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 2187
A-Engrossed
House Bill 2730
Ordered by the House May 24
Including House Amendments dated May 24
Sponsored by Representative WITT
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.
Creates tax credit for qualified investment in { - tangible
personal - } { + certain depreciable + } property.
{ + Provides that amount of credit is lesser of $25,000 or
specified percentage of qualified investment depending upon
unemployment rate in county where property is located. Places
other limits on amount of credit. Limits total amount of credits
per biennium to $1 million. + }
Applies to qualified investments placed into service in tax
years beginning on or after January 1, 2002.
A BILL FOR AN ACT
Relating to taxation; creating new provisions; and amending ORS
314.752 and 318.031.
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, 'qualified
investment' means an investment in depreciable property that
would have qualified for the federal investment tax credit on the
day prior to the effective date of section 211 of the Tax Reform
Act of 1986 (P.L. 99-514) and that would not have qualified for
the federal investment tax credit on the day following the
effective date of section 211 of the Tax Reform Act of 1986
(determined without regard to any date on which property must be
placed in service for federal tax purposes).
(2) A credit against taxes otherwise due under ORS chapter 316
or, if the taxpayer is a corporation, under ORS chapter 317 or
318 is allowed to a taxpayer for an amount equal to the lesser of
$25,000 or:
(a) 10 percent of a qualified investment if the depreciable
property upon which the credit is claimed is used within a county
in this state with an unemployment rate that, at the time the
application is made, exceeds the state average unemployment rate
by two percent or more but less than four percent; or
(b) 20 percent of a qualified investment if the depreciable
property upon which the credit is claimed is used:
(A) Within a county in this state with an unemployment rate
that, at the time the application is made, exceeds the state
average unemployment rate by four percent or more; or
(B) Within an area that the Economic and Community Development
Department has designated as a distressed area under ORS
285A.095.
(3) For the purpose of subsection (2) of this section, if the
depreciable property upon which the credit is claimed is used
within more than one county, only that percentage of the credit
otherwise allowable under this section that corresponds to the
percentage of time during the tax year that the property is used
in a county described in subsection (2) of this section shall be
allowed.
(4) A taxpayer seeking the credit allowed under subsection (2)
of this section shall apply to the Economic and Community
Development Department for certification. The application shall
be on a form prescribed by the Economic and Community Development
Department by rule and shall contain a description of the
depreciable property, the counties in which the depreciable
property is used and any other information required by the
department.
(5) The Economic and Community Development Department shall
issue a certificate for an application received under subsection
(4) of this section, in an amount that does not exceed the amount
allowed under subsection (2) of this section, if the department
determines that the depreciable property is a qualified
investment. The Economic and Community Development Department
shall issue a certificate only to the extent that the total
amount of certificates issued for the biennium in which the
application was filed does not exceed $1 million.
(6) A taxpayer shall include with the taxpayer's tax return a
certificate received under subsection (5) of this section.
(7) The total amount of credit claimed in a tax year under this
section, including amounts carried forward under subsection (8)
of this section, may not exceed 25 percent of the taxpayer's tax
liability for the tax year.
(8) Subject to subsection (9) of this section, any tax credit
allowable under subsection (2) of this section that is not used
by the taxpayer in a particular year because of the limitation in
subsection (7) of this section may be carried forward and offset
against the taxpayer's tax liability for the next succeeding tax
year. Any credit remaining unused in the next succeeding tax year
may be carried forward and used in the second succeeding tax
year, and likewise, any credit not used in that second succeeding
tax year may be carried forward and used in the third succeeding
tax year, and any credit not used in that third succeeding tax
year may be carried forward and used in the fourth succeeding tax
year, and any credit not used in that fourth succeeding tax year
may be carried forward and used in the fifth succeeding tax year,
and any credit not used in that fifth succeeding tax year may be
carried forward and used in the sixth succeeding tax year, and
any credit not used in that sixth succeeding tax year may be
carried forward and used in the seventh succeeding tax year, but
may not be carried forward for any tax year thereafter.
(9) A credit under subsection (2) of this section, including a
carryover of credit under subsection (8) of this section, may not
be allowed in any tax year in which the depreciable property upon
which the credit is claimed is not used in a county or area
described in subsection (2) of this section.
(10)(a) A nonresident shall be allowed the credit provided
under this section in the same manner and subject to the same
limitations as the credit is allowed to a resident of this state.
However, the credit shall be prorated using the proportion
provided in ORS 316.117.
(b) If a change in the tax year of a taxpayer occurs as
described in ORS 314.085, or if the Department of Revenue
terminates the taxpayer's tax 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 determined in a manner
consistent with ORS 316.117.
(11) A credit may not be allowed if the depreciable property
upon which the credit is claimed:
(a) Was previously owned by the taxpayer or by a person related
to the taxpayer under section 267 of the Internal Revenue Code;
or
(b) Was acquired by the taxpayer from a person related to the
taxpayer under section 267 of the Internal Revenue Code.
(12) The taxpayer's adjusted basis in the depreciable property
upon which the credit is claimed may not be further adjusted as a
result of the credit allowed under this section.
(13) The Department of Revenue may adopt rules, not
inconsistent with the other provisions of this section, that
conform the credit allowed under this section with the provisions
of the Internal Revenue Code applicable to the federal investment
tax credit described in subsection (1) of this section. + }
SECTION 3. { + Section 2 of this 2001 Act applies to qualified
investments placed into service in tax years beginning on or
after January 1, 2002. + }
SECTION 4. 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 (investment tax
credit) + }.
SECTION 5. 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.
----------