repaid income. He reduces his federal AGI compared to what was included in his original 2011 federal return by the amount repaid, $10,000. All other Oregon items stay the same (including the federal tax subtraction). The recalculated Oregon tax before credits is $2,668. The difference between the refigured and original tax before credits is $900 ($3,568 minus $2,668). Jerry’s claim of right credit is $900.

(3) Federal deduction. If you claim a deduction under IRC §1341 on your federal return, you can allow the deduction to flow through or you can claim a credit on your Oregon return. Determine by comparing the following amounts:

(a) Calculate Oregon tax before credits for the year of repayment with the deduction.

(b) Add back the federal deduction and figure your Oregon tax before credits. Then subtract the Oregon claim of right credit.

(c) If the tax in (a) is less, allow the deduction for Oregon also. If the tax in (b) is less, add back any deduction as required under ORS 316.680(2)(i) and claim the Oregon credit.

Example 2: In 2012, Shannon had to repay wages of $3,800 from tax year 2010. She qualifies to claim itemized deductions and chooses to claim the deduction on her federal return. Oregon allows this deduction to flow through or allows her to claim the credit instead. Her itemized deductions are mostly Oregon taxes, so her Oregon itemized deductions are less than the standard deduction. Therefore, she will not claim itemized deductions for Oregon and will claim the credit instead.

In 2010, she had federal AGI of $45,000 and her 2010 tax was $2,988. If Shannon had not received the $3,800 she had to repay, her 2010 tax would have been $2,679. Her 2012 credit is the difference of $342, which she will claim on her 2012 Oregon return as a claim of right credit. There’s no addition required because she claimed the standard deduction for Oregon, so the federal deduction did not flow through.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.104
Hist.: REV 9-1999, f. 12-30-99, cert. ef. 12-31-99; REV 5-2000, f. & cert. ef. 8-3-00; REV 8-2001, f. & cert. ef. 12-31-01; REV 10-2006, f. 12-27-06, cert. ef. 1-1-07; REV 4-2013(Temp), f. & cert. ef. 6-5-13 thru 12-2-13; Administrative correction, 12-19-13; REV 10-2013, f. 12-26-13, cert. ef. 1-1-14

150-315.104(1)

Qualified Reforestation Costs

(1) For credits first claimed in tax years beginning on or after January 1, 2001, a credit is allowed in an amount equal to 50 percent of reforestation project costs paid or incurred to reforest underproductive Oregon forest lands. Qualified reforestation project costs are determined in accordance with Oregon State Department of Forestry rules, chapter 629, division 023 (e.g., Oregon Administrative Rules 629-023-410 to 629-023-460) and by ORS 315.104. Qualified project costs do not include amounts paid through federal or state cost share, financial assistance or other incentive programs.

(2) Subject to the credit carryover provisions of ORS 305.104(5), one-half of the credit must be taken in the tax year for which the Department of Forestry issues a preliminary certificate certifying that certain conditions exist as stated in ORS 315.104(1). The balance of the credit must be taken in the tax year for which the forest is certified as being established.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.104
Hist.: TC 8-1980, f. 11-28-80, cert. ef. 12-31-80; RD 12-1985, f. 12-16-85, cert. ef. 12-31-85; RD 15-1987, f. 12-10-87, cert. ef. 12-31-87; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.094(1); REV 8-2001, f. & cert. ef. 12-31-01; REV 4-2009, f. & cert. ef. 7-31-09

150-315.104(2)

Procedure for Claiming the Reforestation Credit

(1) The Oregon Department of Revenue will accept the preliminary certificate issued by the Department of Forestry as evidence of completion of the project. In addition to the preliminary certificate, the taxpayer shall obtain a statement from the landowner or person in possession of the land:

(a) That the land within the project area will be used primarily for the growing and harvesting of trees of an acceptable species as provided in ORS 315.104; and

(b) That the taxpayer is aware that maintenance practices, including release, may be needed to insure that a new forest is established and will remain established.

(2) Upon request of the department, the taxpayer will provide copies of the certificate(s) issued by the Department of Forestry for any year in which the credit is claimed.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.104
Hist.: TC 8-1980, f. 11-28-80, cert. ef. 12-31-80, Renumbered from 150-316.094(2)(a); RD 12-1985, f. 12-16-85, cert. ef. 12-31-85; RD 15-1987, f. 12-10-87, cert. ef. 12-31-87; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.094(2); RD 5-1994, f. 12-15-94, cert. ef. 12-31-94; REV 8-2001, f. & cert. ef. 12-31-01, Renumbered from 150-315.104(2)-(A)

150-315.104(5)

Change of Ownership

If there is a change of ownership between when the project is completed and when the forest is established, only the initial owner (investor) will qualify for the total credit. If the forest is not established, the initial owner must repay the initial credit. The new owner does not qualify for any credit for the project the initial owner started.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.104
Hist.: TC 8-1980, f. 11-28-80, cert. ef. 12-31-80; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.094(6)

150-315.104(10)

Reforestation Credit: Reasons Beyond the Taxpayer's Control

For purposes of reforestation credit, the Department of Revenue adopts the definition of "reasons beyond the taxpayer's control" defined in Department of Forestry rule OAR 629-23-420 filed 8-1-08 and certified effective 9-1-08.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.104
Hist.: RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.094(10); REV 4-2009, f. & cert. ef. 7-31-09

150-315.113

Voluntary Removal of Riparian Land from Farm Production

(1) Definitions. For purposes of ORS 315.113 and this rule:

(a) "Riparian land" means land that:

(A) Is voluntarily removed from farm production to employ conservation practices;

(B) Lies between a river, stream, or other natural water course and land that is in farm production; and

(C) Does not exceed 35 feet in width.

(b) "Forgone crop" means the crop grown on the riparian land in the year prior to taking it out of production.

(c) "Yield" means the amount of crop harvested per acre in the year of the credit as is commonly reported by the County Extension Office for that crop (e.g., pounds, bushels, etc.)

(d) "Market value" means the average county price for that crop as reported for the year of the credit by the County Extension Office.

(2) The credit is determined each year based on yield and market value for the forgone crop using the formula: A x B x C x D, where:

A = the total acreage of riparian land removed from production

B = the crop yield per acre

C = the market value of the forgone crop

D = 75 percent

Example 1: John leases farmland along the Luckiamute River and grows grass seed within 10 feet of the river. In 2004, he voluntarily decides to widen the unplanted area along the river to 35 feet. To claim the credit for not planting the 25 feet of newly created riparian land, John determines the credit based on the crop planted there in 2003 and the average 2004 yield and market value. In 2005, John continues to not plant the 25 feet of riparian land and claims the credit. The credit amount is again based on the crop last grown on the land in 2003, using 2005 yield and market value averages.

Example 2: Hillary created 4 acres of riparian land in the Willamette valley in 2004. In the prior year, she grew a crop on that land that yielded 600 pounds per acre and sold for $0.50 per pound. In 2004, the County Extension Office reported the averages for that crop were 500 pounds per acre and $0.40 a pound. Her credit in 2004 is $600 (4 x 500 x $0.40 x .75).

(3) A credit is not allowed in a year in which a crop is not grown on the land adjacent to the riparian land. Land lying fallow under normal farming practices for the area is considered to be a crop and is not affected by this subsection.

Example 3: Sam owns 6 parcels of farm land in eastern Oregon all of which border Bully Creek. Unlike previous years, when planting begins in 2004, Sam voluntarily does not plant within 35 feet of the creek bed. Parcel 1 was planted with peppermint in 2001, but was fallow in 2002 and 2003 under normal farming practices in Malheur County. Parcels 2 through 5 are planted in sweet potatoes after growing alfalfa in 2003. Parcel 6 is very rocky and Sam has not planted on any of that parcel for the ten years he has owned it. To determine the 2004 riparian land credit for parcel 1, Sam uses the crop last grown in 2001 (peppermint). For parcels 2 through 5, he uses the crop (alfalfa) grown in 2003. Sam cannot claim the riparian land credit for parcel 6 as it was not in farm production.

Stat. Auth.: ORS 305.100 & ORS 315.113
Stat. Implemented: ORS 315.113
Hist.: REV 4-2003, f. & cert. ef. 12-31-03

150-315.138(9)

Fish Screening Device Credit; Substantiation

(1) The fish screening device credit can be claimed for devices installed in tax years beginning on or after January 1, 1990.

(2) Upon request of the department, the taxpayer shall provide a copy of the final certificate issued by the State Department of Fish and Wildlife in the initial year in which the credit is claimed. The taxpayer will provide a statement which contains the computation of the allowed credit if this information is not contained in the final certificate.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.138
Hist.: RD 7-1989, f. 12-18-89, cert. ef. 12-31-89; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.139(9); RD 5-1994, f. 12-15-94, cert. ef. 12-31-94

150-315.144

Transfer of Biomass Credit

(1) As provided by ORS 315.053, a person that has obtained a tax credit under ORS 315.141 may transfer the credit to:

(a) A C corporation;

(b) An S corporation; or

(c) A personal income taxpayer.

(2) Transfers. The value of the credit earned under ORS 315.141 is the greater of the market value upon transfer or the minimum discounted rate established by the Department of Energy. A credit may be transferred or sold only once. In order for the transfer to be effective:

(a) The Department of Energy must certify the credit;

(b) The person who earned the credit must complete and submit the transfer schedule on the back of the certificate provided by the Department of Energy to be attached to the return of the person who transferred the credit (the transferor);

(c) The person who earned the credit and the taxpayer claiming the credit must complete and file a joint statement on a form provided by the Department of Revenue to be attached to the return of the taxpayer receiving the credit (the transferee); and

(d) The credit must be transferred on or before the due date of the tax return (including extensions) for the first tax year in which the credit may first be claimed. After that date, no portion of the credit allowed under ORS 315.141 may be transferred.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.144
Hist.: REV 10-2010, f. 7-23-10, cert. ef. 7-31-10

150-315.156

Crop Gleaning Credit: Information Required

(1) In addition to the items listed under ORS 315.156(2), the form may require:

(a) The social security number, federal employer identification number, or phone number of the grower;

(b) Name and address to identify the gleaning cooperative, food bank, or other charitable organization; or

(c) A signed statement that the grower has complied with the conditions set forth under ORS 315.154(5)(a)-(c).

