US Laws, Codes, Statutes & Cases

Chapter 316 — Personal Income Tax

 

2005 EDITION

 

 

PERSONAL INCOME TAX

 

REVENUE AND TAXATION

 

GENERAL PROVISIONS

 

316.002     Short title

 

316.003     Goals

 

316.007     Policy

 

316.012     Terms have same meaning as in federal laws; federal law references

 

316.013     Determination of federal adjusted gross income

 

316.014     Determination of net operating loss, carryback and carryforward

 

316.018     Application of Payment-in-Kind Tax Treatment Act of 1983

 

316.022     General definitions

 

316.024     Application of federal law to determination of taxable income

 

316.027     “Resident” defined

 

316.032     Department to administer law; policy as to federal conflicts and technical corrections

 

316.037     Imposition and rate of tax

 

316.042     Amount of tax where joint return used

 

316.045     Tax rate imposed on certain long-term capital gain from farming; requirements

 

316.047     Transitional provision to prevent doubling income or deductions

 

316.048     Taxable income of resident

 

316.054     Social Security benefits to be subtracted from federal taxable income

 

316.056     Interest or dividends on municipal obligations subtracted from federal taxable income

 

316.074     Exemption for service in Vietnam on missing status

 

316.076     Deduction for physician in medically disadvantaged area

 

CREDITS

 

316.078     Tax credit for dependent care expenses necessary for employment

 

316.079     Credit for certain disabilities

 

316.082     Credit for taxes paid another state; rules

 

316.085     Personal exemption credit

 

316.087     Credit for the elderly or permanently and totally disabled

 

316.095     Credit for sewage treatment works connection costs

 

316.099     Credit for early intervention services for disabled child; rules of State Board of Education

 

316.102     Credit for political contributions

 

316.109     Credit for tax by another jurisdiction on sale of residential property

 

316.116     Credit for alternative energy device, alternative fuel vehicle or solar electric system

 

TAXATION OF NONRESIDENTS

 

316.117     Proration between Oregon income and other income for nonresidents, part-year residents and trusts

 

316.118     Pro rata share of S corporation income of nonresident shareholder

 

316.119     Proration of part-year resident’s income between Oregon income and other income; alternative proration for pass-through entity items

 

316.122     Separate or joint determination of income for husband and wife

 

316.124     Determination of adjusted gross income of nonresident partner

 

316.127     Income of nonresident from Oregon sources

 

316.130     Determination of taxable income of full-year nonresident

 

316.131     Credit allowed to nonresident for taxes paid to state of residence; exception

 

ADDITIONAL CREDITS

 

(Costs in Lieu of Nursing Home Care)

 

316.147     Definitions for ORS 316.147 to 316.149

 

316.148     Credit for expenses in lieu of nursing home care; limitation

 

316.149     Evidence of eligibility for credit

 

(Mobile Homes; Moving Expense)

 

316.153     Credit for involuntary moving of mobile home of qualifying individuals

 

(Retirement Income)

 

316.157     Credit for retirement income

 

316.158     Effect upon ORS 316.157 of determination of invalidity; severability

 

316.159     Subtraction for certain retirement distributions contributed to retirement plan during period of nonresidency; substantiation rules

 

COLLECTION OF TAX AT SOURCE OF PAYMENT

 

(Generally)

 

316.162     Definitions for ORS 316.162 to 316.221

 

316.164     When surety bond or letter of credit required of employer; enforcement

 

316.167     Withholding of tax required; elective provisions for agricultural employees; liability of supplier of funds to employer for taxes

 

316.168     Employer required to file combined quarterly tax report

 

316.169     Circumstances in which person other than employer required to withhold tax

 

316.171     Application of tax and report to administration of tax laws

 

316.172     Tax withholding tables to be prepared by department

 

316.177     Reliance on withholding statement; penalty for statement without reasonable basis

 

316.182     Exemption certificate

 

316.187     Amount withheld is in payment of employee’s tax

 

316.189     Withholding of state income taxes from certain periodic payments

 

316.191     Withholding taxes at time and in manner other than required by federal law; rules

 

316.193     Withholding of state income taxes from federal retired pay for members of uniformed services

 

316.194     Withholding from lottery prize payments

 

316.196     Withholding of state income taxes from federal retirement pay for civil service annuitant

 

316.197     Payment to department by employer; interest on delinquent payments

 

316.198     Payment by electronic funds transfer; phase-in; rules

 

316.202     Reports by employer; waiver; penalty for failure to report; rules

 

316.207     Liability for tax; warrant for collection; conference; appeal

 

316.209     Applicability of ORS 316.162 to 316.221 when services performed by qualified real estate broker or direct seller

 

