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 2424
 
                         House Bill 3355
 
Sponsored by Representative BUTLER; Representatives ANDERSON,
  BARKER, BERGER, BOQUIST, BROWN, BRUUN, BURLEY, DALLUM, DALTO,
  ESQUIVEL, FARR, GALIZIO, GARRARD, GILMAN, HANNA, HANSEN, HUNT,
  JENSON, KITTS, KOMP, KRIEGER, KROPF, KRUMMEL, OLSON,
  RICHARDSON, ROBLAN, SCHAUFLER, SCOTT, G SMITH, P SMITH, SUMNER,
  THATCHER, WHISNANT, Senators ATKINSON, BATES, BEYER, DEVLIN,
  FERRIOLI, JOHNSON, KRUSE, METSGER, MONNES ANDERSON, MORSE,
  NELSON, B STARR, C STARR, VERGER, WESTLUND, WHITSETT, WINTERS
  (at the request of Oregon Business Association)
 
 
                             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 income tax credit for qualified investments in new
machinery and equipment. Limits total amount of credit that may
be claimed in biennium and limits amount each taxpayer may claim.
  Applies to tax years beginning on or after January 1, 2006, but
permits qualified investments purchased on or after July 1, 2005,
to be considered qualified investments for 2006 tax year.
Sunsets program by prohibiting certification of new qualified
investments on or after July 1, 2011.
 
                        A BILL FOR AN ACT
Relating to investment tax credits; 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 2005 Act is added to and made
a part of ORS chapter 315. + }
  SECTION 2.  { + (1) As used in this section, 'qualified
investment' means a purchase of machinery or equipment that is:
  (a) Newly manufactured and never before used for any purpose;
  (b) Used in a trade or business or for the production of
income; and
  (c) Installed or used in a facility located in this state.
  (2) A credit against taxes that are 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 ___ percent of
the total certified amount of qualified investments made by the
taxpayer during the tax year. The amount of the credit may not
exceed the lesser of:
  (a) $___; or
  (b) The tax liability of the taxpayer for the tax year.
  (3)(a) A taxpayer seeking a credit under this section shall
first obtain credit certification from the Department of Revenue
by applying for certification on a form prescribed by the
department. The application shall state the date of purchase and
the amount of the qualified investment made by the taxpayer
during the tax year and any other information required by the
department.
  (b) The department shall review applications and issue
certifications for those applications that describe qualified
investments. The department shall maintain a record of the
cumulative amounts certified under this subsection and may not
issue a certification during a biennium if the amount proposed to
be certified, when added to the total of previously certified
amounts for the biennium, exceeds $30 million.
  (c) A taxpayer may not claim a credit under this section
without first obtaining certification under this subsection.
  (4) Any tax credit otherwise allowable under this section that
is not used by the taxpayer in a particular tax year because of
the limitation in subsection (2)(b) 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, but may not be carried forward
for any tax year thereafter.
  (5) A nonresident shall be allowed the credit allowed under
subsection (2) or (4) of this section. The credit shall be
computed in the same manner and be subject to the same
limitations as the credit granted to a resident.
  (6) If a change in the taxable year of the taxpayer occurs as
described in ORS 314.085, or if the department 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.
  (7) 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.
  (8) If the qualified investment consists of property for which
the taxpayer claims a deduction for depreciation for federal tax
purposes, the adjusted basis of the property shall be further
adjusted by reducing the federal adjusted basis by the total
amount of credit allowable under this section for Oregon tax
purposes. + }
  SECTION 3. 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 285C.309 (tribal taxes
on reservation enterprise zones), 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 and 315.169 (farmworker housing),
ORS 315.204 (dependent care assistance), ORS 315.208 (dependent
care facilities), ORS 315.213 (contributions for child care), 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 315.507 (electronic commerce),
ORS 315.511 (advanced telecommunications facilities), 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 2005 Act (investment tax credit) + }.
  SECTION 4. 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), ORS 305.140 and 305.150, ORS
chapter 314 and the following sections are incorporated into and
made a part of this chapter: ORS 315.104, 315.134, 315.156,
315.204, 315.208, 315.213, 315.234, 315.254, 315.304, 315.504,
315.511 and 315.604  { + and section 2 of this 2005 Act + } (all
only to the extent applicable for a corporation) and ORS
285C.309, 315.507, 317.010, 317.013, 317.018 to 317.022, 317.030,
317.035, 317.038, 317.080, 317.124 to 317.131, 317.152 to
317.154, 317.259 to 317.303, 317.310 to 317.386, 317.476 to
317.485, 317.488, 317.510 to 317.635 and 317.705 to 317.725.
  SECTION 5.  { + Section 2 of this 2005 Act and the amendments
to ORS 314.752 and 318.031 by sections 3 and 4 of this 2005 Act
apply to tax years beginning on or after January 1, 2006. + }
  SECTION 6.  { + Notwithstanding sections 2 and 5 of this 2005
Act:
  (1) The Department of Revenue may certify qualified investment
amounts with respect to qualified investments that are purchased
on or after July 1, 2005; and
  (2) Qualified investments described in subsection (1) of this
section shall be deemed to have been purchased during the tax
year of the taxpayer that begins on or after January 1, 2006, and
before January 1, 2007. + }
  SECTION 7.  { + The Department of Revenue may not certify
qualified investments under section 2 (3) of this 2005 Act on or
after July 1, 2011. + }
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