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Oregon courts' recent examination of UDITPA provisions
Ist Teil von
The Tax Adviser, 2016-02, Vol.47 (2), p.108
Ort / Verlag
New York: American Institute of CPA's
Erscheinungsjahr
2016
Link zum Volltext
Quelle
Business Source Ultimate
Beschreibungen/Notizen
Over the past year, both the Oregon Supreme Court and the Oregon Tax Court have issued important state income tax decisions in which language suggested by UDITPA and adopted by Oregon played a crucial role. Specifically, the Oregon Tax Court applied Oregon's business income determination rules to a broadcasting company and considered the availability of an apportionment factor election to a service company. The Oregon Supreme Court applied cost-of-performance (COP) sales factor statutes to a communications company and determined how a utility company should source its electricity sales. All of these decisions may have potential application within and outside Oregon. In Fisher Broadcasting Co. v. Department of Revenue, the Oregon Tax Court ruled that the gain from the sale of stock in an unrelated business by a non-Oregon communications company met the functional test to qualify as business income and was properly subject to Oregon corporation excise (income) tax as apportionable income. In its determination, the Tax Court looked to the controlling Oregon allocation and apportionment provisions derived from UDITPA, which apply to businesses other than financial organizations and public utilities. The Tax Court relied also on Oregon's statutory definitions of "business income" and "nonbusiness income," derived from UDITPA, as well as regulatory interpretations of these terms, in its analysis. In Willamette Industries, Inc. v. Department of Revenue, the Oregon Supreme Court had explained that the statutory definition of business income derived from UDITPA is met if either a transactional test or a functional test is satisfied. Thus, the Tax Court focused on determining whether the taxpayer's stock served an operational or investment function for the unitary business of the taxpayer. Specifically, the court found that the functional test was met and concluded that the gain was apportionable business income.