(2) For tax years beginning on or after January 1, 1994. The form required by this section should not be attached to the tax return, but must be kept with the taxpayer's records. Upon audit or examination, the information must be made available to the department to verify any credit claimed under this section.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.156
Hist.: TC 15-1979(Temp), f. & cert. ef. 12-18-79; Hist.: TC 2-1980, f. & cert. ef. 5-20-80; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.091; RD 3-1995, f. 12-29-95, cert. ef. 12-31-95; REV 8-2001, f. & cert. ef. 12-31-01; REV 10-2006, f. 12-27-06, cert. ef. 1-1-07

150-315.164

Agriculture Workforce Housing Credit

(1) General Information.

(a) A credit is available to taxpayers who construct, install, or rehabilitate housing for agricultural workers and their immediate families.

(b) The credit is available for agriculture workforce housing projects that are physically begun on or after January 1, 1990.

(c) Depreciation and amortization expenses associated with the agriculture workforce housing project are not decreased by the amount of the tax credit allowed.

(d) The taxpayer's adjusted basis in the housing project is not decreased by any tax credits allowed.

(e) For tax years beginning on or after January 1, 2004, ORS 315.167 provides that the owner or operator of agriculture workforce housing or a contributor as described in ORS 315.163(6) must apply to the Oregon Housing and Community Services Department (OHCSD) for a letter of credit approval no later than six months after beginning an agriculture workforce housing project.

(2) Qualifications for the Tax Credit.

(a) The agriculture workforce housing project must be located in Oregon to qualify for the credit.

(b) The housing project must be limited to occupancy by agricultural workers during the tax year in order to qualify for the credit. If the housing is occupied at any time during the year by persons other than agricultural workers and their immediate families, the housing will not qualify for the credit. Nor can the housing be used for any other function except housing for agricultural workers.

(c) The taxpayer claiming the credit must:

(A) Obtain a letter of credit approval from the OHCSD; and

(B) Certify on an annual basis that any units that were occupied during the tax year were occupied only by agricultural workers or their immediate families. The letter of credit approval and the certification must be maintained in the taxpayer's records and made available to the department on request.

(d) The OHCSD administers the application and eligibility process for this credit. See chapter 813, divisions 41 and 42 of the Oregon Administrative Rules, and contact OHCSD for more information.

(3) Computation of the Tax Credit For Projects Completed in Tax Years Beginning On or After January 1, 2002

(a) The credit is equal to 50 percent of the costs directly associated with the construction or rehabilitation of the agriculture workforce housing project including costs for financing, construction, excavation, installation, and permits. Construction includes acquisition of new or used prefabricated or manufactured housing. Acquisition costs of land and existing improvements on that land used for the project are not included in the computation.

(b) The credit first may be claimed in the year the project is completed or in any of the nine succeeding tax years. No more than 20 percent of the total credit may be claimed in any one tax year. The housing is not required to be occupied prior to the end of the tax year in which the project is completed in order for the credit to be claimed.

(c) Tax credits not used in a tax year may be carried forward for up to nine years. Any credit carried forward is used first, before the allowable current year credit.

(d) Costs of rehabilitation include capital expenditures only. The allowable costs are those incurred for additions or improvements to property (or related facilities) with a useful life of five years or more. Rehabilitation costs do not include the cost of acquiring the building or an interest in the building.

(4) Computation of the Tax Credit for Projects Completed in Tax Years Beginning before January 1, 2002. The credit is equal to 30 percent of costs described in subsection (3)(a) if completed after December 31, 1995, and 50 percent if completed before December 31, 1995. The credit is claimed in equal installments over a consecutive five-year period beginning in the year the agriculture workforce housing project is completed. The credits may be carried forward for up to five years. Otherwise, the computation of the credit is the same as specified in section (3) of this rule.

(5) Disallowance and Forfeiture of Tax Credit. The tax credit will be disallowed and any prior years' credits forfeited in the case of:

(a) Fraud or misrepresentation by the taxpayer to obtain the credit.

(b) A taxpayer who is an owner or operator who fails to substantially comply with occupational health and safety rules, regulations, or standards. The Department of Consumer and Business Services will notify the department of any agriculture workforce housing project failing to substantially comply with these standards.

(c) A taxpayer who is an owner or operator who fails to obtain required registration as an agriculture workforce camp with the Department of Consumer and Business Services.

(d) A taxpayer who is an owner or operator of an agriculture workforce housing project that is not operated by a person who holds a valid endorsement as a farmworker camp operator, if required under ORS 658.730.

(6) Sale of Agriculture Workforce Housing Project. If the agriculture workforce housing project is sold, the original investor may continue to claim the tax credit, provided all other provisions are met.

Example: LeRay began construction of an agriculture workforce housing project on his property on July 1, 1995. The project was completed on December 15, 1995, and on that date complied with the applicable health and safety standards. The housing was registered with the Department of Consumer and Business Services, and LeRay obtained endorsement as a farm camp operator. LeRay must claim the credit on his 1995 return, even though no units are occupied until 1996. If LeRay sells the property, he may continue to claim the credit only by obtaining a statement from the new owner of the property, certifying that any occupied units are occupied only by agricultural workers and their immediate families. Upon audit or examination, LeRay must provide a statement for each year in which the credit is claimed if requested by the department.

(7) Transfer of Credit to Contributor. For tax years beginning on or after January 1, 2005, an owner or operator may transfer up to 100 percent of the total credit the owner or operator may claim. For tax years beginning on or after January 1, 2002 and before January 1, 2005, an owner or operator of agriculture workforce housing may transfer to one or more contributors up to 80 percent of the total credit the owner or operator may claim. A contributor claiming the credit and the owner or operator must file a joint statement to be attached to the return on which the credit is claimed. The statement must include:

(a) The owner or operator's name, federal employer ID number (FEIN), Oregon business identification number (BIN), and designation as either the owner or operator;

(b) The contributor's name, FEIN, and BIN:

(c) The amount and percentage of the credit transferred;

(d) The total amount of credit the owner or operator may claim, before any transfer to contributors; and

(e) Signatures of or on behalf of the owner or operator and the contributor.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.164
Hist.: 9-20-89, 12-31-89; RD 12-1990, f. 12-20-90, cert. ef. 12-31-90; RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-316.116(Note)-(B); RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.154; RD 5-1994, f. 12-15-94, cert. ef. 12-31-94; RD 3-1995, f. 12-29-95, cert. ef. 12-31-95; REV 8-2001, f. & cert. ef. 12-31-01; REV 8-2002, f. & cert. ef. 12-31-02; REV 6-2004, f. 7-30-04, cert. ef. 7-31-04; REV 1-2014, f. & cert. ef. 7-31-14

150-315.204-(A)

Dependent Care Credits: General Information

(1) Taxpayers must apply to the Department of Education, Early Learning Division, Office of Child Care and receive certification before being eligible for the Dependent Care Assistance or Dependent Care Information and Referral Services credits. Contact the Office of Child Care of the Department of Education for more information.

(2) For taxable years beginning on or after January 1, 1988, the following credits are available to employers that provide dependent care assistance or information and referral services to their employees:

(a) Dependent Care Assistance Credit. This credit is available to employers for the expenses paid or incurred by the employer for the care of employees' dependents.

(b) Dependent Care Information and Referral Services Credit. This credit is available to employers that provide information and referral services to assist their employees in obtaining dependent care.

(3) Any tax credit otherwise allowable that is not used by the taxpayer in a tax year may be carried forward and offset against the taxpayer's tax liability for up to five tax years. The amount of credit carried forward to a succeeding tax year is the sum of credits that exceed the tax liability, after other credits, for all prior tax years that are within the carryover period.

(a) If a credit carried forward from a prior year and a current year's credit are available, the taxpayer must use the credit from the prior year first and then the current year's credit.

(b) If a credit carried forward from a prior year and a current year's credit are available, the two credits may be combined and taken up to the amount of tax liability for the year.

(4) If the taxpayer is an individual and the tax year is changed resulting in a short period return (a return covering a period of less than 12 months), the credit must be computed in a manner consistent with ORS 314.085.

(5) If the taxpayer is a part-year resident individual, the credit must be computed in a manner consistent with ORS 316.117.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.204
Hist.: RD 5-1988, f. 5-25-88, cert. ef. 6-1-88; RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 7-1991, f. 12-30-91, cert. ef. 12-31-91; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.134-(A); REV 8-2001, f. & cert. ef. 12-31-01; REV 3-2005, f. 12-30-05, cert. ef. 1-1-06; REV 10-2009, f. 12-21-09, cert. ef. 1-1-10; REV 5-2010, f. & cert. ef. 3-15-10; REV 10-2013, f. 12-26-13, cert. ef. 1-1-14

150-315.204-(B)

Dependent Care Assistance Credit

As used in this rule, references to the Internal Revenue Code mean the code as in effect on the date specified in ORS 316.012.

(1) Qualifications. To qualify for this credit, the following requirements must be met:

(a) The assistance must be provided to an employee pursuant to a program which meets the requirements of Internal Revenue Code (IRC) Section 129(d).

(b) In the case of an on-site facility, the credit shall be based upon the value of the services actually provided to the dependents of employees. The value of services provided to dependents of nonemployees shall not be included. In determining the value of services actually provided to dependents of employees, the employer shall use the actual direct and indirect costs, or a fair market value amount.

(c) The provider of the dependent care cannot be the spouse, a dependent, or a child under age 19 of the employee.

(d) Dependent care assistance funded by a salary reduction cannot be included in the computation of the credit. If assistance is provided by both a salary reduction and an employer contribution, only that portion of the assistance provided by the employer contribution shall qualify for the credit.

(e) Only amounts paid or incurred for dependent care assistance services performed in Oregon are eligible for the credit.

