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.
Pursuant to the bulletin, the sales factor impact depends on the taxpayer’s facts and circumstances:
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, firstname.lastname@example.org, 503.778.2107, and John Gadon, email@example.com, 503.778.2130.
This legal update highlights an important current development. It is not intended as legal advice.
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