Bill Text: OR HB3069 | 2013 | Regular Session | Enrolled
Bill Title: Relating to tax treatment of intangible expenses; and prescribing an effective date.
Spectrum: Bipartisan Bill
Status: (Passed) 2013-06-24 - Chapter 467, (2013 Laws): 90 days after Sine Die. [HB3069 Detail]
Download: Oregon-2013-HB3069-Enrolled.html
77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session
Enrolled
House Bill 3069
Sponsored by Representatives GILLIAM, DAVIS; Representatives
BAILEY, GARRETT, READ, WHISNANT, Senators BATES, GEORGE, HASS,
JOHNSON (at the request of Mentor Graphics)
CHAPTER ................
AN ACT
Relating to tax treatment of intangible expenses; creating new
provisions; amending ORS 314.296; repealing ORS 314.296; and
prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 314.296 is amended to read:
314.296. (1) As used in this section:
(a) 'Intangible expense' includes:
(A) Expenses, losses and costs for, related to or in connection
directly or indirectly with the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange or any
other disposition of intangible property to the extent such
amounts are allowed as deductions or costs in determining taxable
income before net operating loss deductions and special
deductions for the taxable year under the Internal Revenue Code;
(B) Amounts directly or indirectly allowed as deductions under
section 163 of the Internal Revenue Code for purposes of
determining taxable income under the code to the extent such
expenses and costs are directly or indirectly for, related to or
in connection with the expenses, losses and costs described in
subparagraph (A) of this paragraph;
(C) Losses related to, or incurred in connection directly or
indirectly with, factoring transactions or discounting
transactions;
(D) Royalty, patent, technical and copyright fees;
(E) Licensing fees; and
(F) Other similar expenses and costs.
(b) 'Intangible property' includes patents, patent
applications, trade names, trademarks, service marks, copyrights,
mask works, trade secrets and similar types of intangible assets.
(c) 'Related entity' means:
(A) A stockholder who is an individual, or a member of the
stockholder's family as defined in section 318 of the Internal
Revenue Code, if the stockholder and the members of the
stockholder's family own, directly, indirectly, beneficially or
constructively, in the aggregate, at least 50 percent of the
value of the taxpayer's outstanding stock;
(B) A stockholder, partnership, limited liability company,
estate, trust or corporation, if the stockholder and the
stockholder's partnerships, limited liability companies, estates,
trusts or corporations own, directly, indirectly, beneficially or
Enrolled House Bill 3069 (HB 3069-A) Page 1
constructively, in the aggregate, at least 50 percent of the
value of the taxpayer's outstanding stock; or
(C) A corporation, or a party related to the corporation in a
manner that would require an attribution of stock from the
corporation to the party or from the party to the corporation
under the attribution rules of the Internal Revenue Code if the
taxpayer owns, directly, indirectly, beneficially or
constructively, at least 50 percent of the value of the
corporation's outstanding stock. The attribution rules of the
code shall apply for purposes of determining whether the
ownership requirements of this definition have been met.
(d) 'Related member' means a person that, with respect to the
taxpayer during all or any portion of the taxable year, is:
(A) A related entity;
(B) A component member as defined in section 1563(b) of the
Internal Revenue Code;
(C) A person to or from whom there is attribution of stock
ownership in accordance with section 1563(e) of the Internal
Revenue Code; or
(D) A person that, notwithstanding the person's form of
organization, bears the same relationship to the taxpayer as a
person described in this paragraph.
(e) 'Valid business purpose' means one or more business
purposes, other than the evasion or improper avoidance of
taxation, that alone or in combination constitute the primary
motivation for a business activity or transaction, if the
activity or transaction changes in a meaningful way, apart from
tax effects, the economic position of the taxpayer. The economic
position of the taxpayer includes an increase in the market share
of the taxpayer or the entry by the taxpayer into a new business
market.
(2) To derive Oregon taxable income there shall be added to
federal taxable income amounts:
(a) That are intangible expenses;
(b) That are otherwise deductible;
(c) That have been received by one or more related members that
are not included in the same state tax return as the taxpayer;
and
(d) That have been directly or indirectly paid, accrued or
incurred in connection with one or more direct or indirect
transactions with one or more related members.
(3)(a) A taxpayer is allowed a credit against the taxes
otherwise due under ORS chapter 317 or 318 if a related member
pays tax on the same income that has been added back under
subsection (2) of this section.
(b) The amount from which the credit shall be derived shall be
the greater of:
(A) The tax paid by the related member with respect to the
portion of the related member's income representing the
intangible expense paid, accrued or incurred by the taxpayer; or
(B) The tax that would have been paid by the related member
with respect to that portion of the related member's income if
that portion had not been offset by expenses or losses and the
resulting tax liability had not been offset by any other credit.
(c) If the taxpayer is subject to apportionment, the credit
shall be calculated by multiplying the amount in paragraph (b) of
this subsection by the taxpayer's apportionment factor provided
by ORS 314.605 to 314.675.
Enrolled House Bill 3069 (HB 3069-A) Page 2
(d) The credit may not exceed that portion of the taxpayer's
liability that results from the net income taxed as a result of
subsection (2) of this section.
{ - (4) The adjustment required in subsection (2) of this
section and the credit allowed in subsection (3) of this section
do not apply to any portion of the intangible expense that the
related member directly or indirectly paid, accrued or incurred
to a person that is not a related member, if the transaction
giving rise to the intangible expense was undertaken for a valid
business purpose. - }
{ + (4) The adjustment required in subsection (2) of this
section and the credit allowed in subsection (3) of this section
do not apply to any portion of the intangible expense:
(a) That the related member directly or indirectly paid,
accrued or incurred to a person that is not a related member, if
the transaction giving rise to the intangible expense was
undertaken for a valid business purpose; or
(b) If the transaction giving rise to the intangible expense
was undertaken by the taxpayer for a valid business purpose and
the related member is a foreign corporation described in section
1563(b)(2)(C) of the Internal Revenue Code.
(5) Nothing in this section prohibits the Department of Revenue
from applying the provisions of ORS 314.295 to any transaction
with related members located in a foreign country. + }
SECTION 2. { + The amendments to ORS 314.296 by section 1 of
this 2013 Act apply to tax years beginning on or after January 1,
2010, and before January 1, 2013. + }
SECTION 3. { + ORS 314.296 is repealed. + }
SECTION 4. { + The repeal of ORS 314.296 by section 3 of this
2013 Act applies to tax years beginning on or after January 1,
2013. + }
SECTION 5. { + This 2013 Act takes effect on the 91st day
after the date on which the 2013 regular session of the
Seventy-seventh Legislative Assembly adjourns sine die. + }
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Passed by House June 4, 2013
.............................................................
Ramona J. Line, Chief Clerk of House
.............................................................
Tina Kotek, Speaker of House
Passed by Senate June 13, 2013
.............................................................
Peter Courtney, President of Senate
Enrolled House Bill 3069 (HB 3069-A) Page 3
Received by Governor:
......M.,............., 2013
Approved:
......M.,............., 2013
.............................................................
John Kitzhaber, Governor
Filed in Office of Secretary of State:
......M.,............., 2013
.............................................................
Kate Brown, Secretary of State
Enrolled House Bill 3069 (HB 3069-A) Page 4