(f) The individual receiving the dependent care must meet the requirements of IRC 21(b)(1).

(2) Computation of the Credit. The credit is equal to 50% of the qualifying expenses paid or incurred by the employer. However, no more than $5,000 paid or incurred for the care of the dependents of each employee can be included for the purpose of this computation.

Example. In 1988, Employer A reimburses three employees for the cost of dependent care services provided to the employees' qualifying dependents. The amount reimbursed is based upon the number of each employee's dependents receiving dependent care services. Assuming that Employer A otherwise qualifies for the credit, the allowable dependent care assistance credit is computed as follows: [Example not included. See ED. NOTE.]

(3) An employer must reduce deductions claimed on the employer's tax return by the dollar amount of the dependent care assistance credit allowed. In the example above, Employer A must reduce deductions for Oregon tax purposes by $6,000.

[ED. NOTE: The Examples referenced in this rule are not printed in the OAR Compilation. Copies are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.204
Hist.: RD 5-1988, f. 5-25-88, cert. ef. 6-1-88; RD 7-1991, f. 12-30-91, cert. ef. 12-31-91; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.134-(B); RD 5-1997, f. 12-12-97, cert. ef. 12-31-97

150-315.204-(C)

Dependent Care Information and Referral Services Credit

(1) Qualifications. To qualify for this credit the employee receiving the information or referral services must perform services in Oregon.

(2) Computation of the Credit. The credit is equal to 50 percent of the qualifying expenses paid or incurred by the employer.

Example. In 1988, Employer A paid $2,500 to a dependent care referral agency to provide dependent care information and referral services to its employees. A credit of $1,250 is allowable to the employer in 1988. The deduction allowed for 1988 is $1,250 (the $2,500 paid less the $1,250 credit allowed).

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.204
Hist.: RD 5-1988, f. 5-25-88, cert. ef. 6-1-88; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.134-(C); RD 5-1994, f. 12-15-94, cert. ef. 12-31-94

150-315.208

Dependent Care Facility Credit

(1) General Information: As used in this rule, references to the Internal Revenue Code mean the code as in effect on the date specified in ORS 316.012.

(a) A credit is available to employers that acquire, construct, reconstruct, renovate or otherwise improve real property for use as a dependent care facility. If real property is acquired by lease for use as a dependent care facility, only the costs paid or incurred for leasehold improvements qualify for the dependent care facility tax credit.

(b) An employer may have more than one facility.

(c) More than one employer may join in acquiring, constructing, reconstructing, renovating or otherwise improving real property to be used as a dependent care facility.

(d) The employer may operate the facility or may contract with others to operate it.

(e) The credit is first available in tax years beginning on or after January 1, 1988, for facilities placed into operation on or after January 1, 1988, and prior to January 1, 2002.

(f) The credit shall be spread equally over a period of ten tax years beginning with the tax year the facility is first placed into operation.

(g) Any tax credit otherwise allowable which is not used by the taxpayer in a tax year may be carried forward and offset against the taxpayer's tax liability for up to five tax years.

(A) If a taxpayer fails to meet the credit qualifications for a tax year, the current year's credit is lost, and may not be carried forward to any other tax year. Only a credit which is allowable, but unused due to insufficient tax liability, may be carried forward.

Example: Employer A constructs a dependent care facility, receives certification from Children's Services Division to operate the facility, and provides dependent care assistance in the facility as defined in Internal Revenue Code Section 129. All of these events occur in tax year 1988. The total available credit is $100,000, which may be claimed at a rate of $10,000 per year, beginning with tax year 1988 and ending with tax year 1997. In tax years 1988, 1989 and 1990, the taxpayer meets the qualifications and claims a tax credit of $10,000 for each of these years. In tax year 1991, the taxpayer fails to receive certification from Children's Services Division, thus the $10,000 tax credit for 1991 is not allowable. The 1991 credit may not be carried forward to any other tax year: it is lost forever. However, any unused credit from tax years 1988, 1989 or 1990 is carried forward and used in 1991 if sufficient tax liability exists.

(B) If a credit carried forward from a prior year and a current year's credit are available, the taxpayer shall use the credit from the prior year first and then the current year's credit.

(C) If a credit carried forward from a prior year and a current year's credit are available, the two credits may be combined and taken up to the amount of tax liability for the year.

(h) If the employer is a shareholder of an S corporation established to own and/or operate the facility, each shareholder's share of the cost of the facility is subject to the limitations as provided under ORS 315.208. Each shareholder's share of the cost is determined by applying the shareholder's percentage of ownership interest to the facilities total cost.

(i) If the employer is a partnership or S corporation, the tax credit shall be attributable to the partnership or S corporation. The current tax year's credit shall be allocated to the current tax year's partners or shareholders based on the partners' or shareholders' percentages of ownership interest.

(j) If the employer is a partner in a partnership established to own and/or operate the facility, each partner's share of the cost of the facility is subject to the limitations as provided under ORS 315.208. The cost of purchasing a partnership interest by a new employer-partner shall qualify for the credit to the extent the cost is attributable to the dependent care facility. The purchase must be made in a tax year beginning on or after January 1, 1988 and must be purchased prior to January 1, 2002 for the partner to qualify for the credit.

(k) Depreciation deductions attributable to a dependent care facility must be reduced by the annual credit amount each year that the credit is available. If the annual credit amount exceeds the depreciation deduction allowable, such excess must be carried over to reduce the depreciation deduction in subsequent tax years.

(2) Qualifications. To qualify for this credit, the following requirements must be met:

(a) The dependent care facility must be located in Oregon.

(b) The dependent care facility must be able to accommodate six or more children.

(c) The operator of the facility must hold a certificate of approval (either permanent or temporary) issued by the Children's Services Division, Department of Human Resources, on the last day of each tax year in which the credit is claimed. Upon request by the department, a copy of the certificate of approval shall be provided for any tax year in which the credit is claimed.

(d) The employer must have a dependent care assistance plan as provided under IRC Section 129 and by the last day of each tax year for which the credit is claimed, the employer must either make payment for, or provide for, services defined as dependent care assistance in Internal Revenue Code Section 129.

(e) The facility must be in use as a dependent care facility on the last day of the tax year for which the credit is claimed. If the facility is in use up to the end of the normal operating year of the employer, or for the entire period in which seasonal employees are normally employed, this qualification will be met. This is true even though the employer's normal operating year, or period in which seasonal employees are employed, ends before the last day of their tax year. (Seasonal employees include but are not limited to agricultural, construction and cannery.)

Example 1: Employer A is a calendar-year taxpayer. The business is normally shut down for the last week of each year to allow employees time off during the holiday season. A dependent care facility was placed in service in April, 1988. Except for the last week, the facility was used for the rest of the 1988 business year. This facility would qualify for the credit because it was in use up to the end of the normal operating year for this business.

Example 2: Assume the same facts as in Example 1, except Employer A decides to shut down the dependent care facility at the end of October, 1988. In this case, the facility wouldn't qualify for the credit because it wasn't in use up to the end of the normal operating year.

Example 3: Employer B is a farmer and a calendar-year taxpayer. Employer B hires seasonal employees during the harvest period. A dependent care facility was placed in service in July, 1988 to provide care for the dependents of these employees. It was in operation through the end of the 1988 harvest period, at which time the facility was closed. The facility wasn't used again until it was reopened to care for the dependents of seasonal employees during the 1989 harvest period. This facility would qualify for the credit in 1988 because it was in use for the entire period in 1988 in which the seasonal employees were employed.

(f) The dependent care facility shall first provide dependent care services for dependents of employees. However, dependent care services may also be provided to dependents of nonemployees when the facility is not fully used by employee's dependents. If the facility is operating at full capacity and dependents of nonemployees are receiving services and an employee requests dependent care services at the employer's facility, dependent care services must be provided by the employer to the employee. The employee shall be given priority for the first available vacancy. The employer may in addition provide such services by providing assistance to the employee in finding other dependent care arrangements.

(g) The individuals receiving the dependent care must meet the requirements under IRC 21(b)(1).

(3) Computation of the Credit.

(a) The credit is equal to the lesser of:

(A) 50% of cost; or

(B) $2,500 times the number of full-time equivalent employees (FTEs); or

(C) $100,000.

(b) For the purpose of computing the credit limitation under 3(a)(B) above, the number of FTEs used is the number on any date selected by the taxpayer during the two-year period ending on the date the tax year ends in which the credit is first claimed. Only those employees working in proximity to the facility are included in computing this limitation. All employees working within two miles of a facility are deemed to be in proximity to a facility. For employees working beyond two miles, the determination whether they are in proximity to a facility will be made on a case-by-case basis, i.e., all facts and circumstances will be considered.

(c) A single limitation under(3)(a)(C) above, applies to all facilities located in proximity to a job site. All facilities located more than two miles from a job site are deemed not to be in proximity to a job site. For all facilities located within two miles of a job site, a single credit limitation applies unless the facts and circumstances indicate they are not in proximity to a job site.

(d) Where more than one employer shares a facility, each employer's share is subject to the limitations listed in (3)(a) above.

Example. Employers A, B, C and D have offices and manufacturing facilities in the same business park. In 1988, they join in constructing a dependent care facility costing $575,000 within the park. Each employer's contributed cost in the facility and the computation of each employer's credit are as follows: [Example not included. See ED. NOTE.]

Employers A, B, C and D must reduce their Oregon depreciation deductions attributable to the facility each year by their respective annual credit amount.

(e) The adjusted basis of the dependent care facility must be adjusted each year by the amount of depreciation allowable using depreciation methods recognized by the Department of Revenue. The depreciation deduction is the depreciation allowable minus the amount of credit claimed. [Example not included. See ED. NOTE.]

[ED. NOTE: Examples referenced are available from the agency.]

