2017 ORS 314.734¹
Taxation of shareholder’s income
  • computation
  • character of income, gain, loss or deduction

(1) The shareholder’s pro rata share of the income of an S corporation is subject to tax under ORS chapter 316. In determining the tax imposed under ORS chapter 316 of a shareholder for the shareholder’s taxable year in which the taxable year of the S corporation ends (or for the final taxable year of a shareholder who dies, or of a trust or estate that terminates, before the end of the corporation’s taxable year), there shall be taken into account the shareholder’s pro rata share of the corporation’s separately stated items of income, loss or deduction and nonseparately computed income or loss, as determined under or for purposes of section 1366 of the Internal Revenue Code (including but not limited to section 1366(d) and (e) of the Internal Revenue Code), with the modifications, additions and subtractions provided under this chapter and ORS chapter 316.

(2) Each item of shareholder income, gain, loss or deduction has the same character for a shareholder under this chapter and ORS chapter 316 as it has for federal income tax purposes. If an item is not characterized for federal income tax purposes, it has the same character for a shareholder as if realized directly from the source from which realized by the S corporation or incurred in the same manner as incurred by the S corporation.

(3) In any case where it is necessary to determine the gross income of a shareholder for purposes of ORS chapter 316, such gross income shall include the shareholder’s pro rata share of the gross income of the S corporation.

(4) If any tax is imposed under ORS 314.740 (Tax on built-in gain) for any taxable year on an S corporation, for purposes of subsection (1) of this section, the amount of each recognized built-in gain for such taxable year shall be reduced by its proportionate share of such tax.

(5) If any tax is imposed under ORS 314.742 (Tax on excess net passive income) on an S corporation, for purposes of subsection (1) of this section, each item of passive investment income shall be reduced by an amount which bears the same ratio to the amount of such tax as the amount of such item bears to the total passive investment income for the taxable year. [1989 c.625 §43; 1991 c.457 §22; 1997 c.839 §60]

Notes of Decisions

Income from sale of intangible prop­erty used in trade or business that is located in Oregon is source of Oregon derived income for nonresident individual. Crystal Communica­tions, Inc. v. Dept. of Revenue, 19 OTR 524 (2008), aff’d 353 Or 300, 297 P3d 1256 (2013)

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 (2017) (last ac­cessed Mar. 30, 2018).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2017, Chapter 314, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ano314.­html (2017) (last ac­cessed Mar. 30, 2018).
 
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.