316.212     Application of penalties, misdemeanors and jeopardy assessment; employer as taxpayer

 

(Professional Athletic Teams)

 

316.213     Definitions for ORS 316.213 to 316.219

 

316.214     Withholding requirements for members of professional athletic teams

 

316.218     Annual report of compensation paid to professional athletic team members

 

316.219     Rules

 

(Qualifying Film Productions)

 

316.220     Alternative withholding requirements for qualifying film production compensation; refund prohibition

 

316.221     Disposition of withheld amounts

 

NONRESIDENT REPORTING

 

316.223     Alternate methods of filing, reporting and calculating liability for nonresident employer and employee in state temporarily; rules

 

ESTATES AND TRUSTS

 

(Generally)

 

316.267     Application of chapter to estates and certain trusts

 

316.272     Computation and payment on estate or trust

 

316.277     Associations taxable as corporations exempt from chapter

 

316.279     Treatment of business trusts and business trusts income

 

(Resident Estates and Trusts)

 

316.282     Definitions related to trusts and estates; rules

 

316.287     “Fiduciary adjustment” defined; shares proportioned; rules

 

316.292     Credit for taxes paid another state

 

316.298     Accumulation distribution credit

 

(Nonresident Estates and Trusts)

 

316.302     “Nonresident estate or trust” defined

 

316.307     Income of nonresident estate or trust

 

316.312     Determination of Oregon share of income

 

316.317     Credit to beneficiary for accumulation distribution

 

RETURNS; PAYMENTS; REFUNDS

 

316.362     Persons required to make returns

 

316.363     Returns; instructions

 

316.364     Flesch Reading Ease Score form instructions

 

316.367     Joint return by husband and wife

 

316.368     When joint return liability divided; showing of marital status and hardship

 

316.369     Circumstances where one spouse relieved of joint return liability

 

316.372     Minor to file return; unpaid tax assessable against parent; when parent may file for minor

 

316.377     Individual under disability

 

316.382     Returns by fiduciaries

 

316.387     Election for final tax determination by personal representative; period for assessment of deficiency; discharge of personal representative from personal liability for tax

 

316.392     Notice of qualification of receiver and others

 

316.417     Date return considered made or advance payment made

 

316.457     Department may require copy of federal return

 

316.462     Change of election

 

316.472     Tax treatment of common trust fund; information return required

 

316.490     Refund as contribution to Alzheimer’s Disease Research Fund

 

316.491     Refund as contribution to Oregon Military Emergency Financial Assistance Program

 

316.493     Refund as contribution for prevention of child abuse and neglect

 

DISTRIBUTION OF REVENUE

 

316.502     Distribution of revenue to General Fund; working balance; refundable credit payments

 

PAYMENT OF ESTIMATED TAXES

 

316.557     Definition of “estimated tax”

 

316.559     Application of ORS 316.557 to 316.589 to estates and trusts

 

316.563     When declaration of estimated tax required; exception; effect of short tax year; content; amendment

 

316.567     Joint declaration of husband and wife; liability; effect on nonjoint returns

 

316.569     When declaration required of nonresident

 

316.573     When individual not required to file declaration

 

316.577     Date of filing declaration

 

316.579     Amount of estimated tax to be paid with declaration; installment schedule; prepayment of installment

 

316.583     Effect of payment of estimated tax or installment; credit for overpayment of prior year taxes

 

316.587     Effect of underpayment of estimated tax; computation of underpayment; interest; when not imposed

 

316.588     When interest on underpayment not imposed

 

316.589     Application to short tax years and tax years beginning on other than January 1

 

MODIFICATIONS OF TAXABLE INCOME

 

(Generally)

 

316.680     Modification of taxable income

 

316.681     Interest or dividends to benefit self-employed or individual retirement accounts

 

316.683     State exempt-interest dividends

 

316.685     Federal income tax deductions; accrual method of accounting required; adjustment for federal earned income credit

 

316.687     Amount in excess of standard deduction for child, if child’s income included on parent’s federal return; limitation

 

316.690     Foreign income taxes

 

316.695     Additional modifications of taxable income

 

316.697     Fiduciary adjustment

 

316.698     Subtraction for qualifying film production labor rebates

 

316.699     Subtraction for college savings network account contributions; limitations; carryforward

 

316.707     Computation of depreciation of property under federal law; applicability

 

316.716     Differences in basis on federal and state return

 

316.737     Amount specially taxed under federal law to be included in computation of state taxable income

 

316.738     Modification of taxable income when deferred gain is recognized as result of out-of-state disposition of property

 

316.744     Cash payments for energy conservation

 

(Additional Personal Exemption Credits)

 

316.752     Definitions for ORS 316.752 to 316.771

 

316.758     Additional personal exemption credit for severely disabled persons

 