[Publications: Publications recerenced are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.208
Hist.: RD 5-1988, f. 5-25-88, cert. ef. 6-1-88; RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 12-1990, f. 12-20-90, cert. ef. 12-31-90; RD 7-1991, f. 12-30-91, cert. ef. 12-31-91; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.132; RD 5-1994, f. 12-15-94, cert. ef. 12-31-94; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97

150-315.213(4)

Child Care Division Contribution Credit

The form required by this section should not be attached to the tax return, but kept with the taxpayer's records. Upon audit or examination, the information must be made available to the department to verify any credit claimed under this section.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.213
Hist.: REV 3-2002, f. 6-26-02, cert. ef. 6-30-02

150-315.237(8)

Scholarship Tax Credit

The form required by this section should not be attached to the tax return, but must be kept with the taxpayer's records. Upon audit or examination, the information must be made available to the department to verify any credit claimed under this section.

[ED. NOTE: Forms referenced are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.237
Hist.: REV 8-2001, f. & cert. ef. 12-31-01

150-315.262

Working Family Childcare Credit

(1) Definitions. For purposes of ORS 315.262 and this rule:

(a) "Federal poverty level" means the federal poverty level for the same tax year as determined by the federal Department of Health and Human Services.

(b) “Household size” generally means the number of individuals related by birth, marriage, or adoption who are living in the home and are allowed as exemptions on the taxpayer's return. There are special rules for children whose parents are divorced, legally separated, or permanently living apart. See section (4) of this rule for those special rules.

Example 1: Chris and Shelly live together but are not married. They have two children together; Tyler and Alec. Each child could be the qualifying child of one parent or the other, but not both parents. Each parent may claim their qualifying child(ren) in their household size. See definition of qualifying child later in this section.

Example 2: Mike and Sarah are married and have three children and also support Sarah’s parents who do not live with Mike and Sarah in their home. Because they meet the federal tests for claiming individuals not living with them, their federal return allows seven exemptions. Mike and Sarah cannot increase their household size by the people they claim as dependents on their federal return that do not live with them. Their household size for purposes of the working family childcare credit is five.

(c) “Physical or cognitive condition" means a state where an individual's ability to perform a basic activity of daily living is markedly restricted where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual is unable (or requires an inordinate amount of time) to perform an activity of daily living. “Activities of daily living” include:

(A) Bathing;

(B) Dressing oneself, except that it does not include any of the activities of identifying, finding, shopping for or otherwise procuring clothing;

(C) Feeding oneself, except that it does not include any of the activities of identifying, finding, shopping for or otherwise procuring food, or the activity of preparing food to the extent that the time associated with the activity would not have been necessary in the absence of a dietary restriction or regime;

(D) Medicating oneself;

(E) Toileting; or

(F) Transferring, ambulating, and being mobile.

(d) "Qualifying child" means a son, daughter, stepson, stepdaughter, grandchild, step grandchild, brother, sister, stepbrother, stepsister, niece, nephew, step niece, step nephew, eligible foster child, child legally placed with the taxpayer for adoption by the taxpayer, or adopted child of the taxpayer, and descendents of all such individuals who:

(A) Lived more than half the year with the qualifying taxpayer;

(B) Is under 13 years of age or who is a disabled child of the taxpayer for whom the additional exemption credit under ORS 316.099 is allowed; and

(C) Is not claimed as a qualifying child by another taxpayer. A child can only be the qualifying child of one taxpayer. See section (4) of this rule for the special rules for divorced and separated parents and taxpayers filing as married filing separately.

Example 3: John and Kim have never been married and have two children; Kyle who lives with John all year, and Shannon who lives with Kim all year. In the summer each child spends one month with the child's other parent and sibling. John has both Kyle and Shannon in July and Kim has both kids in August. In addition to the child care for the child that lives with them, each parent also has daycare expenses during those months where both children are living in the parent's home. John may claim one "qualifying child" because Kyle lives with him. He may claim the expenses he paid for Kyle, but he may not claim the child care expenses he paid for Shannon because Shannon is not his qualifying child; Shannon is Kim's qualifying child. Kim may claim one "qualifying child" because Shannon lives with her. She may claim the expenses she paid for Shannon, but she may not claim the child care expenses she paid for Kyle because Kyle is not her qualifying child; Kyle is John's qualifying child. John and Kim each have a household size of two.

(2) Schedule WFC. To claim the working family child care credit, the taxpayer must provide all information requested on the Schedule WFC and file the Schedule WFC with the tax return to the department. Failure to file a completed Schedule WFC with the department may result in denial of the working family child care credit.

(3) Costs associated with child care. For purposes of determining the credit, the credit is limited to costs associated with child care. The payments must be made by the parent claiming the working family child care credit. Payments made by an entity or individual other than the parent claiming the credit are not payments made by the taxpayer.

Example 4: Shannon and Caleb are not married and live together with their son, Adam. Adam's child care expense for the year is $4,600 of which each parent pays half. Caleb's adjusted gross income (AGI) is $30,000 and Shannon's AGI is $16,000. Under federal law, either Caleb or Shannon could claim the dependency exemption for Adam as their qualifying child. They agree that Shannon will claim Adam as her qualifying child, therefore Caleb cannot. Shannon may claim the working family child care credit based on the $2,300 of child care expenses she paid and a household size of two. Even though Caleb paid child care expenses, he may not claim the working family child care credit because Adam is not his qualifying child.

(a) Costs associated with child care include:

(A) Child care expenses paid with amounts excluded from income as dependent care benefits under IRC section 129;

(B) Child care expenses paid from dependent care benefits provided as part of a cafeteria plan under IRC section 125; or,

(C) Reimbursement of child care expenses as part of a flexible spending arrangement under IRC section 125.

(b) Costs associated with child care do not include:

(A) Expenses for a child's kindergarten through twelfth grade education at a public or a private institution;

Example 5: Traci has a five-year-old son who attends a local academy. She pays $750 per month for her son's kindergarten and child care. Of the amount she pays each month, $500 is the contract price for child care and $250 is an additional amount she pays for the child's education. Traci can only claim $500 per month as qualifying child care.

(B) Expenses for extracurricular activities or elective courses such as swimming, dance lessons, or other such activities unless the activities or courses are an ordinary part of the care provided to the child and cannot be separated;

Example 6: David and Lisa are married and they have a three-year old son, Noah. David and Lisa are both gainfully employed and they send Noah to a daycare center near Lisa's work for child care. Noah's parents signed him up for a swimming class through the daycare center that costs $50 per month. The daycare center charges $400 per month for the full-time care of a toddler. The daycare center bills David and Lisa $450 per month for Noah's child care and activities. David and Lisa can use the child care expenses they paid ($400 per month or $4,800 annually) to determine the working family child care credit they are entitled to claim. They cannot use the amounts they paid for the swimming lessons.

(C) Expenses for care provided when one spouse on a joint return is not gainfully employed, not seeking employment, not a full-time or part-time student, or not disabled as explained in Section (5) of this rule.

Example 7: James and Holly are married and James stays home to take care of their four children. Holly earns $55,000 annually and they paid $4,000 in child care during the year. The child care expenses they paid are not costs associated with both James and Holly being gainfully employed, seeking employment, or being a full-time or part-time student. James and Holly cannot claim the working family child care credit.

(D) Expenses paid by a federal or state assistance agency (such as Department of Human Services or the Employer Related Day Care program) for child care expenses on behalf of the taxpayer who is claiming the working family child care credit;

Example 8: Debbie works full time and qualifies for state assistance in paying her child care expenses. The child care provider charges Debbie $600 per month to care for her two children or $7,200 per year. Of the $600 per month, the state pays $450 and Debbie has a copay of $150. Debbie cannot claim the entire $7,200 because she did not pay it. She can only claim $1,800, the amount she actually paid.

(E) The value of a child care owner-operator's forgone revenue relating to child care that the owner-operator provided to his or her own child; or,

Example 9: Shirley is the owner-operator of a registered daycare facility. She cares for six children every day, of which two are her own children. Shirley cannot use the value of the two spaces her children use to calculate her working family child care credit because the forgone revenue is not a cost associated with child care.

(F) Transactions that are not arm's-length or have no economic substance.

(4) Divorced or Separated Parents and Married Individuals Filing Separately:

(a) Divorced or Separated Parents:

(A) For purposes of this credit, a child is the qualifying child of the custodial parent, even if the exemption was released to a noncustodial parent under Internal Revenue Code (IRC) section 152(e). In situations where both parents live in the home with the child more than 50 percent of the year, the child may be the qualifying child of either parent, but not both. If the child is claimed on both parent's returns, the child is the qualifying child of the parent with the highest adjusted gross income (AGI).

Example 10: Maria and Kendall are divorced with two children. The children live in Maria’s home with Maria for more than half of the year. Kendall has the children on certain weekends, holidays, and one month in the summer. Maria pays childcare expenses for 11 months during the year. Kendall pays childcare expenses for the one month in the summer when the children are with him. Maria releases the exemption for one child to Kendall. Only Maria may claim the working family child care credit because the children are her qualifying children. Kendall may not claim the working family child care credit because he does not have a qualifying child.

(B) An individual cannot be counted in the household size on more than one tax return.

Example 11: Sam and Sally are divorced with two children, Ben and Brianna. Ben lives with Sam and Brianna lives with Sally. Each parent pays the child care expenses for the child that lives with them. Sally releases the dependent exemption for Brianna to Sam under IRC section 152(e). Brianna is counted in the household size of Sally because she lives with Sally. Ben is counted in the household size of Sam, because he lives with Sam. Sam and Sally will each have a household size of two to determine the percentage of child care costs each may claim as a working family child care credit.

(b) Married Individuals Filing Separately:

(A) Taxpayers filing separate returns who share a common household cannot claim the working family child care credit.

(B) Taxpayers maintaining separate residences at the end of the tax year, and who intend to live apart in the future, determine their household size based on the computation defined in subsection (1)(c) of this rule.

Example 12: John and Sue are married and have two children. They are legally separated and live apart permanently, and one child lives with each. John and Sue file separate returns for the tax year and each claims a child as a dependent. John and Sue will each have a household size of two to determine the percentage of child care costs each may claim as a working family child care credit. John may claim the credit based on the child care costs he paid for the child that lives with him and Sue may claim the credit based on the child care costs she paid for the child that lives with her.

