71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 663
 
                         House Bill 2492
 
Sponsored by Representative SHETTERLY, Senator COURTNEY (at the
  request of Northwest Planned Giving Roundtable)
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
 
  Creates tax credits for taxpayers who make planned gift or
charitable contribution to qualified endowment.
  Requires Department of Revenue to report on credits annually to
Legislative Assembly or interim committee.
  Applies to tax years beginning on or after January 1, 2002, and
before January 1, 2006.
 
                        A BILL FOR AN ACT
Relating to taxation; creating new provisions; and amending ORS
  314.752 and 318.031.
  Whereas charitable endowments are permanent savings accounts,
and the income from those endowments is perpetually committed to
charitable purposes; and
  Whereas Oregon-based charitable endowments can grow over time
to become significant resources capable of providing Oregon's
citizens and communities with funding to address many
unanticipated and unmet needs and to create new opportunities;
and
  Whereas a planned gift is a type of charitable contribution
that is composed typically of assets saved over the contributor's
lifetime, is conferred in connection with a carefully considered
estate plan and transfers assets of the contributor to a charity
prior to the contributor's death; and
  Whereas planned gifts might be used more in funding charitable
endowments in Oregon if contributors could offset a significant
portion of their gifts against their Oregon income tax
liabilities; and
  Whereas income distributed from charitable endowments over the
long term can help achieve community goals and objectives when
funding from state and local government budgets may be limited;
and
  Whereas community-based charitable endowments can provide
long-term benefits to Oregon communities by developing creative
solutions to help individual communities meet growing needs and
by helping those communities transition to self-sufficiency; and
  Whereas state government cannot meet, nor should it be expected
to meet, all of the needs of the state's communities because of
the state government's limited financial resources and because
each community is in a better position to determine its own
existing and future needs and opportunities; and
  Whereas tax credits provide financial incentives that would
encourage contributions for the establishment or expansion of
charitable endowments in Oregon; now, therefore,
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + Section 2 of this 2001 Act is added to and made
a part of ORS chapter 315. + }
  SECTION 2.  { + (1) As used in this section:
  (a) 'Planned gift' means:
  (A) An irrevocable contribution to a permanent endowment held
by an organization that is tax-exempt under section 501(c)(3) of
the Internal Revenue Code; or
  (B) A contribution to an organization that is tax-exempt under
section 501(c)(3) of the Internal Revenue Code if the
contribution qualifies as any of the following:
  (i) A charitable remainder unitrust, as described in section
664(d)(2) of the Internal Revenue Code;
  (ii) A charitable remainder annuity trust, as described in
section 664(d)(1) of the Internal Revenue Code;
  (iii) A pooled income fund trust, as described in section
642(c)(5) of the Internal Revenue Code;
  (iv) A charitable lead unitrust qualifying under section
170(f)(2)(B) of the Internal Revenue Code;
  (v) A charitable lead annuity trust qualifying under section
170(f)(2)(B) of the Internal Revenue Code;
  (vi) A charitable gift annuity undertaken pursuant to section
1011(b) of the Internal Revenue Code;
  (vii) A deferred charitable gift annuity undertaken pursuant to
section 1011(b) of the Internal Revenue Code;
  (viii) A charitable life estate agreement qualifying under
section 170(f)(3)(B) of the Internal Revenue Code; or
  (ix) A paid-up life insurance policy meeting the requirements
of section 170(f)(10) of the Internal Revenue Code.
  (b) 'Present value' has the meaning given that term in ORS
72A.1030 (1)(u).
  (c) 'Qualified endowment' means a permanent, irrevocable fund
that is held by an organization in this state that:
  (A) Is tax-exempt under section 501(c)(3) of the Internal
Revenue Code; or
  (B) Is a bank or trust company, as those terms are defined in
ORS 706.008, that holds the fund on behalf of an organization
that is tax-exempt under section 501(c)(3) of the Internal
Revenue Code.
  (2) A taxpayer is allowed a credit against the taxes otherwise
due under ORS chapter 316, 317 or 318 in an amount equal to 50
percent of:
  (a) The present value of the aggregate amount of the charitable
gift portion of a planned gift made by the taxpayer during the
tax year to a qualified endowment; or
  (b) A charitable contribution made to a qualified endowment, if
the taxpayer is subject to taxation under ORS chapter 317 or 318.
  (3) The maximum credit a taxpayer may claim under this section
for contributions made from all sources in a tax year is $10,000.
  (4) If the taxpayer has claimed a deduction on the taxpayer's
federal return for that portion of the contribution for which
credit is being claimed, the taxpayer must add the amount of the
deduction to taxable income for Oregon tax purposes.
  (5) The credit allowed under this section may not exceed the
tax liability of the taxpayer and may not be carried forward to a
succeeding tax year.
  (6) In the case of a credit allowed under this section for
purposes of ORS chapter 316, 317 or 318:
  (a) A nonresident is allowed the credit in the same manner and
subject to the same limitations as a resident. However, the
credit shall be prorated using the proportion provided in ORS
316.117.
 