316.765     Additional personal exemption credit for spouse of severely disabled person; conditions

 

316.771     Proof of status for exemption credit

 

(Exemptions)

 

316.777     Income derived from sources within federally recognized Indian country exempt from tax

 

316.778     Small city business development exemption; rules

 

316.783     Amounts received for condemnation of Indian tribal lands

 

316.785     Income derived from exercise of Indian fishing rights

 

316.787     Payments to Japanese and Aleuts under Civil Liberties Act of 1988

 

316.789     Persian Gulf Desert Shield active military service

 

316.791     Compensation for active duty military service

 

(Temporary provisions relating to exemption for certain sales of manufactured dwelling parks are compiled as notes following ORS 316.791)

 

(Additional Modifications of Taxable Income)

 

316.806     Definitions for ORS 316.806 to 316.818

 

316.812     Certain traveling expenses

 

316.818     Proof of expenses

 

316.821     Federal election to deduct sales taxes; addition for state purposes

 

316.824     Definitions for ORS 316.824 and 316.832

 

316.832     Travel expenses for loggers

 

316.834     Underground storage tank pollution prevention or essential services grant

 

316.836     Qualified production activities income

 

316.837     Addition for federal prescription drug plan subsidies excluded for federal tax purposes

 

316.838     Art object donation

 

316.844     Special computation of gain or loss where farm use value used

 

316.845     Exception to ORS 316.844

 

316.846     Scholarship awards used for housing expenses

 

316.848     Individual development accounts

 

316.852     Qualified donations and sales to educational institutions

 

DEFERRAL OF REINVESTED GAIN

 

316.871     Definitions for ORS 316.872

 

316.872     Deferral of gain on sale of small business securities

 

316.873     Definitions for ORS 316.873 to 316.884

 

316.874     Deferral of gain from sale of capital asset; reinvestment of gain; disposition of interest or asset in which gain reinvested

 

316.876     Gain that may not be deferred under ORS 316.873 to 316.884

 

316.877     Declaration of intent to reinvest in qualified business interest, qualified investment fund or qualified business asset required for deferral of gain

 

316.878     Basis of qualified business interest, qualified investment fund or qualified business asset in which gain reinvested

 

316.879     Events causing deferral of gain to cease; recognition of deferred gain

 

316.881     Sale or disposition of reinvestment interest; period for assessment of deficiency; failure to reinvest after declaration filed

 

316.882     Death or disability; election of successor related party to continue deferral; basis upon death if deferral not continued

 

316.883     Rules for ORS 316.873 to 316.884; adoption by Department of Revenue

 

316.884     Deferral of gain for tax years beginning in 1996; applicability of ORS 316.873 to 316.884; modifications

 

316.970     Effect of chapter 493, Oregon Laws 1969

 

PENALTIES

 

316.992     Penalty for filing incorrect return that is based on frivolous position or is intended to delay or impede administration; appeal

 

GENERAL PROVISIONS

 

      316.002 Short title. This chapter may be cited as the Personal Income Tax Act of 1969. [1969 c.493 §1; 1995 c.79 §164]

 

      316.003 Goals. (1) The goals of the Legislative Assembly are to achieve for Oregon’s citizens a tax system which recognizes:

      (a) Fairness and equity as its basic values; and

      (b) That the total tax system should use seven guiding principles as measures by which to evaluate tax proposals.

      (2) Those guiding principles are:

      (a) Ability to pay;

      (b) Fairness;

      (c) Efficiency;

      (d) Even distribution;

      (e) The tax system should be equitable where the minimum aspects of a fair system are:

      (A) That it shields genuine subsistence income from taxation;

      (B) That it is not regressive; and

      (C) That it imposes approximately the same tax burden on all households earning the same income;

      (f) Adequacy; and

      (g) Flexibility.

      (3) To meet those goals of Oregon’s tax system, any tax must be considered in conjunction with the effects of all other taxes on Oregonians. [1991 c.457 §1a]

 

      Note: 316.003 was enacted into law by the Legislative Assembly but was not added to or made a part of ORS chapter 316 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.