(5) Disabled Spouse:

(a) Married taxpayer with disabled spouse. Beginning in tax year 2007, a qualified taxpayer is allowed to claim the working family credit based on child care expenses paid even if the expenses were paid when the taxpayer has a spouse who did not work, look for work, or attend school. The expenses may be claimed if the taxpayer's disabled spouse has a physical or cognitive condition which causes the disabled spouse to require assistance in performing basic activities of daily living and prevents the disabled spouse from working, looking for work, and attending school.

(b) Certification by physician. For a taxpayer to claim child care expenses paid when the taxpayer's spouse is unable to work, look for work, and attend school because the spouse has a disability that prevents the spouse from such tasks, the taxpayer must obtain certification from the physician or other qualified medical professional that the taxpayer's spouse meets the definition of disabled in the statute and this rule. This certification is to be kept in the taxpayer's records and provided to the department upon request.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.262
Hist.: RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 7-1998, f. 11-13-98, cert. ef. 12-31-98; REV 4-2003, f. & cert. ef. 12-31-03; REV 11-2004, f. 12-29-04, cert. ef. 12-31-04; REV 3-2005, f. 12-30-05, cert. ef. 1-1-06; REV 11-2007, f. 12-28-07, cert. ef. 1-1-08; REV 10-2009, f. 12-21-09. cert. ef. 1-1-10

150-315.274(3)

Computation of Oregon Credit for Qualified Adoption Expenses

Oregon taxpayers compute the Oregon adoption credit using their qualified adoption expenses as defined in section 23(d) of the Internal Revenue Code before federal dollar and income limitations are imposed.

Example 1: Darrell and Zelma incur qualified adoption expenses of $2,000 during 1999 and $9,000 in 2000 when the adoption of their son became final. Under IRC section 23(a), Darrell and Zelma use total expenses of $11,000 to compute the credit on their 2000 federal return. Their allowed federal adoption credit is $5,000. Their federal income tax liability is $2,080 after other credits so they claim $2,080 of their federal adoption credit in the current year. They will carry forward $2,920, which is the unused portion of their allowed federal credit. Their Oregon credit is the lesser of:

(1) Qualified adoption expenses less the federal credit allowed ($11,000 - 5,000 = $6,000);

(2) The Oregon limit of $1,500; or

(3) The federal credit allowed of $5,000.

Their Oregon credit is $1,500. If their Oregon liability is less than the credit, they may carry forward any unused portion to the next year. Any carry forward that is not used within four years is lost.

Example 2: Heidi and Bryce have qualified adoption expenses of $10,000 for the year. The dollar limitation for the federal credit is $5,000. Their federal credit allowed is further reduced by the federal income limitation. Their allowable federal credit is $1,875. They compute their Oregon credit as the lesser of:

(1) qualified adoption expenses less federal credit allowed ($10,000 - 1,875 = $8,125);

(2) the Oregon limit of $1,500; or

(3) the federal credit allowed of $1,875.

Their Oregon credit is $1,500.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.274
Hist.: REV 5-2000, f. & cert. ef. 8-3-00

150-315.274(4)

Oregon Adoption Credit Prorated for Part-Year and Nonresidents

Nonresidents and part-year residents are allowed a portion of the Oregon credit otherwise allowable. The portion is based on their Oregon percentage. The Oregon percentage is the ratio of federal adjusted gross income from Oregon sources divided by federal adjusted gross income from all sources.

Example: Heidi and Bryce lived in Washington at the beginning of the year. They move to Oregon during the year and file their Oregon return as part-year residents. They have federal adjusted gross income of $25,000 from Oregon sources and federal adjusted gross from all sources of $100,000, making their Oregon percentage 25 percent. Their qualified adoption expense is $5,000, and their allowable federal adoption credit is $875. They compute their Oregon credit before proration as the lesser of:

(a) Qualified adoption expenses less federal credit allowed ($5,000 - 875 = $4,125);

(b) The Oregon limit of $1,500; or

(c) The federal credit allowed of $875.

If they were full year Oregon residents their Oregon adoption credit would be $875. Since they are part-year residents and their Oregon percentage is 25 percent, their allowable Oregon credit is $219; that is, 25 percent of the $875 Oregon credit otherwise allowable.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.274
Hist.: REV 5-2000, f. & cert. ef. 8-3-00

150-315.304(1)(a)

Pollution Control Facilities: Types of Facilities Eligible for Certification

(1) Tax relief provisions to encourage the construction of pollution control facilities were first enacted by the 1967 legislature, and were substantially amended in subsequent legislative sessions.

(2) Under the 1967 law (ORS 316.092) and the 1969 law (ORS 316.097), the types of facilities eligible for certification were those a substantial purpose of which was to prevent, control, or reduce air or water pollution. Under the 1974 special session amendments (Chapter 37) to ORS 449.625 (since renumbered as ORS 468.165), the types of eligible facilities were expanded to include facilities which utilize solid wastes to produce a useable source of power or other item of real economic value.

(3) Every facility certified prior to the October 5, 1973, effective date of the 1973 amendments is bound by the law in effect prior to that date (see Oregon Laws 1973, Chapter 831, Sec. 11); except that the amendments by Chapter 37 of the 1974 special session are effective May 26, 1974.

(4) Under the 1977 law, facilities built on or after January 1, 1977, for control of noise pollution are eligible for certification. Also, the definition of a solid waste facility is expanded to include certain subsequent additions, either to a facility already certified or to an operation that would have qualified as a facility but for the fact that it was built prior to January 1, 1973. The addition must be one that increases the production or recovery of useful materials or energy over the amount produced or recovered by the original facility. However, the 1977 law also sets additional eligibility requirements for solid waste facilities on which construction is commenced during the period January 1, 1981, up to December 31, 1983. These added requirements are found in ORS 468.170(9)(b).

(5) A 1983 amendment provided that hazardous waste facilities built on or after January 1, 1984 will not be required to produce a useable source of power or other item of real economic value to be eligible for certification.

(6) Facilities built on or after September 26, 1987, that use solid waste to produce a useable source of power, are not eligible for the pollution control facility credit.

Stat. Auth.: ORS 305.100
Stats. Implemented:
Hist.: 1-1-77; 12-31-77; 12-31-81; 12-31-83; 12-31-92, Renumbered from 150-316.097(1)(a); 12-31-93

150-315.304(1)(b)

Pollution Control Facilities: Information to be Furnished Upon Request

Upon request of the department, each taxpayer claiming a pollution control facility tax credit shall provide a statement containing the following information for each facility:

(1) The certificate serial number assigned under ORS 468.170.

(2) The computation of the amount of the tax credit allowable for the tax year covered by the return. For each facility show:

(a) The actual cost certified;

(b) The portion of actual cost allocable to pollution control and the percentage of cost available as a credit for the current year;

(c) The amount of credit claimed for the current year;

(d) The total amount of credit claimed for this facility on prior returns.

(3) The amount and computation of each carry-over credit claimed under ORS 315.304 as to each facility. In computing the tax credit attributable to a particular facility, the taxpayer may have to apportion the total credit used in a particular year to each separate certification of a facility or facilities. Where a part of a facility or of a group of facilities under one certificate has been sold, exchanged, or otherwise disposed of, appropriate adjustments must be made for the total prior credits claimed.

(4) The date of erection, construction, or installation.

(5) The facts showing compliance with the requirements of ORS 315.304 as to ownership (or purchase under contract), lease, conduct of the trade or business under agreement, or having a beneficial interest in a resource recovery facility.

A copy of the certificate issued by the Department of Environmental Quality and copies of agreements for the conduct of a trade or business shall be attached to the statement.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.304
Hist.: 1-1-77; 12-31-81; 12-31-83, Renumbered from 150-316.097(1)(b); 12-31-93; RD 5-1994, f. 12-15-94, cert. ef. 12-31-94; RD 6-1996, f. 12-23-96, cert. ef. 12-31-96

150-315.304(2)

Pollution Control Facilities: Computation of Credit

(1) Definitions. For purposes of ORS 315.304 and this rule:

(a) "Certified cost" means that portion of total costs that the Environment Quality Commission (EQC) determines is allocable to a pollution control facility.

(b) "Facility" refers to one or more facilities certified under one certificate, with one serial number and with the same allowable percentages used in determining the certified costs and the maximum allowable credit.

(c) "Applicable percentage" means the percentage indicated on the certification issued by the EQC for that facility.

(d) "Useful life" is the remaining years of expected useful life at the time the facility is certified, but not more than 10 years.

(e) "Tax liability" is the amount of tax that is due after any offsets or other tax credits are taken, such as those permitted under ORS 316.082, 316.087, 316.102, 315.104, 315.354, and 315.324.

(2) The credit is equal to the lesser of:

(a) The applicable percentage multiplied by the certified cost and divided by the useful life of the property; or

(b) The taxpayer's tax liability after other credits.

(3) If additional costs are incurred after a pollution control certificate is issued and a revised certificate including those additional costs is issued, the credit for the additional costs may not be claimed prior to the year in which the revised certificate is issued. The credit for those additional costs must be spread equally over the remaining years on the original certificate.

(4) A pollution control facility's useful life is determined as of the date it is certified and may not be changed unless additional certified costs have been incurred. If a facility becomes obsolete and is abandoned before the end of its expected useful life, no remaining unused credit is allowable. If the life of a pollution control facility is extended by repair, which is not eligible for additional tax credit, the taxpayer continues to claim the original credit over the original useful life. If an error in the actual amount spent prior to certification by the EQC is later discovered and the EQC issues a revised certificate, the taxpayer must amortize the correct certified cost over the original useful life, and amend returns for those years for which credits have been claimed that are still open. Any cost incurred and certified after the original certification may be amortized over the new remaining useful life to the extent that the total life of the facility over which credits are claimed does not exceed ten years. The additional credit may be claimed beginning in the year in which certification for the additional cost was obtained.

(5) If a pollution control facility's certification is revoked by the EQC pursuant to ORS 468.185(1)(b), the allowable credit for the tax year must be prorated. The amount for the portion of the tax year before the certification is revoked is allowed. If no appeal is made, the certificate is considered revoked on the date the revocation is issued.

