2015 ORS 314.665¹
Determination of sales factor
  • inclusions and exclusions
  • definitions

(1) As used in ORS 314.650 (Business income apportionment), the sales factor is a fraction, the numerator of which is the total sales of the taxpayer in this state during the tax period, and the denominator of which is the total sales of the taxpayer everywhere during the tax period.

(2) Sales of tangible personal property are in this state if:

(a) The property is delivered or shipped to a purchaser, other than the United States Government, within this state regardless of the f.o.b. point or other conditions of the sale; or

(b) The property is shipped from an office, store, warehouse, factory, or other place of storage in this state and the purchaser is the United States Government or the taxpayer is not taxable in the state of the purchaser. For purposes of this paragraph:

(A) The sale of goods shipped from a public warehouse is not considered to take place in this state if:

(i) The taxpayer’s only activity in Oregon is the storage of the goods in the public warehouse prior to shipment; or

(ii) The taxpayer’s only activities in Oregon are the storage of the goods in the public warehouse prior to shipment and the presence of employees within this state solely for purposes of soliciting sales of the taxpayer’s products; and

(B) "Taxpayer" means a taxpayer as defined in section 7701 of the Internal Revenue Code, an affiliate of the person storing goods in a public warehouse or a person that is related under section 267 of the Internal Revenue Code to the person storing goods in a public warehouse.

(3) Subsection (2)(b) of this section shall not apply to sales of tangible personal property if:

(a) The sales are included in the numerator of a formula used to apportion business income to another state of the United States, a foreign country or the District of Columbia; and

(b) The other state, a foreign country or the District of Columbia has imposed a tax on or measured by the apportioned business income.

(4) Sales, other than sales of tangible personal property, are in this state if (a) the income-producing activity is performed in this state; or (b) the income-producing activity is performed both in and outside this state and a greater proportion of the income-producing activity is performed in this state than in any other state, based on costs of performance.

(5) Where the sales apportionment factor is determined by administrative rule pursuant to ORS 314.682 (Method of apportionment of interstate broadcaster income), 314.684 (Determination of sales factor), 317.660 (Allocation of net income where insurer has both in-state and out-of-state business) or other law, the Department of Revenue shall adopt rules that are consistent with the determination of the sales factor under this section.

(6) For purposes of this section, "sales":

(a) Excludes gross receipts arising from the sale, exchange, redemption or holding of intangible assets, including but not limited to securities, unless those receipts are derived from the taxpayer’s primary business activity.

(b) Includes net gain from the sale, exchange or redemption of intangible assets not derived from the primary business activity of the taxpayer but included in the taxpayer’s business income.

(c) Excludes gross receipts arising from an incidental or occasional sale of a fixed asset or assets used in the regular course of the taxpayer’s trade or business if a substantial amount of the gross receipts of the taxpayer arise from an incidental or occasional sale or sales of fixed assets used in the regular course of the taxpayer’s trade or business. Insubstantial amounts of gross receipts arising from incidental or occasional transactions or activities may be excluded from the sales factor unless the exclusion would materially affect the amount of income apportioned to this state.

(7) The department may determine that a warehouse that meets the definition of "public warehouse" under this section may not be treated as a public warehouse if the warehouse is being used primarily for tax avoidance purposes or if transactions related to the use of the warehouse are primarily for tax avoidance purposes.

(8) As used in this section, "public warehouse":

(a) Means a warehouse owned or operated by a person that does not own the goods stored in the warehouse; and

(b) Does not include a warehouse that is owned by a person that is related to the person that owns goods that are stored in the warehouse, as determined under section 267 of the Internal Revenue Code, or an affiliate of the person that owns goods that are stored in the warehouse. [1965 c.152 §§16,17,18; 1993 c.813 §4; 1995 c.176 §1; 1999 c.143 §8; 2001 c.793 §5; 2001 c.933 §4; 2005 c.832 §3]

Notes of Decisions

If consignee sells tangible per­sonal prop­erty and is an independent taxable entity, then income from such sale is appor­tionable under this sec­tion. Northwest Textbook Depository v. Dept. of Rev., 11 OTR 280 (1989)

Goodwill, measured and disposed of in connec­tion with disposi­tion of all assets of business, it not intangible prop­erty under subsec­tions (6)(a) and (b) of this sec­tion and cannot be appropriately included in sales factor computa­tion. Tektronix, Inc. v. Dept. of Revenue, 20 OTR 468 (2012)

Taxpayer, in business of developing and selling electronic equip­ment, may exclude from income por­tion of proceeds from sale of division of company attributable to intangible assets because sale of division was not taxpayer's primary business ac­tivity even though division itself was central to taxpayer's opera­tion. Tektronix, Inc. v. Dept. of Revenue, 354 Or 531, 316 P3d 276 (2013)

For purposes of this sec­tion, electricity is "tangible per­sonal prop­erty." Powerex Corpora­tion v. Dept. of Revenue, 357 Or 40, 346 P3d 476 (2015)

Where taxpayer telephone company did not identify correct income-producing activities and did not correctly calculate costs of performance of those activities, taxpayer did not meet burden of proof and is not entitled to refund. AT&T Corpora­tion v. Dept. of Revenue, 357 Or 691, 358 P3d 973 (2015)

Notes of Decisions

Interest income from long-term invest­ments of an interstate corpora­tion is not attributable to Oregon unless it arises from transac­tions in the regular course of the taxpayer's business within the state. Sperry & Hutchinson v. Dept. of Rev., 270 Or 329, 527 P2d 729 (1974)

It was not abuse of discre­tion for Revenue Depart­ment to require corpora­tions to file combined rather than consolidated corporate excise tax returns where one corpora­tion owned at least 95 percent of voting stock of other. Caterpillar Tractor Co. v. Dept. of Rev., 8 OTR 236 (1979), aff'd 289 Or 895, 618 P2d 1261 (1980)

The Supremacy Clause gives Congress the authority to impose a brief moratorium on the collec­tion of taxes for "insured depositories" in order to permit the develop­ment of a uniform state taxing system. Pac. First Fed. Savings & Loan v. Dept. of Revenue, 8 OTR 466 (1980), aff'd 293 Or 138, 645 P2d 27 (1982)

Plaintiff's use of appor­tion­ment method was proper because separate accounting would not fairly represent extent of plaintiff's business activities in Oregon. Lane v. Dept. of Rev., 10 OTR 168 (1985)

Intangible drilling and develop­ment costs (IDCs) should be included in prop­erty factor for purposes of appor­tioning income to Oregon. Atlantic Richfield Co. v. Dept. of Rev., 301 Or 242, 722 P2d 727 (1986)

Exclusion of intangible prop­erty from formula to determine Oregon business income of California financial organiza­tion engaged in owning, leasing and financing tangible per­sonal prop­erty did not represent fair appor­tion­ment of taxpayer's business ac­tivity in Oregon. Crocker Equip­ment Leasing, Inc. v. Dept. of Rev., 314 Or 122, 838 P2d 552 (1992)

Law Review Cita­tions

17 WLR 487 (1981)

Chapter 314

Law Review Cita­tions

9 WLJ 249 (1973); 5 EL 516 (1975)


1 Legislative Counsel Committee, CHAPTER 314—Taxes Imposed Upon or Measured by Net Income, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ors314.­html (2015) (last ac­cessed Jul. 16, 2016).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2015, Chapter 314, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ano314.­html (2015) (last ac­cessed Jul. 16, 2016).
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.