 

      316.005 [1953 c.304 §1; repealed by 1969 c.493 §99]

 

      316.007 Policy. It is the intent of the Legislative Assembly, by the adoption of this chapter, insofar as possible, to:

      (1) Make the Oregon personal income tax law identical in effect to the provisions of the Internal Revenue Code relating to the measurement of taxable income of individuals, estates and trusts, modified as necessary by the state’s jurisdiction to tax and the revenue needs of the state;

      (2) Achieve this result by the application of the various provisions of the Internal Revenue Code relating to the definition of income, exceptions and exclusions therefrom, deductions (business and personal), accounting methods, taxation of trusts, estates and partnerships, basis, depreciation and other pertinent provisions relating to gross income as defined therein, modified as provided in this chapter, resulting in a final amount called “taxable income”; and

      (3) Impose a tax on residents of this state measured by taxable income wherever derived and to impose a tax on the income of nonresidents that is ascribable to sources within this state. [1969 c.493 §2; 1971 s.s. c.4 §1; 1987 c.293 §1; 1989 c.625 §1; 2003 c.46 §34]

 

      316.010 [1953 c.304 §2; 1953 c.552 §1; repealed by 1969 c.493 §99]

 

      316.012 Terms have same meaning as in federal laws; federal law references. Any term used in this chapter has the same meaning as when used in a comparable context in the laws of the United States relating to federal income taxes, unless a different meaning is clearly required or the term is specifically defined in this chapter. Except where the Legislative Assembly has provided otherwise, any reference in this chapter to the laws of the United States or to the Internal Revenue Code refers to the laws of the United States or to the Internal Revenue Code as they are amended and in effect:

      (1) On December 31, 2004; or

      (2) If related to the definition of taxable income, as applicable to the tax year of the taxpayer. [1969 c.493 §3; 1971 s.s. c.4 §2; 1975 c.672 §3; 1983 c.162 §59; 1985 c.802 §1; 1987 c.293 §2; 1989 c.625 §2; 1991 c.457 §1; 1993 c.726 §27; 1995 c.556 §1; 1997 c.839 §1; 1999 c.224 §7; 2001 c.660 §35; 2003 c.77 §14; 2005 c.519 §9; 2005 c.832 §27]

 

      Note: Section 10, chapter 519, Oregon Laws 2005, provides:

      Sec. 10. The amendments to ORS 314.011 and 316.012 by sections 8 and 9 of this 2005 Act apply to:

      (1) Tax years beginning on or after January 1, 2001; or

      (2) Any tax year affected by any provision of the Military Family Tax Relief Act of 2003 (P.L. 108-121). [2005 c.519 §10]

 

      316.013 Determination of federal adjusted gross income. Unless the context requires otherwise and notwithstanding ORS 316.012, whenever, in the calculation of Oregon taxable income, reference to the taxpayer’s federal adjusted gross income is required to be made, the taxpayer’s federal adjusted gross income shall be as determined under the provisions of the Internal Revenue Code as they may be in effect for the tax year of the taxpayer without any of the additions, subtractions or other modifications or adjustments required under this chapter and other laws of this state applicable to personal income taxation. [1985 c.802 §3a; 1999 c.580 §3]

 

      316.014 Determination of net operating loss, carryback and carryforward. (1) In the computation of state taxable income the net operating loss, net operating loss carryback and net operating loss carryforward shall be the same as that contained in the Internal Revenue Code as it applies to the tax year for which the return is filed and shall not be adjusted for any changes or modifications contained in this chapter or by the case law of this state.

      (2) In the case of a nonresident, the net operating loss deduction, net operating loss carryback and net operating loss carryforward shall be that described in subsection (1) of this section which is attributable to Oregon sources.

      (3) If any provision in ORS 316.047 or 316.127 appears to require an adjustment to a net operating loss, net operating loss carryback or net operating loss carryforward contrary to the provisions of this section, that adjustment shall not be made. [1985 c.802 §18; 1997 c.839 §2; 2003 c.77 §15]

 

      316.015 [1953 c.304 §3; 1953 c.552 §2; 1959 c.211 §3; 1959 c.593 §1 (referred and rejected); 1963 c.627 §2 (referred and rejected); repealed by 1969 c.493 §99; amended by 1969 c.520 §41]

 

      316.016 [1973 c.119 §2; repealed by 1975 c.672 §8]

 

      316.017 [1969 c.493 §3a; repealed by 1969 c.493 §3b]

 

      316.018 Application of Payment-in-Kind Tax Treatment Act of 1983. The Payment-in-Kind Tax Treatment Act of 1983 (P.L. 98-4, as amended by section 1061 of P.L. 98-369) applies for purposes of determining Oregon taxable income under this chapter, notwithstanding that the Act is not part of the Internal Revenue Code. [1985 c.802 §42; 2003 c.46 §35]

 

      316.019 [1985 c.802 §46; repealed by 1997 c.839 §69]

 

      316.020 [1953 c.304 §4; repealed by 1969 c.493 §99]

 

      316.021 [1985 c.802 §58; 1987 c.293 §3; renumbered 314.029 in 1993]

 

      316.022 General definitions. As used in this chapter, unless the context requires otherwise:

      (1) “Department” means the Department of Revenue.

      (2) “Director” means the Director of the Department of Revenue.