Example 1: A calendar year taxpayer has a pollution control facility certified January 1, 1996. The credit otherwise allowable for 2000 is $500. On June 30, 2000, the facility's certification was revoked by the EQC. The credit allowable for 2000 is computed as follows: [Example not included. See ED. NOTE.]

(6) When a certification is reinstated by the EQC under ORS 468.185(5) because the facility has been brought into compliance with the EQC's guidelines, the certificate is reinstated for the remaining period of certification, less the period of revocation. The period of revocation is from the date the revocation is issued to the date of reinstatement. The credit for the period of revocation is lost.

Example 2: Assume the same facts as in Example 1, except that the facility's certification was reinstated September 30, 2000. The credit allowable for 2000 is computed as follows: [Example not included. See ED. NOTE.]

(7) If a pollution control facility's certificate is revoked by the EQC pursuant to ORS 468.185(1)(a), because the certification was obtained by fraud or misrepresentation, all tax relief allowed in prior years is forfeited. The credit forfeited will be added to any other excise or income tax due from the taxpayer who had claimed the credit, for the tax year in which the certification is revoked. 

[ED. NOTE: Examples referenced are available from the agency.]]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.304
Hist.: 1-77; 12-31-77; 12-31;81; 12-31-83; 12-31-84; 12-31-87; 12-31-88; 12-31-89, Renumbered from 150-316.097(2); 12-31-93; RD 5-1994, f. 12-15-94, cert. ef. 12-31-94; RD 3-1995, f. 12-29-95, cert. ef. 12-31-95; REV 8-2001, f. & cert. ef. 12-31-01; REV 11-2004, f. 12-29-04, cert. ef. 12-31-04

150-315.304(4)

Pollution Control Facilities: To Whom is Credit Allowable

(1) With the exception of a facility used for resource recovery certified on or after November 1, 1981, and pulp, paper and paperboard facilities discussed in paragraph (2), the credit is allowable only to the taxpayer who owns or conducts the trade or business which utilizes the facility. Therefore, if the owner of the facility also carries on the trade or business which uses the facility, such owner is entitled to the credit. But if the owner of the facility leases the property to someone who carries on a trade or business using the leased property, then the lessee is the one entitled to the credit during the period of the lease agreement.

(2) If an application for certification of a pulp, paper or paperboard facility is filed with the Department of Environmental Quality on or after January 1, 1999, the credit may be claimed by the facility's owner/lessor, including a contract purchaser, or lessee. The owner need not operate the facility or conduct the trade or business that utilizes the property to qualify for the credit.

(3)(a) For a resource recovery facility certified on or after November 1, 1981, and prior to September 27, 1987, the credit is allowable to taxpayers who own, lease, or have a beneficial interest in the facility. "Beneficial interest" refers to the right to receive a profit, benefit, or other advantage from the facility. That right must be conveyed by a contract or other written document. A capital investment is required. Beneficial interest includes but is not limited to a partner's interest in a partnership owning part or all of the facility, or a contract purchaser's interest in a facility. If more than one taxpayer has an interest in the facility, the cost may be allocated between them. It is not necessary that the cost be allocated according to percentage of interest. The total costs allocated cannot exceed the total certified cost.

(b) For a resource recovery facility certified on or after September 27, 1987, the credit is allowable only to the taxpayer who owns, or leases the facility. An allocation of the costs is not allowed for these facilities.

(c) For purposes of (a) and (b), it is not necessary that the taxpayer receiving the credit operate or use the facility in the business.

(d) The taxpayer to whom the certificate is issued must file a written statement with the Department of Revenue not later than the final day of the first tax year for which a tax credit is claimed. For resource recovery facilities certified prior to September 27, 1987, the statement must designate the persons to whom the certified costs have been allocated and the cost allocated to each. For resource recovery facilities certified on or after September 27, 1987, the statement filed with the Department of Revenue must designate the taxpayer claiming the credit.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.304
Hist.: 1-1-77; 12-31-81, Renumbered from 150-316.097(5) to 150-316.097(4); 12-31-85; 12-31-86; 12-31-87, Renumbered from 150-316.097(4); 12-31-93; REV 5-2000, f. & cert. ef. 8-3-00

150-315.304(5)

Pollution Control Facilities: Years in Which Credit May be Claimed

The credit may be claimed beginning in the tax year in which the facility is certified but not beyond the 10-year certification period provided in ORS 468.170(7), except as to the carry-forward credit.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.304
Hist.: Hist.: 1-1-77; 12-31-77, Renumbered from 150-316.097(6) to 150-316.097(5); 12-31-85; 12-31-86; Renumbered from 150-316.097(5); 12-31-93; RD 5-1994, f. 12-15-94, cert. ef. 12-31-94

150-315.304(8)

Pollution Control Facilities: Transfer of Facilities

(1) A transferee of a facility previously certified and for which tax credits had been allowed in the hands of the transferor shall, in addition to the information required under OAR 150-315.304(1)(b), include in the statement the following:

(a) The identification of each pollution control facility by the serial number issued to the transferor and the number issued to the transferee.

(b) A computation of the total amount of tax credit claimed as available for each facility.

(2) A transferee of a pollution control facility shall not claim the credit until the transferee obtains a new certificate as required by ORS 315.304(8) and ORS 468.170.

(a) If a sole proprietorship or partnership obtains a pollution control facility certificate and the business subsequently incorporates, the new corporation must obtain a new certificate before it may claim any remaining credit for the facility. A new certificate is required even if the facility is transferred in a tax-free exchange.

(b) When two or more domestic corporations merge or consolidate, or when one or more domestic corporations and one or more foreign corporations merge or consolidate, the successor corporation is not required to apply for a new certificate.

(c) If a foreign corporation authorized to transact business in Oregon is merged or consolidated into another foreign corporation, the laws of the state in which the successor corporation is incorporated will govern the rights of the successor corporation and, hence, determine the transferability of the certificate.

(3) When a facility is sold, the seller may claim a credit for the year of sale prorated to that portion of the tax year during which the seller owned and operated the facility. The buyer also may claim a credit for the year of purchase prorated to the period of ownership and operation of the facility, provided the buyer applies for and receives a new certificate as required by ORS 315.304(8) and ORS 468.170. If the seller's tax year does not coincide with the purchaser's, each taxpayer's credit is based upon the portion of each taxpayer's own tax year in which that taxpayer owned the facility.

Example. Taxpayer A sold a certified facility to taxpayer B on July 1. Taxpayer B is a fiscal year taxpayer with a tax year ending March 31. Taxpayer A's credit would be limited to 50 percent of a full year's credit (facility owned January 1 through June 30). Assuming taxpayer B applied for and received a new certificate taxpayer B would be entitled to 75 percent of a full year's credit (facility owned July 1 through March 31).

(4) Since ORS 315.304(8) provides that "the tax credit available to such transferee shall be limited to the amount of credit not claimed by the transferor," it is necessary that the seller disclose to the buyer the amount of maximum allowable credit not yet claimed, based on 50 percent, or lesser applicable percentage, of the original certificate holder's investment in the facility. The transferee shall amortize the available credit over the shorter of the remaining useful life, as of the date of the new certificate, or ten years.

(5) When a facility is sold, any credit carryforward from tax years prior to the sale cannot be sold or otherwise transferred to the buyer. Such credit shall be carried forward by the seller.

Stat. Auth.: ORS 305.100
Stats. Implemented:
Hist.: 1-69; 10-73; 7-76; 1-1-77; 12-31-81, 12-31-83; 12-31-84, Renumbered from 150-316.097(10) to 150-316.097(8); 12-31-85; 12-31-88, Renumbered from 150-316.097(8); 12-31-93

150-315.304(9)

Pollution Control Facilities: Tax Credit Carry Forward

(1) The amount of pollution control facility tax credit that may be carried forward to a succeeding tax year is the sum of credits that exceed the tax liability, after other credits, for all prior tax years that are within the carryover period.

Example 1: A corporate excise taxpayer built a pollution control facility in 1995 at a certified cost of $80,000. The certified percentage allocable to pollution control is 50 percent and the facility has a useful life of eight years. The maximum credit allowed in one tax year is calculated as follows: The $80,000 certified cost is multiplied by the 50 percent allocable to pollution control, yielding $40,000 as the total amount of credit to be claimed over the eight year life of the facility. The $40,000 divided by eight equals $5,000, the maximum yearly credit. See ORS 315.304(2). The taxpayer claimed the maximum credit on tax returns for 1995 and 1996. On the taxpayer's 1997 return, the taxpayer is subject to a corporate excise tax of $1,000 that is offset by $1,000 of the pollution control facility tax credit, leaving $4,000 of credit to be carried forward.

(2) If a credit carried forward from a prior year and a current year's credit are available, the taxpayer must use the credit from a previous year first and then the current year's credit.

(3) If a credit carried forward from a prior year and a current year's credit are available, the two credits may be combined and taken up to the amount of tax liability for the year.

Example 2: The taxpayer described in the prior example computes a tax of $8,000 for 1998. The taxpayer will offset that tax with $8,000 of credit ($4,000 carried over from 1997 plus $4,000 of the current year's $5,000 credit), leaving $1,000 of the 1998 credit to be carried forward.

(4) When a facility is sold, the amount of unused credit carried forward from tax years before the sale is retained by the seller to offset tax in future years.

Example 3: Calendar year taxpayer A sold a facility to taxpayer B on January 1, 2001. A's allowable pollution control facility credit for 2000 was $500, but A had a net loss and no tax liability to offset. The unused 2000 credit will be carried forward by A to offset A's future taxes.

(5) A taxpayer that has unexpired credits at the beginning of tax year 2001 may carry those credits forward for up to three additional tax years, but only if the facility is in use and operation during the tax year to which the credit is carried.

