menu
  • Our Story

    • Overview
    • Careers
    • Locations
    • Diversity, Equity & Inclusion
    • Pro Bono
    • Community Involvement
    • Firm Leadership
    • History
    • Alumni
    • Affiliations
    • Media Inquiries
    • Make a Payment
  • Our People

  • Our Insights

    • Events/CLE
    • Publications
    • News
    • Blogs
  • Our Practices & Industries

    • Business
      • Business Transitions
      • Construction
      • Corporate, Securities, and M&A
      • ERISA, Life, Health & Disability
      • Finance & Banking
      • Immigration
      • Health Care Transactions
      • Intellectual Property Transactions
      • Labor, Employment & Benefits
      • Private Client Services
      • Private Investment Funds
      • Real Estate
      • Startups & Emerging Companies
      • Tax
      • Wage & Hour
    • Litigation
      • Antitrust, Competition & Trade
      • Appellate
      • Class Actions
      • Commercial Litigation
      • Construction
      • Creditors' Rights & Bankruptcy
      • Electronic Discovery, Technology & Strategy
      • ERISA, Life, Health & Disability
      • Fiduciary Litigation
      • Financial Institutions Litigation & Investigations
      • Insurance
      • Intellectual Property Litigation
      • International Arbitration
      • Labor, Employment & Benefits
      • Securities & Corporate Governance Litigation
      • Wage & Hour
    • Industries
      • Blockchain & Cryptocurrency
      • Food, Beverage & Hospitality
      • Government Law
      • Investigations, Compliance & White Collar
      • Japan Practice
      • Nonprofit & Social Enterprise
      • Privacy & Data Security
      • Senior Living & Long Term Care
      • Transportation
    • Services
      • COVID-19 Landlord/Tenant Response Team
      • COVID-19 Resource Center
      • Business Dispute Resolution
  • Our Locations

    • Anchorage
    • Portland
    • Seattle
  • Our Careers

    • Attorneys
    • Summer Associates
    • Professional Staff
  • Our Diversity

    • Diversity, Equity & Inclusion
    • Our Story
Lane Powell Web Site
  • OUR PEOPLE
  • STORY
  • INSIGHTS
  • PRACTICES & INDUSTRIES
Search
  • 日本語
  • 中文
  • 한국어
Email this pagePrint this pagePrint to PDF

Topics

  • Oregon Tax
  • Tax

Related People

  • John H. Gadon
  • Eric J. Kodesch

Related Practices & Industries

  • Tax
November 14, 2018Publication

Oregon Department of Revenue Describes Sales Factor Impact of Federal Tax Reform’s Deemed Repatriation

Tax Legal Update

One of the revenue raisers in the December 2017 federal tax reform act is a deemed repatriation from certain non-U.S. corporations.  This primarily was a 2017 income event but, in limited circumstances, can have an impact in 2018.  Oregon corporation excise tax law, as amended in the 2018 legislative session, provides affected corporations with an 80 percent dividends-received deduction for the deemed repatriation.  Still, 20 percent of the deemed repatriation can result in a significant increase in the taxpayer’s apportionable income.

On Friday, November 9, 2018, the Oregon Department of Revenue (“Department”) issued Oregon Revenue Bulletin 2018-01.  The bulletin discusses the sales factor impact of the deemed repatriation for both (1) tax years beginning before January 1, 2018, when Oregon apportioned receipts from sales other than sales of tangible personal property based on costs of performance and (2) tax years beginning on or after January 1, 2018, for which Oregon applies a market-based sourcing method to such receipts.    

  • 2017 Deemed Repatriation:  The deemed repatriation is excluded from the Oregon sales factor “unless the repatriation gross receipts are derived from the taxpayer’s primary business activity.”  The example in the bulletin indicates that this depends on whether the taxpayer’s ownership interest in the non-U.S. corporation is derived from the taxpayer’s primary business.
  • 2018 Deemed Repatriation:  The deemed repatriation is excluded from the Oregon sales factor “unless the receipts are received from transactions and activities in the regular course of the taxpayer’s trade or business.”  In the example in the bulletin, the Department describes how the deemed repatriation is never included in the Oregon sales factor “because the one-time mandatory repatriation * * * isn’t received from transactions and activities in the regular course of” the recipient’s trade or business.

Pursuant to the bulletin, the sales factor impact depends on the taxpayer’s facts and circumstances:

  • 2017 Deemed Repatriation:  If the ownership of the interests in the non-U.S. corporation is derived from the taxpayer’s primary business, the 2017 deemed repatriation amount may be includible in the denominator of the recipient’s sales factor. 
  • 2018 Deemed Repatriation:  If the non-U.S. corporation regularly pays dividends and/or earns subpart F income, the 2018 deemed repatriation may be from transactions and activities in the regular course of the recipient’s trade or business.  Accordingly, it may be includible in the denominator of the recipient’s sales factor.  The bulletin appears to treat the deemed repatriation as a standalone event.  Despite the one-time nature of the deemed repatriation, federal tax law treats the deemed repatriation as subpart F income, which Oregon tax law treats as a deemed dividend.  It is unclear why the deemed repatriation would be treated differently than other subpart F income or dividends.

If you would like to know more about the Oregon sales factor impact of the deemed repatriation, please contact one of our Oregon tax partners:  Eric Kodesch, kodesche@lanepowell.com, 503.778.2107, and John Gadon, gadonj@lanepowell.com, 503.778.2130.

 

This legal update highlights an important current development.  It is not intended as legal advice.

Before proceeding, please note:  If you are not a current client of Lane Powell PC, please do not include any information in this email that you or someone else considers to be confidential or secret in nature.  Prior to the establishment of a lawyer-client relationship, unsolicited emails from non-clients containing confidential or secret information cannot be protected from disclosure.

back to top
  • Our Story

    • Overview
    • Careers
    • Locations
    • Diversity, Equity & Inclusion
    • Pro Bono
    • Community Involvement
    • Firm Leadership
    • History
    • Alumni
    • Affiliations
    • Media Inquiries
    • Make a Payment
  • Our People

    • Our Insights

      • Events/CLE
      • Publications
      • News
      • Blogs
    • Our Practices & Industries

      • Business
      • Litigation
      • Industries
      • Services
      • View All

    Blogs

    Boom: The ERISA Law Blog
    Earth & Table Law Reporter

    • Site Map
    • Disclaimer
    • Data Privacy & Security
    • Contact Us
    • Subscribe
    © 2022 Lane Powell PC Lane Powell & LP
    Logo, Reg. U.S. Pat. & Tm. Off.
    Sitemap
    Connect With Us
    • Twitter
    • Facebook
    • Linkedin
    • Vimeo
    • Make a Payment