      (3) “Individual” means a natural person, including aliens and minors.

      (4) A “nonresident” means an individual who is not a resident of this state.

      (5) “Part-year resident” means an individual taxpayer who changes status during a tax year from resident to nonresident or from nonresident to resident.

      (6) “Taxable income” means the taxable income as defined in subsection (a) or (b), section 63 of the Internal Revenue Code, with such additions, subtractions and adjustments as are prescribed by this chapter.

      (7) “Taxpayer” means any natural person, estate, trust, or beneficiary whose income is in whole or in part subject to the taxes imposed by this chapter, or any employer required by this chapter to withhold personal income taxes from the compensation of employees for remittance to the state. [1969 c.493 §§4,5,6,7,9 and 1969 c.520 §42b; 1985 c.141 §2; 1987 c.293 §4]

 

      316.023 [1987 c.293 §§71,72,73; renumbered 314.033 in 1993]

 

      316.024 Application of federal law to determination of taxable income. Section 243 of the Tax Reform Act of 1986 (P.L. 99-514) does not apply for purposes of determining taxable income under this chapter. [1987 c.293 §12a; 2003 c.46 §36]

 

      316.025 [1953 c.304 §5; repealed by 1957 c.632 §1 (314.075 and 314.080 enacted in lieu of 316.025, 316.030, 317.015 and 317.020)]

 

      316.027 “Resident” defined. (1) For purposes of this chapter, unless the context requires otherwise:

      (a) “Resident” or “resident of this state” means:

      (A) An individual who is domiciled in this state unless the individual:

      (i) Maintains no permanent place of abode in this state;

      (ii) Does maintain a permanent place of abode elsewhere; and

      (iii) Spends in the aggregate not more than 30 days in the taxable year in this state; or

      (B) An individual who is not domiciled in this state but maintains a permanent place of abode in this state and spends in the aggregate more than 200 days of the taxable year in this state unless the individual proves that the individual is in the state only for a temporary or transitory purpose.

      (b) “Resident” or “resident of this state” does not include:

      (A) An individual who is a qualified individual under section 911(d)(1) of the Internal Revenue Code for the tax year;

      (B) A spouse of a qualified individual under section 911(d)(1) of the Internal Revenue Code, if the spouse has a principal place of abode for the tax year that is not located in this state; or

      (C) A resident alien under section 7701(b) of the Internal Revenue Code who would be considered a qualified individual under section 911(d)(1) of the Internal Revenue Code if the resident alien were a citizen of the United States.

      (2) For purposes of subsection (1)(a)(B) of this section, a fraction of a calendar day shall be counted as a whole day. [1969 c.493 §8; 1987 c.158 §49; 1995 c.79 §165; 1999 c.1096 §1]

 

      316.030 [1953 c.304 §6; repealed by 1957 c.632 §1 (314.075 and 314.080 enacted in lieu of 316.025, 316.030, 317.015 and 317.020)]

 

      316.032 Department to administer law; policy as to federal conflicts and technical corrections. (1) The Department of Revenue shall administer and enforce this chapter.

      (2) Insofar as is practicable in the administration of this chapter, the department shall apply and follow the administrative and judicial interpretations of the federal income tax law. When a provision of the federal income tax law is the subject of conflicting opinions by two or more federal courts, the department shall follow the rule observed by the United States Commissioner of Internal Revenue until the conflict is resolved. Nothing contained in this section limits the right or duty of the department to audit the return of any taxpayer or to determine any fact relating to the tax liability of any taxpayer.

      (3) When portions of the Internal Revenue Code incorporated by reference as provided in ORS 316.007 or 316.012 refer to rules or regulations prescribed by the Secretary of the Treasury, then such rules or regulations shall be regarded as rules adopted by the department under and in accordance with the provisions of this chapter, whenever they are prescribed or amended.

      (4)(a) When portions of the Internal Revenue Code incorporated by reference as provided in ORS 316.007 or 316.012 are later corrected by an Act or a Title within an Act of the United States Congress designated as an Act or Title making technical corrections, then notwithstanding the date that the Act or Title becomes law, those portions of the Internal Revenue Code, as so corrected, shall be the portions of the Internal Revenue Code incorporated by reference as provided in ORS 316.007 or 316.012 and shall take effect, unless otherwise indicated by the Act or Title (in which case the provisions shall take effect as indicated in the Act or Title), as if originally included in the provisions of the Act being technically corrected. If, on account of this subsection, any adjustment is required to an Oregon return that would otherwise be prevented by operation of law or rule, the adjustment shall be made, notwithstanding any law or rule to the contrary, in the manner provided under ORS 314.135.