Example 4: Calendar year corporation taxpayer B received certification for a pollution control facility with a 10 year asset life and was first eligible to claim the credit in tax year 1996. B reported losses for tax years 1996 through 2000 and was not able to claim the allowable credits for those years. The credit allowed for 1996 was carried forward to 1997, 1998, and 1999 and expired. The credit allowed for 1997 was carried forward to 1998, 1999, and 2000 and expired. The credits allowed for tax years 1998 through 2005 were unexpired at the beginning of B's 2001 tax year and are eligible to be carried forward for up to six years.

Example 5: Taxpayer B from Example 4 reports a loss in tax year 2002 and closes the pollution control facility on December 31, 2002. B's unused credits from 1998 and 1999 may not be carried forward to 2003 because the facility was not in use and operation during the tax year to which the credit is carried and the three year period for carryover expired in 2001 and 2002 respectively. The credits for tax years 2000, 2001, and 2002 are eligible to be carried forward for up to three years. No credits may be computed for tax years 2003, 2004, and 2005, but the unused credits carried forward from 2000, 2001, and 2002 may be claimed in the three later years.

Example 6: Corporation taxpayer C's pollution control facility is certified on January 1, 2001. C is able to offset only half of its allowable credit against tax on its 2001 return. The balance of the 2001 credit may only be carried forward for up to three years. C did not have unexpired credits at the beginning of its tax year beginning in 2001.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.304
Hist.: 1-69; 10-73; 7-76; 1-1-77, Renumbered from 150-316.097(11) to 150-316.097(9); 12-31-85; 12-31-86; 12-31-88, Renumbered from 150-316.097(9); 12-31-93; RD 5-1994, f. 12-15-94, cert. ef. 12-31-94; REV 11-2013, f. 12-26-13, cert. ef. 1-1-14

150-315.304(10)

Pollution Control Facilities: Adjustment of Basis

When computing adjusted basis for a facility certified in a tax year beginning before January 1, 1977, original basis is reduced by the amount of depreciation that was not deducted due to claiming the credit and by the amount of credit claimed in tax years beginning before January 1, 1977.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.304
Hist.: Hist.: 1-69; 12-31-77; 12-31-81, Renumbered from 150-316.097(12) to 150-316.097(10); 12-31-85, Renumbered from 150-316.097(10); 12-31-93; RD 3-1995, f. 12-29-95, cert. ef. 12-31-95

150-315.326

Tax Credit Auctions

(1) Definitions.

(a) “Tax Credits” means the credits authorized by Chapter 730, Section 23, Oregon Laws 2011 (HB 3672). These credits may also be referred to as the “Renewable Energy Development Contribution Credit(s).”

(b) “Qualified Bid” means a bid that is eligible to participate in the tax credit auction because:

(A) It is submitted in a manner and time prescribed by the department’s instructions and this rule;

(B) It is submitted for no less than 95 percent of the tax credit value or $950 per tax credit increment;

(C) An associated payment is received by the department in the time and manner prescribed in section (4).

(c) “Non-qualified Bid” means a bid that is not eligible to participate in the auction because it does not meet the requirements of subsection (b).

(d) “Invalid or Insufficient Payments” are payments that are:

(A) Not received by the department by 5:00 p.m. (PT) on the date for payment set by the department;

(B) In a form other than one listed in section (4) of this rule;

(C) Fraudulent or otherwise not able to be immediately banked by the department;

(D) Less than the full amount of the corresponding bid received by the department; or

(E) Not submitted in a manner consistent with department’s instructions (including attaching the required completed forms).

(e) “PT” means Pacific Time (Daylight or Standard as dictated by the time of year).

(2) Auction Bidding Period. The tax credits auction bidding period is no less than seven days, not to exceed 14 days; with specific dates as announced by the department.

(3) Tax Credit Certificates. 1,500 increments of $1,000 tax credit certificates ($1,500,000 total) will be available for bidding at the auction. The Oregon Department of Energy will issue tax credit certificates for the prevailing qualified bids. A taxpayer to whom a certificate is issued may claim a credit in the amount shown on the certificate against Oregon personal income or corporate income or excise tax otherwise due for that tax year. The tax credit may not exceed the liability of the taxpayer in any one year. Any credit amount unused by the taxpayer may be carried forward to offset tax liabilities in the next three succeeding tax years. No transfer of the certificate (or the credit that it represents) is allowed.

(4) Determination of Qualifying Bids and Payments.

(a) Bids must be submitted on-line in a manner consistent with the department’s instructions and within the bidding period as outlined in section (2). Bids received before or after the bidding period will be considered a non-qualified bid. The department will determine the order of bids received by the electronic date and time stamp.

(b) A bidder may submit multiple separate bids.

(c) After a bid is submitted, a bidder must send, and the department must receive, a payment for the total amount bid. Invalid or insufficient payments will be returned to the bidder and the associated bid considered a non-qualified. All bid payments must be received by the department no later than 5:00 p.m. (PT) on the payment date. The department will date stamp payments when they are received. The department will not consider postmarks when determining if the payment has been timely received. It is the bidder’s responsibility to ensure that the department receives the payment by the deadline. The method of payment is limited to the following:

(A) Bank-issued certified check;

(B) Bank-issued cashier’s check; or

(C) Money Order.

(d) All payments will be held until the outcome of the auction is determined. As soon as practicable, the department will return payments received to bidders that do not prevail at the auction. No interest will be paid on payments.

(e) A bid, once submitted, is not revocable and may not be changed. A payment will only be returned if a bid does not result in the issuance of a tax credit certificate.

(5) Determination of the Prevailing Bid(s). After the payment deadline has passed, the department will determine the prevailing bids by placing the qualifying bids in order from highest bid amount to lowest bid amount. The department will allot up to 1,500 tax credit increments of $1,000 each to the highest qualifying bids in order from highest bid to lowest bid. In the event that two or more qualifying bids have identical bid amounts for the last tax credit increment (or increments) available, the prevailing qualifying bid will be the one the department received first as determined under section (4).

Example: Four bidders (A, B, C and D) make qualifying bids on $10,000 worth of tax credits (sold in ten increments of $1,000). Bidder A bids $950 for each of four increments on October 24. Bidder B bids $965 for each of four increments on October 26. Bidder C bids $985 for each of three increments and $965 for each of two increments on November 1. Bidder D bids $990 for each of five increments on November 4. The department will place the bids in the following order:

Bid Amount/Increment -- Date Received -- Bidder -- Number of Increments Bid

$990 -- 11/04 -- D -- 5

$985 -- 11/01 -- C -- 3

$965 -- 10/26 -- B -- 4

$965 -- 11/01 -- C -- 2

$950 -- 10/24 -- A --  4

The results of the auction are as follows:

5 of the 10 increments go to D.

3 of the 10 increments go to C (for the $985 bid).

2 of the 10 increments go to B (for the $965 bid).

NOTE 1: B only received two of the four increments he bid on because no more increments were available. The department will return the payment to B for the amount of the two non-prevailing bids.

NOTE 2: The bid C placed at $965 did not prevail because it tied with the bid B submitted. B’s bid will prevail over C’s bid in the event of a tie because it was received before C’s bid. C’s payment for the $965 bid will be returned.

NOTE 3: A’s bid was not high enough to prevail. A’s bid payment will be returned.

Stat. Auth.: ORS 305.100
Stats. Implemented: 315.326
Hist.: REV 4-2011, f. 12-30-11, cert. ef. 1-1-12

150-315.354(5)

Business Energy Tax Credit: Transfer of Facilities

(1)(a) When a facility is sold, the seller may claim a credit for the year of sale prorated to the portion of the tax year that the seller owned and operated the facility. The buyer also may claim a credit for the year of purchase prorated to the period of ownership and operation of the facility if the buyer applies for and receives a new certificate as required by ORS 315.354(5)(a) and 469.215. If the seller's tax year is not the same as the purchaser's, each taxpayer's credit is based upon the portion of each taxpayer's own tax year in which that taxpayer owned the facility.

Example: Taxpayer A, a calendar year taxpayer, sold a certified facility to Taxpayer B on July 1. Taxpayer B is a fiscal year taxpayer with a tax year ending March 31. Taxpayer A's credit would be limited to 50 percent of a full year's credit (facility owned January 1 through June 30). Assuming Taxpayer B applied for and received a new certificate, Taxpayer B would be entitled to 75 percent of a full year's credit (facility owned July 1 through March 31).

(b) ORS 315.354(5)(a) provides that the tax credit available to the new owner is limited to the amount of credit not claimed by the former owner or, for a new lessor, the amount of credit not claimed by the lessor under all previous leases. Therefore, it is necessary for the seller to disclose to the buyer the amount of allowable credit not yet claimed based on the original certificate holder's investment in the facility.

(2) When the credit is available to co-owners of a facility and one owner purchases the interest of another, the credit must be prorated between purchaser and seller. The method of prorating partnership income when a partnership interest is sold that is provided in Internal Revenue Code Section 706(d) must be used to prorate the credit.

(3) When a facility is sold, any credit carryforward from tax periods prior to the sale cannot be sold or otherwise transferred to the buyer. Such credit carry forwards may only be used by the seller.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.354
Hist.: 9-20-89, 12-31-89, 12-31-92, Renumbered from 150-317.104(5); 12-31-93; REV 8-2001, f. & cert. ef. 12-31-01; REV 10-2007, f. 12-28-07, cert. ef. 1-1-08

150-315.514

Oregon Production Investment Fund Tax Credit Auctions

(1) Definitions.

(a) “Tax Credit” means the credit authorized by ORS 315.514.

(b) “Qualified Bid” means a bid that is eligible for consideration in the tax credit auction because:

(A) It is submitted in a manner and time prescribed by the department’s instructions and this rule;

(B) It is submitted for no less than 95 percent of the tax credit value;

(C) An associated payment is received by the department in the time and manner prescribed in section (4).

(c) “Non-qualified Bid” means a bid that is not eligible to participate in the auction because it does not meet the requirements of subsection (b).