  (b) If a change in the taxable year of a taxpayer occurs as
described in ORS 314.085, or if the Department of Revenue
terminates the taxpayer's taxable year under ORS 314.440, the
credit allowed by this section shall be prorated or computed in a
manner consistent with ORS 314.085.
  (c) If a change in the status of a taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit
allowed by this section shall be prorated or computed in a manner
consistent with ORS 314.085. + }
  SECTION 3.  { + Section 2 of this 2001 Act applies to tax years
beginning on or after January 1, 2002, and before January 1,
2006. + }
  SECTION 4.  { + (1) The Department of Revenue shall prepare an
annual report regarding the number and type of taxpayers claiming
credits under section 2 of this 2001 Act, the total amount of the
credits claimed and the department's cost associated with
administering the credits.
  (2) The department shall present the report prepared under
subsection (1) of this section to each regular session of the
Legislative Assembly and to those interim committees of the
Legislative Assembly to which revenue matters are assigned.
  (3) A report need not be prepared for a year beginning on or
after January 1, 2006. + }
  SECTION 5. ORS 314.752 is amended to read:
  314.752. (1) Except as provided in ORS 314.740 (5)(b), the tax
credits allowed or allowable to a C corporation for purposes of
ORS chapter 317 or 318 shall not be allowed to an S corporation.
The business tax credits allowed or allowable for purposes of ORS
chapter 316 shall be allowed or are allowable to the shareholders
of the S corporation.
  (2) In determining the tax imposed under ORS chapter 316, as
provided under ORS 314.734, on income of the shareholder of an S
corporation, there shall be taken into account the shareholder's
pro rata share of business tax credit (or item thereof) that
would be allowed to the corporation (but for subsection (1) of
this section) or recapture or recovery thereof. The credit (or
item thereof), recapture or recovery shall be passed through to
shareholders in pro rata shares as determined in the manner
prescribed under section 1377(a) of the Internal Revenue Code.
  (3) The character of any item included in a shareholder's pro
rata share under subsection (2) of this section shall be
determined as if such item were realized directly from the source
from which realized by the corporation, or incurred in the same
manner as incurred by the corporation.
  (4) If the shareholder is a nonresident and there is a
requirement applicable for the business tax credit that in the
case of a nonresident that the credit be allowed in the
proportion provided in ORS 316.117, then that provision shall
apply to the nonresident shareholder.
  (5) As used in this section, 'business tax credit' means a tax
credit granted to personal income taxpayers to encourage certain
investment, to create employment, economic opportunity or
incentive or for charitable, educational, scientific, literary or
public purposes that is listed under this subsection as a
business tax credit or is designated as a business tax credit by
law or by the Department of Revenue by rule and includes but is
not limited to the following credits: ORS 315.104 (forestation
and reforestation), ORS 315.134 (fish habitat improvement), ORS
315.138 (fish screening, by-pass devices, fishways), ORS 315.156
(crop gleaning), ORS 315.164 (farmworker housing), ORS 315.204
(dependent care assistance), ORS 315.208 (dependent care
facilities), ORS 315.234 (child development program
contributions), ORS 315.254 (youth apprenticeship sponsorship),
ORS 315.304 (pollution control facility), ORS 315.324 (plastics
recycling), ORS 315.354 and ORS 469.207 (energy conservation
facilities), ORS 315.504 (Oregon Capital Corporation), ORS
315.604 (bone marrow transplant expenses) and ORS 317.115
(fueling stations necessary to operate an alternative fuel
vehicle) { +  and section 2 of this 2001 Act (contributions made
to qualified endowments) + }.
  SECTION 6. ORS 318.031 is amended to read:
  318.031. It being the intention of the Legislative Assembly
that this chapter and the Corporation Excise Tax Law of 1929
shall be administered as uniformly as possible (allowance being
made for the difference in imposition of the taxes and the
operative date of this chapter), the provisions of ORS 305.140
and 305.150 and ORS chapter 314 and of the following sections of
ORS chapter 315 or 317, as amended on or before August 3, 1955,
and as they may thereafter be amended, are incorporated into this
chapter by this reference and made a part hereof: ORS 315.104,
315.134, 315.156, 315.204, 315.208, 315.234, 315.254, 315.304,
315.504 and 315.604  { +  and section 2 of this 2001 Act + } (all
only to the extent applicable for a corporation) and ORS 317.010,
317.013, 317.018 to 317.022, 317.030, 317.035, 317.038, 317.080,
317.152 to 317.154, 317.259 to 317.303, 317.310 to 317.386,
317.476 to 317.485, 317.510 to 317.635 and 317.705 to 317.725 and
section 40, chapter 835, Oregon Laws 1997, and section 4, chapter
358, Oregon Laws 1999.
                         ----------