      (b) As used in this subsection, “Act or Title” includes any subtitle, division or other part of an Act or Title. [1969 c.493 §10; 1985 c.802 §1a; 1987 c.293 §5; 1997 c.839 §3]

 

      316.035 [1953 c.304 §117; repealed by 1969 c.493 §99 and 1969 c.520 §49]

 

      316.037 Imposition and rate of tax. (1)(a) A tax is imposed for each taxable year on the entire taxable income of every resident of this state. The amount of the tax shall be determined in accordance with the following table:

______________________________________________________________________________

 

If taxable income is:          The tax is:

 

 

Not over $2,000                5% of

                                                taxable

                                                income

 

Over $2,000 but not

      over $5,000          

                                          $100 plus 7%

                                                of the excess

                                                over $2,000

 

Over $5,000                      $310 plus 9%

                                                of the excess

                                                over $5,000

______________________________________________________________________________

 

      (b) For tax years beginning in each calendar year, the Department of Revenue shall adopt a table that shall apply in lieu of the table contained in paragraph (a) of this subsection, as follows:

      (A) The minimum and maximum dollar amounts for each rate bracket for which a tax is imposed shall be increased by the cost-of-living adjustment for the calendar year.

      (B) The rate applicable to any rate bracket as adjusted under subparagraph (A) of this paragraph shall not be changed.

      (C) The amounts setting forth the tax, to the extent necessary to reflect the adjustments in the rate brackets, shall be adjusted.

      (c) For purposes of paragraph (b) of this subsection, the cost-of-living adjustment for any calendar year is the percentage (if any) by which the monthly averaged U.S. City Average Consumer Price Index for the 12 consecutive months ending August 31 of the prior calendar year exceeds the monthly averaged index for the second quarter of the calendar year 1992.

      (d) As used in this subsection, “U.S. City Average Consumer Price Index” means the U.S. City Average Consumer Price Index for All Urban Consumers (All Items) as published by the Bureau of Labor Statistics of the United States Department of Labor.

      (e) If any increase determined under paragraph (b) of this subsection is not a multiple of $50, the increase shall be rounded to the next lower multiple of $50.

      (2) A tax is imposed for each taxable year upon the entire taxable income of every part-year resident of this state. The amount of the tax shall be computed under subsection (1) of this section as if the part-year resident were a full-year resident and shall be multiplied by the ratio provided under ORS 316.117 to determine the tax on income derived from sources within this state.

      (3) A tax is imposed for each taxable year on the taxable income of every full-year nonresident that is derived from sources within this state. The amount of the tax shall be determined in accordance with the table set forth in subsection (1) of this section. [1969 c.493 §11; 1975 c.674 §1; 1977 c.872 §1; 1979 c.649 §1; 1983 c.684 §23; 1985 c.141 §1; 1987 c.293 §6; 1991 c.457 §1b; 2001 c.660 §11; 2003 c.46 §37]

 

      316.040 [1953 c.304 §7; repealed by 1969 c.493 §99]

 

      316.042 Amount of tax where joint return used. In the case of a joint return of husband and wife, pursuant to ORS 316.122 or pursuant to ORS 316.367, the tax imposed by ORS 316.037 shall be twice the tax which would be imposed if the taxable income were cut in half. For purposes of this section, a return of a head of household or a surviving spouse, as defined in subsections (a) and (b) of section 2 of the Internal Revenue Code, shall be treated as a joint return of husband and wife. [1969 c.493 §12; 1975 c.674 §2; 1987 c.293 §7; 1987 c.647 §10]

 

      316.045 Tax rate imposed on certain long-term capital gain from farming; requirements. (1) As used in this section:

      (a) “Farming” means:

      (A) Raising, harvesting and selling crops;

      (B) Feeding, breeding, managing or selling livestock, poultry, fur-bearing animals or honeybees or the produce thereof;

      (C) Dairying and selling dairy products;

      (D) Stabling or training equines, including but not limited to providing riding lessons, training clinics and schooling shows;

      (E) Propagating, cultivating, maintaining or harvesting aquatic species and bird and animal species to the extent allowed by the rules adopted by the State Fish and Wildlife Commission;

      (F) On-site constructing and maintaining equipment and facilities used for the activities described in this subsection;

      (G) Preparing, storing or disposing of, by marketing or otherwise, the products or by-products raised for human or animal use on land employed in activities described in this subsection; or

      (H) Any other agricultural or horticultural activity or animal husbandry, or any combination of these activities, except that “farming” does not include growing and harvesting trees of a marketable species other than growing and harvesting cultured Christmas trees or certain hardwood timber described in ORS 321.267 (3) or 321.824 (3).

      (b) “Section 1231 gain” has the meaning given that term in section 1231 of the Internal Revenue Code.

