Chapter 556 Oregon Laws 1999

Session Law

AN ACT

SB 258

Relating to taxation; creating new provisions; and amending ORS 316.127 and section 7, chapter 143, Oregon Laws 1999 (Enrolled Senate Bill 410).

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 316.127 is amended to read:

316.127. (1) The adjusted gross income of a nonresident derived from sources within this state is the sum of the following:

(a) The net amount of items of income, gain, loss and deduction entering into the nonresident's federal adjusted gross income that are derived from or connected with sources in this state including (A) any distributive share of partnership income and deductions and (B) any share of estate or trust income and deductions; and

(b) The portion of the modifications, additions or subtractions to federal taxable income provided in this chapter that relate to adjusted gross income derived from sources in this state, including any modifications attributable to the nonresident as a partner.

(2) Items of income, gain, loss and deduction derived from or connected with sources within this state are those items attributable to:

(a) The ownership or disposition of any interest in real or tangible personal property in this state; and

(b) A business, trade, profession or occupation carried on in this state.

(3) Income from intangible personal property, including annuities, dividends, interest and gains from the disposition of intangible personal property, constitutes income derived from sources within this state only to the extent that such income is from property employed in a business, trade, profession or occupation carried on in this state.

(4) Deductions with respect to capital losses, net long-term capital gains, and net operating losses shall be based solely on income, gains, losses and deductions derived from or connected with sources in this state, under regulations to be prescribed by the Department of Revenue, but otherwise shall be determined in the same manner as the corresponding federal deductions.

(5) Notwithstanding subsection (3) of this section, the income of an S corporation for federal income tax purposes derived from or connected with sources in this state does constitute income derived from sources within this state for a nonresident individual who is a shareholder of such a corporation, and a net operating loss of such corporation derived from or connected with sources in this state does constitute a loss or deduction connected with sources in this state for such a nonresident individual.

(6) If a business, trade, profession or occupation is carried on partly within and partly without this state, the determination of net income derived from or connected with sources within this state shall be made by apportionment and allocation under ORS 314.605 to 314.675.

(7) Compensation paid by the United States for service in the Armed Forces of the United States performed by a nonresident does not constitute income derived from sources within this state.

(8) Compensation paid by the United States to a nonresident for services performed by the nonresident as an employee of the United States at a hydroelectric facility does not constitute income derived from sources within this state if the hydroelectric facility:

(a) Is owned by the United States;

(b) Is located on the Columbia River; and

(c) Contains portions located within both this state and another state.

(9)(a) Retirement income received by a nonresident does not constitute income derived from sources within this state unless the individual is domiciled in this state.

(b) As used in this section, "retirement income" means retirement income as that term is defined in section 114, Title 4 of the United States Code, as amended and in effect for the tax period.

SECTION 2. The amendments to ORS 316.127 by section 1 of this 1999 Act apply to tax years beginning on or after January 1, 1999.

SECTION 3. Section 7, chapter 143, Oregon Laws 1999 (Enrolled Senate Bill 410), is amended to read:

Sec. 7. Section 2 [of this 1999 Act], chapter 143, Oregon Laws 1999 (Enrolled Senate Bill 410), and the amendments to ORS 314.625, 316.127, 316.194 and 461.560 by sections 1, 4, 5 and 6 [of this 1999 Act], chapter 143, Oregon Laws 1999 (Enrolled Senate Bill 410), apply to prize payments made in tax years beginning on or after January 1, [1999] 2000.

Approved by the Governor July 8, 1999

Filed in the office of Secretary of State July 8, 1999

Effective date October 23, 1999

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