73rd OREGON LEGISLATIVE ASSEMBLY--2005 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 1171
 
                         House Bill 2368
 
Sponsored by Representative WHISNANT (at the request of
  Associated Oregon Industries)
 
 
                             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.
 
  Increases corporate excise and income tax credit limits for
qualified research and basic research. Extends number of years
taxpayer can carry forward tax credits.
  Applies to tax years beginning on or after January 1, 2006.
 
                        A BILL FOR AN ACT
Relating to research tax credits; creating new provisions; and
  amending ORS 317.152 and 317.154.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 317.152, as amended by section 12, chapter 739,
Oregon Laws 2003, is amended to read:
  317.152. (1) A credit against taxes otherwise due under this
chapter shall be allowed to eligible taxpayers for increases in
qualified research expenses and basic research payments. The
credit shall be determined in accordance with section 41 of the
Internal Revenue Code, except as follows:
  (a) The applicable percentage specified in section 41(a) of the
Internal Revenue Code shall be five percent.
  (b) 'Qualified research' and 'basic research' shall consist
only of research conducted in Oregon.
  (c) The following do not apply to the credit allowable under
this section:
  (A) Section 41(c)(4) of the Internal Revenue Code (relating to
the alternative incremental credit).
  (B) Section 41(h) of the Internal Revenue Code (relating to
termination of the federal credit).
  (2) For purposes of this section, 'eligible taxpayer' means a
corporation, other than a corporation excluded under Internal
Revenue Code section 41(e)(7)(E).
  (3) The Income Tax Regulations as prescribed by the Secretary
of the Treasury under authority of section 41 of the Internal
Revenue Code apply for purposes of this section, except as
modified by this section or as provided in rules adopted by the
Department of Revenue.
  (4) The maximum credit under this section may not exceed
  { - $750,000 - }  { +  $1 million + }.
  (5) Any tax credit that is otherwise allowable under this
section and that is not used by the taxpayer in that year may be
carried forward and offset against the taxpayer's tax liability
for the next succeeding tax year. Any credit remaining unused in
such 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 - }  { + may be carried forward and used in a
succeeding tax year through the 20th + } succeeding tax year, but
may not be carried forward for any tax year   { - thereafter - }
 { +  after the 20th succeeding tax year + }.
  SECTION 2.  { + The amendments to ORS 317.152 by section 1 of
this 2005 Act apply to amounts paid or incurred in tax years
beginning on or after January 1, 2006. + }
  SECTION 3. ORS 317.152, as amended by section 12, chapter 739,
Oregon Laws 2003, and section 1 of this 2005 Act, is amended to
read:
  317.152. (1) A credit against taxes otherwise due under this
chapter shall be allowed to eligible taxpayers for increases in
qualified research expenses and basic research payments. The
credit shall be determined in accordance with section 41 of the
Internal Revenue Code, except as follows:
  (a) The applicable percentage specified in section 41(a) of the
Internal Revenue Code shall be five percent.
  (b) 'Qualified research' and 'basic research' shall consist
only of research conducted in Oregon.
  (c) The following do not apply to the credit allowable under
this section:
  (A) Section 41(c)(4) of the Internal Revenue Code (relating to
the alternative incremental credit).
  (B) Section 41(h) of the Internal Revenue Code (relating to
termination of the federal credit).
  (2) For purposes of this section, 'eligible taxpayer' means a
corporation, other than a corporation excluded under Internal
Revenue Code section 41(e)(7)(E).
  (3) The Income Tax Regulations as prescribed by the Secretary
of the Treasury under authority of section 41 of the Internal
Revenue Code apply for purposes of this section, except as
modified by this section or as provided in rules adopted by the
Department of Revenue.
  (4) The maximum credit under this section may not exceed
 { - $1 - }  { + $2 + } million.
  (5) Any tax credit that is otherwise allowable under this
section and that is not used by the taxpayer in that year may be
carried forward and offset against the taxpayer's tax liability
for the next succeeding tax year. Any credit remaining unused in
such next succeeding tax year may be carried forward and used in
the second succeeding tax year, and likewise may be carried
forward and used in a succeeding tax year through the 20th
succeeding tax year, but may not be carried forward for any tax
year after the 20th succeeding tax year.
  SECTION 4.  { + The amendments to ORS 317.152 by section 3 of
this 2005 Act apply to amounts paid or incurred in tax years
beginning on or after January 1, 2008. + }
  SECTION 5. ORS 317.154, as amended by section 13, chapter 739,
Oregon Laws 2003, is amended to read:
  317.154. (1) A credit against taxes otherwise due under this
chapter shall be allowed for qualified research expenses that
exceed 10 percent of Oregon sales.
  (2) For purposes of this section:
  (a) 'Oregon sales' shall be computed using the laws and
administrative rules for calculating the numerator of the Oregon
sales factor under ORS 314.665.
  (b) 'Qualified research' has the meaning given the term under
section 41(d) of the Internal Revenue Code and shall consist only
of research conducted in Oregon.
  (3) The credit under this section is equal to five percent of
the amount by which the qualified research expenses exceed 10
percent of Oregon sales.
  (4) The credit under this section shall not exceed $10,000
times the number of percentage points by which the
 { - qualifying - }  { + qualified + } research expenses exceed
10 percent of Oregon sales.
  (5) The maximum credit under this section may not exceed
  { - $750,000 - }  { +  $1 million + }.
  (6) Any tax credit that is otherwise allowable under this
section and that is not used by the taxpayer in that year may be
carried forward and offset against the taxpayer's tax liability
for the next succeeding tax year. Any credit remaining unused in
such 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 - }  { + may be carried forward and used in a
succeeding tax year through the 20th + } succeeding tax year, but
may not be carried forward for any tax year   { - thereafter - }
 { +  after the 20th succeeding tax year + }.
  SECTION 6.  { + The amendments to ORS 317.154 by section 5 of
this 2005 Act apply to amounts paid or incurred in tax years
beginning on or after January 1, 2006. + }
  SECTION 7. ORS 317.154, as amended by section 13, chapter 739,
Oregon Laws 2003, and section 5 of this 2005 Act, is amended to
read:
  317.154. (1) A credit against taxes otherwise due under this
chapter shall be allowed for qualified research expenses that
exceed 10 percent of Oregon sales.
  (2) For purposes of this section:
  (a) 'Oregon sales' shall be computed using the laws and
administrative rules for calculating the numerator of the Oregon
sales factor under ORS 314.665.
  (b) 'Qualified research' has the meaning given the term under
section 41(d) of the Internal Revenue Code and shall consist only
of research conducted in Oregon.
  (3) The credit under this section is equal to five percent of
the amount by which the qualified research expenses exceed 10
percent of Oregon sales.
  (4) The credit under this section shall not exceed $10,000
times the number of percentage points by which the qualified
research expenses exceed 10 percent of Oregon sales.
  (5) The maximum credit under this section may not exceed
 { - $1 - }  { + $2 + } million.
  (6) Any tax credit that is otherwise allowable under this
section and that is not used by the taxpayer in that year may be
carried forward and offset against the taxpayer's tax liability
for the next succeeding tax year. Any credit remaining unused in
such next succeeding tax year may be carried forward and used in
the second succeeding tax year, and likewise may be carried
forward and used in a succeeding tax year through the 20th
succeeding tax year, but may not be carried forward for any tax
year after the 20th succeeding tax year.
  SECTION 8.  { + The amendments to ORS 317.154 by section 7 of
this 2005 Act apply to amounts paid or incurred in tax years
beginning on or after January 1, 2008. + }
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