      (2) Notwithstanding ORS 316.037, taxable income that consists of net long-term capital gain shall be subject to tax under this chapter at a rate of five percent if all of the following conditions apply:

      (a) The gain is:

      (A) Derived from the sale or exchange of capital assets consisting of ownership interests in a corporation, partnership or other entity in which, prior to the sale or exchange, the taxpayer owned at least a 10 percent ownership interest; or

      (B) Section 1231 gain.

      (b) The property that was sold or exchanged consisted of:

      (A) Ownership interests in a corporation, partnership or other entity that is engaged in the trade or business of farming; or

      (B) Property that is predominantly used in the trade or business of farming.

      (c) The sale or exchange is to a person who is not related to the taxpayer under section 267 of the Internal Revenue Code.

      (d) The sale or exchange constitutes a substantially complete termination of all of the taxpayer’s ownership interests in a trade or business that is engaged in farming or a substantially complete termination of all of the taxpayer’s ownership interests in property that is employed in the trade or business of farming. Ownership of a farm dwelling or farm homesite does not constitute ownership of property employed in the trade or business of farming.

      (3) If the taxpayer has net long-term capital gain derived in part from the sale or exchange of property described in subsection (2)(b) of this section and in part from the sale or exchange of all other property, the net long-term capital gain that is subject to tax under this section shall be determined as follows:

      (a) Compute the net long-term capital gain derived from all property described in subsection (2)(b) of this section that was sold or exchanged during the tax year.

      (b) Compute the net capital gain or loss from the sale or exchange of all other property during the tax year.

      (c) If the amount determined under paragraph (b) of this subsection is a net capital gain, the gain that is subject to tax under subsection (2) of this section shall be the amount determined under paragraph (a) of this subsection.

      (d) If the amount determined under paragraph (b) of this subsection is a net capital loss, the gain that is subject to tax under subsection (2) of this section shall be the amount determined under paragraph (a) of this subsection minus the amount determined under paragraph (b) of this subsection. [2001 c.545 §2; 2003 c.454 §123; 2003 c.621 §98a]

 

      316.047 Transitional provision to prevent doubling income or deductions. If any provision of the Internal Revenue Code or of this chapter requires that any amount be added to or deducted from federal gross income or the net income taxable under this chapter that previously had been added to or deducted from net income taxable under the Oregon law in effect prior to the taxpayer’s taxable year as to which this chapter is first effective, then, in such event, appropriate adjustment shall be made to the net income for the year or years subject to this chapter so as to prohibit the double taxation or the double deduction of any such amount that previously had entered into the computation of taxable income. Differences such as the difference in basis of property used by the taxpayer for federal and Oregon income tax returns and on account of the treatment of operating losses shall be resolved by application of this principle. However, the Department of Revenue, in its audit of a return, shall not apply any adjustment under this section which, in its opinion, if applied would result in an increase or decrease of tax liability of less than $25. [1969 c.493 §13; 1987 c.293 §8]

 

      316.048 Taxable income of resident. The entire taxable income of a resident of this state is the federal taxable income of the resident as defined in the laws of the United States, with the modifications, additions and subtractions provided in this chapter and other laws of this state applicable to personal income taxation. [Formerly 316.062; 1999 c.580 §4]

 

      316.049 [1977 c.755 §2; renumbered 316.777]

 

      316.050 [1977 c.553 §2; renumbered 316.783]

 

      316.051 [1977 c.390 §2; renumbered 316.788]

 

      316.052 [1977 c.390 §3; 1979 c.691 §2; renumbered 316.794]

 

      316.053 [1977 c.390 §4; renumbered 316.799]

 

      316.054 Social Security benefits to be subtracted from federal taxable income. In addition to the other modifications to federal taxable income contained in this chapter, there shall be subtracted from federal taxable income the amount of any Social Security benefits, as defined in section 86 of the Internal Revenue Code (Title II Social Security or tier 1 railroad retirement benefits) included in gross income for federal income tax purposes under section 86 of the Internal Revenue Code. [1985 c.154 §2; 1997 c.839 §4]

 

      316.055 [1953 c.304 §8; 1953 c.552 §3; 1957 s.s. c.15 §1; 1963 c.627 §3 (referred and rejected); repealed by 1969 c.493 §99]

 

      316.056 Interest or dividends on municipal obligations subtracted from federal taxable income. In addition to the modifications to federal taxable income contained in this chapter, there shall be subtracted from federal taxable income the interest or dividends on obligations of counties, cities, districts, ports or other public or municipal corporations or political subdivisions of this state, to the extent includable in gross income for federal income tax purposes. However, the amount subtracted under this section shall be reduced by any interest on indebtedness incurred to carry the obligations or securities described in this section, and by any expenses incurred in the production of interest or dividend income described in this section. [1987 c.293 §23b; 1989 c.988 §1]

