Oregon adopted a temporary regulation allowing corporate taxpayers a subtraction for some listed jurisdiction income.
Why is the modification necessary?
Oregon required corporate taxpayers to include listed jurisdiction income in taxable income in 2014, 2015, and 2016. The federal adoption of a one-time mandatory repatriation of earnings and profits under IRC Sec. 965 could lead to Oregon taxing this income again.
Oregon adopted a tax credit (TAXDAY, 2018/04/12, S. 23) to address this situation. However, the credit does not apply to taxpayers with a repatriation obligation in 2018.
Which taxpayers will the rule apply to?
Oregon corporate taxpayers:
– with an IRC Sec. 965 repatriation obligation;
– required to include listed jurisdiction income already included in Oregon income; and
– that the repatriation tax credit does not offer full relief to.
What is the modification?
A taxpayer can elect to subtract listed jurisdiction income amounts included in income because of IRC Sec. 965. The taxpayer must have included the amounts in tax year 2014, 2015, or 2016.
Taxpayers make the election instead of claiming the repatriation tax credit. Taxpayers must use the modification in both the 2017 and 2018 tax years. Taxpayers claim the modification on Schedule OR-ASC-CORP.
OAR 150-317-0652, Oregon Department of Revenue, effective October 15, 2018 through April 12, 2019