(d) “Invalid or Insufficient Payments” are payments that are:

(A) Not received by the department by 5:00 p.m. (PT) on the date for payment set by the department;

(B) In a form other than one listed in section (4) of this rule;

(C) Fraudulent or otherwise not able to be immediately banked by the department;

(D) Less than the full amount of the corresponding bid received by the department; or

(E) Not submitted in a manner consistent with department’s instructions (including attaching the required completed forms).

(e) “PT” means Pacific Time (Daylight or Standard as dictated by the time of year).

(2) Auction Bidding Period. The tax credits auction bidding period is no less than seven days, not to exceed 14 days; with specific dates as announced by the department.

(3) Tax Credit Certificates. The Oregon Film and Video Office will issue tax credit certificates for the prevailing qualified bids. A taxpayer to whom a certificate is issued may claim a credit in the amount shown on the certificate against Oregon personal income or corporate income or excise tax otherwise due for that tax year. The tax credit may not exceed the liability of the taxpayer in any one year. Any credit amount unused by the taxpayer may be carried forward to offset tax liabilities in the next three succeeding tax years. No transfer of the certificate (or the credit that it represents) is allowed.

(4) Determination of Qualifying Bids and Payments.

(a) Bids must be submitted on-line in a manner consistent with the department’s instructions and within the bidding period as outlined in section (2). Bids received before or after the bidding period will be considered a non-qualified bid. The department will determine the order of bids received by the electronic date and time stamp.

(b) A bidder may submit multiple separate bids.

(c) After a bid is submitted, a bidder must send, and the department must receive, a payment for the total amount bid. Invalid or insufficient payments will be returned to the bidder and the associated bid considered non-qualified. All bid payments must be received by the department no later than 5:00 p.m. (PT) on the payment date. The department will date stamp payments when they are received. The department will not consider postmarks when determining if the payment has been timely received. It is the bidder’s responsibility to ensure that the department receives the payment by the deadline. The method of payment is limited to the following:

(A) Bank-issued certified check;

(B) Bank-issued cashier’s check; or

(C) Money Order.

(d) All payments will be held until the outcome of the auction is determined. As soon as practicable, the department will return payments received to bidders that do not prevail at the auction. No interest will be paid on payments.

(e) A bid, once submitted, is not revocable and may not be changed. A payment will only be returned if a bid does not result in the issuance of a tax credit certificate.

(5) Determination of the Prevailing Bid(s). After the payment deadline has passed, the department will determine the prevailing bids by placing the qualifying bids in order from highest bid amount to lowest bid amount. The department will allot tax credit certificates to the highest qualifying bids. In the event that two or more qualifying bids have identical bid amounts for the last tax credit increment (or increments) available, the prevailing qualifying bid will be the one the department received first as determined under section (4).

Example: Four bidders (A, B, C and D) make qualifying bids on $10,000 worth of tax credits (sold in twenty increments of $500). Bidder A bids $475 for each of eight increments on October 24. Bidder B bids $480 for each of eight increments on October 26. Bidder C bids $485 for each of six increments and $480 for each of four increments on November 1. Bidder D bids $495 for each of ten increments on November 4.

The results of the auction are as follows:

10 of the 20 increments go to D.

6 of the 20 increments go to C (for the $490 bid).

4 of the 20 increments go to B (for the $480 bid).

NOTE 1: B only received four of the eight increments he bid on because no more increments were available. The department will return the payment to B for the amount of the four non-prevailing bids.

NOTE 2: The bid C placed at $480 did not prevail because it tied with the bid B submitted. B’s bid will prevail over C’s bid in the event of a tie because it was received before C’s bid. C’s payment for the $480 bid will be returned.

NOTE 3: A’s bid was not high enough to prevail. A’s bid payment will be returned.

[ED. NOTE: Tables referenced are not included in rule text. Click here for PDF copy of table(s).]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.514
Hist.: REV 3-2006, f. & cert .ef. 7-31-06; REV 3-2012(Temp), f. 5-17-12, cert. ef. 6-1-12 thru 7-31-12; REV 4-2012, f. 7-20-12, cert. ef. 8-1-12; REV 6-2013, f. & cert. ef. 12-26-13

150-315.521

University Venture Development Fund Tax Credit

(1) Under ORS 315.521, taxpayers may claim a credit for donations to a qualified university venture development fund. The total credit is equal to sixty percent of the amount contributed to the university venture development fund that is shown on the tax credit certificate issued by a university. The credit allowable in any one tax year is limited to the lesser of:

(a) $50,000;

(b) The tax liability of the taxpayer for that year; or

(c) Twenty percent of the amount contributed.

(2) The credit is claimed in the year the donation is made and in any subsequent tax years until the total credit is used.

Example 1: Ian donated $200,000 to a university venture development fund in 2007. Ian may claim a tax credit of $120,000 (60 percent of $200,000). In any one tax year, the maximum credit Ian may claim is the least of $50,000, his tax liability for the tax year, or $40,000 (20% of his 2007 contribution).

Ian's tax liability by year; 2007 -- $25,000; 2008 -- $65,000; 2009 -- zero; 2010 -- $45,000;

2011 and 2012 -- $35,000

In 2007, Ian may claim $25,000 (his 2007 tax liability); the lowest of the amounts in subsections (1)(a), (1)(b), or (1)(c) of this rule. Ian has $95,000 remaining to claim in future tax years.

In 2008, Ian may claim $40,000 because he may not claim more than 20 percent of the contribution in any one year. Ian has used $65,000 of his total credit ($25,000 in 2007 + $40,000 in 2008).

In 2009, Ian may not claim any credit because he may does not have a tax liability. He has $55,000 remaining to claim in later years.

In 2010, Ian may claim $40,000 (20 percent of the contribution in any one year). Ian has used $105,000 of his total credit ($25,000 in 2007 + $40,000 in 2008 + $40,000 in 2010).

In 2011, he may claim $15,000 because he may not claim more than the total credit of $120,000 ($120,000 total credit - $105,000 already used = $15,000 available credit for 2011).

Example 2: Assume the same facts as Example 1, except that Ian contributes an additional $100,000 to the fund in 2008. The total credit that may be claimed for this contribution is $60,000 (60 percent of $100,000). In 2008, Ian has $95,000 remaining of his 2007 credit to claim in future tax years and the 2008 credit from the new contribution. Ian figures his 2008 credit as follows:

In 2008, Ian may claim $40,000 of the 2007 credit and $20,000 of his 2008 credit because he may not claim more than 20 percent of the contributions in any one year. Ian has $55,000 remaining of his 2007 credit ($120,000 - $25,000 - $40,000 = $55,000) and $40,000 of his 2008 credit ($60,000 - $20,000) to claim in future tax years.

In 2009, Ian may not claim any credit because he does not have a tax liability. He continues to have $95,000 in credits remaining to claim in later years.

In 2010, Ian may claim $40,000 of the 2007 credit because he may not claim more than 20 percent of the contribution in any one year. He may also claim $5,000 of his 2008 credit because he may not claim more than his tax liability. Ian has $15,000 remaining of his 2007 credit [$120,000 - $25,000 (in 2007) - $40,000 (in 2008) - $40,000 (in 2009) = $15,000] and $35,000 of his 2008 credit [$60,000 - $20,000 (in 2008) - $5,000 (in 2010)] to claim in future tax years.

In 2011, Ian may claim the remaining $15,000 of his 2007 credit and $20,000 of his 2008 credit. He may not claim more than $20,000 of his 2008 credit because he may not claim more than his tax liability or more than 20 percent of the contribution; in this case either is $20,000. Ian has used his entire 2007 credit and has $15,000 of his 2008 credit ($60,000 - $20,000 - $5,000 - $20,000) to claim in future tax years.

In 2012, he may claim the remaining $15,000 of his 2008 credit.

(3) ORS 315.521 requires that any amount deducted for federal tax purposes that serves as the basis of calculating the credit must be added to taxable income.

Example 3: Ian deducted the $200,000 contribution on his 2007 federal tax return. Because that amount is used as the basis for determining the tax credit, ORS 315.521(5) requires the $200,000 be added to Oregon taxable income on the 2007 Oregon tax return.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.521
Hist. REV 7-2007(Temp), f. & cert. ef. 9-21-07 thru 12-31-07; REV 11-2007, f. 12-28-07, cert. ef. 1-1-08

150-315.610(5)(c)

Long-term Care Insurance Premiums Credit Allowable to Spouses Filing Separately

(1) A husband and wife who file separate Oregon returns may each claim a share of the long-term care insurance premiums credit that would have been allowed on a joint return. The credit on a joint return is limited to the lesser of 15 percent of the combined long-term care insurance premiums expense, or $500. The spouses may divide the total premium cost between them based on who actually paid the premiums or by any other method that is acceptable to both spouses. If the spouses do not agree on how to divide the total premium cost, the department may allocate the payments between them. Spouses are considered not to have agreed on a method for dividing their payments if both spouses file separate returns claiming total credits that exceed the maximum that would have been allowed on a joint return.

(2) Figuring the credits. There are three steps to determine the allowable credits.

(a) Step 1: Compute a credit using the total premium cost.

(b) Step 2: Determine each spouse's allowable credit proportion by dividing each spouse's premium expense by the total premium cost.

(c) Step 3: Multiply the joint credit by each individual's proportion.

Example: Jim and Gina, husband and wife, use married filing separate status for their Oregon tax returns. During the year Jim paid $2,400 in long-term care insurance premiums. Gina paid premiums of $1,200, for total premiums paid of $3,600. First they compute the credit as if they were claiming it jointly. Their combined individual credits cannot exceed their joint credit; that is, the lesser of 15 percent of the combined premiums or $500. A total premium of $3,600 x 15 percent is $540, so their joint credit amount is limited to $500. Next, they each determine their individual proportion of the total premiums paid. Jim divides $2,400 by $3,600 to find he paid 67 percent of the total premiums. Gina's portion is 33 percent ($1,200/$3,600). Finally, they each multiply the joint credit by their proportion to determine their separate credit. Jim's individual credit is 67 percent of $500 or $335. Gina's credit is $165 ($500 x 33 percent).

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 315.610
Hist.: REV 5-2000, f. & cert. ef. 8-3-00

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