 

      316.057 [1977 c.872 §8; renumbered 316.806]

 

      316.058 [1977 c.872 §9; renumbered 316.812]

 

      316.059 [1977 c.872 §10; renumbered 316.818]

 

      316.060 [1953 c.304 §9; 1955 c.596 §1; part derived from 1955 c.596 §4; 1957 c.586 §1; 1957 s.s. c.15 §2; 1959 c.593 §2 (referred and rejected); 1963 c.627 §4 (referred and rejected); repealed by 1969 c.493 §99; amended by 1969 c.520 §42]

 

      316.061 [1979 c.887 §2; renumbered 316.824]

 

      316.062 [1969 c.493 §14; renumbered 316.048]

 

      316.063 [1979 c.887 §§3,4; renumbered 316.832]

 

      316.064 [1979 c.707 §2; renumbered 316.838]

 

      316.065 [1953 c.304 §10; repealed by 1959 c.593 §14 (referred and rejected); repealed by 1963 c.627 §23 (referred and rejected); repealed by 1969 c.493 §99]

 

      316.066 [1973 c.753 §2; repealed by 1979 c.414 §7]

 

      316.067 [1969 c.493 §15; 1971 c.686 §12; 1971 c.736 §1; 1973 c.1 §1; 1973 c.88 §1; 1973 c.402 §18; 1973 c.753 §3; 1977 c.784 §1; 1979 c.414 §5; 1979 c.436 §1; 1979 c.579 §7; 1983 c.381 §1; renumbered 316.680]

 

      316.068 [1975 c.672 §§2,2a,10b,13; subsection (7) enacted as 1975 c.650 §2; 1977 c.795 §10; 1977 c.872 §12; 1978 c.9 §1; 1979 c.240 §1; 1979 c.436 §6; 1981 c.679 §1; 1981 c.896 §1; 1983 c.684 §6; renumbered 316.695]

 

      316.069 [1981 c.778 §34; renumbered 316.744]

 

      316.070 [1953 c.304 §13; repealed by 1969 c.493 §99]

 

      316.071 [1981 c.801 §2; renumbered 316.690]

 

      316.072 [1969 c.467 §6; 1979 c.376 §1; 1981 c.705 §1; renumbered 316.685]

 

      316.073 [1975 c.672 §12; repealed by 1991 c.457 §24]

 

      316.074 Exemption for service in Vietnam on missing status. (1) Any compensation or gratuity received from any source by any individual by reason of civilian or military service on and after February 28, 1961, during the Vietnam conflict, for any month during any part of which such individual is in a missing status as a result of that conflict, is exempt from tax under this chapter. Any such compensation or gratuity is exempt from tax without regard to:

      (a) The identity of the recipient of the compensation or gratuity;

      (b) The death of the individual whose service in a missing status results in payment of the compensation or the gratuity; or

      (c) A date of death established for the individual whose service in a missing status results in payment of the compensation or the gratuity.

      (2) As used in this section:

      (a) “Compensation” does not include any pension or retirement allowance.

      (b) “Missing status” means the status of an individual who is carried or determined to be in a status of missing; missing in action; interned in a foreign country; captured, beleaguered or besieged by a hostile force; or detained in a foreign country against the will of the individual. “Missing status” does not include the status of an individual for a period during which the individual is officially determined to be absent from a post of duty without authority.

      (3) In addition to the income tax relief provided by this section, any provision in the laws of the United States or in the Internal Revenue Code providing income tax relief for returning prisoners of war, persons in a missing status, their spouses, heirs, devisees or executors shall apply to the measurement of the taxable income of individuals, estates and trusts. [1973 c.475 §§2,3; 1975 c.672 §4; 1997 c.839 §5]

 

      316.075 [1953 c.304 §11; 1953 c.522 §4; 1959 c.593 §3 (referred and rejected); 1963 c.627 §5 (referred and rejected); repealed by 1969 c.493 §99]

 

      316.076 Deduction for physician in medically disadvantaged area. (1) Any person who becomes licensed under ORS chapter 677 on or after January 1, 1974, and prior to January 1, 1982, and enters the practice of medicine in any medically disadvantaged area of this state may deduct as an expense from income earned from the practice of medicine an amount equal to the annual expense incurred for each year in attending medical school, including tuition, fees, living expenses and other actual and necessary expenses, but not to exceed $10,000 for any year.

      (2) In order to qualify for the exemption granted by subsection (1) of this section, the person must apply to the Department of Revenue on or before April 15, following the first tax year for which the deduction is claimed on a form prescribed by the department and accompanied by evidence from the Board of Medical Examiners for the State of Oregon that the area in whi