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 308
 
                           A-Engrossed
 
                         House Bill 2554
                  Ordered by the House March 22
            Including House Amendments dated March 22
 
Sponsored by Representative BUTLER; Representative KNOPP
 
 
                             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.
 
  Permits personal income taxpayer to elect to average personal
income taxes derived from farm income using federal income tax
farm income averaging method.
  Applies to tax years beginning on or after January 1, 2002.
 
                        A BILL FOR AN ACT
Relating to taxation of farmers.
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 314. + }
  SECTION 2.  { + (1) As used in this section:
  (a) 'Farm income':
  (A) Means taxable income attributable to a farming business;
and
  (B) Includes gain from the sale or other disposition of
property (other than land) regularly used by the taxpayer in the
farming business for a substantial period of time.
  (b) 'Farming business' has the meaning given that term in
section 263A(e)(4) of the Internal Revenue Code.
  (c) 'Taxable income' has the meaning given that term in ORS
316.022.
  (d) 'Taxpayer' means a person subject to tax under ORS chapter
316, but does not include an estate or trust.
  (2) A taxpayer may elect to have personal income taxes for the
tax year determined under this section in lieu of ORS chapter 316
if the individual is engaged in a farming business for the tax
year and has farm income for the tax year.
  (3) The taxpayer shall make the election in the manner provided
by the Department of Revenue. In making the election, the
taxpayer shall determine the amount of farm income that is to be
considered elected farm income. The election shall apply only to
the tax year for which the election is made.
  (4) Upon making the election, the tax imposed under this
section shall equal:
  (a) The tax computed under ORS chapter 316 on the taxable
income of the taxpayer reduced by the income that is elected farm
income under subsection (3) of this section; plus
 
  (b) The cumulative increase in the tax computed under ORS
chapter 316 that would result if the taxable income of the
taxpayer for each of the three prior tax years were increased by
an amount equal to one-third of the income that is elected farm
income under subsection (3) of this section.
  (5) Any tax credit that would be allowable against the tax
computed under ORS chapter 316 may be allowed against the tax
computed under this section.
  (6) The department shall:
  (a) Prescribe the manner in which an election under this
section is made; and
  (b) Adopt rules on:
  (A) The order and manner in which items of income, gain,
deduction, loss or limitation on tax shall be taken into account
in computing the tax under this section; and
  (B) The treatment of a short tax year for purposes of this
section. + }
  SECTION 3.  { + Section 2 of this 2001 Act applies to tax years
beginning on or after January 1, 2002. + }
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