Oregon Additions to Income
Interest and Dividends on State and Local Government Bonds Outside of Oregon (code 158)
Did you report the interest or dividends of your minor child on your federal return? And, did your child receive interest or dividends from another state or political subdivision? If so, include this income as an addition using Schedule OR-ASC.
Full-year residents. Oregon taxes interest and dividends on bonds and notes of another state or political subdivision of another state that you did not include on your federal return. This income is an addition using Schedule OR-ASC.
Part-year residents. Oregon taxes all interest and dividends you earned on all bonds or notes when you were an Oregon resident. Oregon also taxes the interest and dividends on bonds or notes of another state (or political subdivision of another state) earned from an Oregon business, partnership, or S corporation during the part of the year you were a nonresident.
Nonresidents. Oregon will only tax this income if it comes from an Oregon business, partnership, or S corporation.
You will have an Oregon addition for interest or dividends on obligations of any authority, commission, instrumentality, or territorial possession of the United States. These are exempt from federal tax but not Oregon tax.
Oregon does not tax interest or dividends on obligations that states cannot tax under federal law. Examples of such obligations are bonds issued by:
* Territory of Guam.
* Commonwealth of Puerto Rico.
* Territory of Puerto Rico.
* Territory of Samoa.
* Territory of Virgin Islands
Other Additions to Oregon Income
529 Oregon College Savings Network (code 117)
Did you withdraw funds from an Oregon 529 College Savings Network plan for nonqualified purposes? If so, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. IRC Section 529(e) defines qualified higher education expenses. If a portion of the withdrawal was used for qualified purposes, use any reasonable method to determine the amount of the addition. Keep a copy of this determination with your tax records.
Basis adjustments (code 150)
Are you a nonresident? If so, there are several ways you can bring assets into Oregon’s taxing jurisdiction. For example:
* You become an Oregon resident and transfer business assets into Oregon.
* You become an Oregon resident and leave the assets in the other state.
* You open a business in Oregon and transfer business assets into Oregon.
Did you transfer business assets into Oregon? If so, the basis for Oregon depreciation will be either the federal unadjusted basis or fair market value at the time of transfer, whichever is smaller.
The federal unadjusted basis is the original cost before adjustments. Adjustments include reductions for investment tax credits, depletion, amortization, depreciation, or amounts expensed under IRC Section 179. The fair market value and useful life are figured when you bring the asset into Oregon.
Reduce the federal unadjusted basis or the fair market value of the asset by any Oregon depreciation previously allowed.
Business credit, unused (code 122)
Did you claim a deduction on your federal return for unused business credits (UBC)? Oregon does not allow this deduction.
Full-year residents. You must report your federal UBC deduction as an Oregon addition.
Part-year residents. You will have an Oregon addition for your federal UBC deduction related to any UBC earned while you were an Oregon resident. You also must include any federal UBC deduction related to Oregon credits earned while you were a nonresident.
Nonresidents. You will have an addition for your federal UBC deduction related to Oregon credits earned from Oregon sources.
Claim of right income repayments (code 103)
Did you repay over $3,000 of income taxed by Oregon in a prior year and claim a federal claim of right deduction under IRC Section 1341? If so, you may claim an Oregon credit based on the Oregon tax you paid in that earlier year for the income that you repaid.
If you claimed a federal deduction on Schedule A for your repayment, you may choose to allow the deduction to flow through to your Oregon return, or you may claim the Oregon credit, but you may not do both. If you choose to allow the deduction to flow through, there is nothing more to do. If you choose to claim the credit, however, you must add back your federal deduction on your Oregon return.
Disposition of inherited Oregon farmland or forestland (code 106)
You may have an addition on your return if:
* You dispose of farmland you inherited from someone who died on or after October 5, 1973, and before January 1, 1987, or
* You dispose of forestland you inherited from someone who died on or after November 1, 1981, and before January 1, 1987.
You may have this addition because the valuation of the land for Oregon inheritance tax purposes may differ from the valuation for federal estate tax purposes. Generally, the federal valuation is the fair market value of the property at the date of the previous owner’s death. The Oregon valuation is usually less than the federal valuation, because for inheritance tax purposes the property may have been valued as farm-use or forestland.
Domestic production activities deduction (code 102)
Oregon’s tie to federal income tax law does not include the federal deduction for domestic production activities contained in IRC Section 199 of the Internal Revenue Code. This deduction is also known as the “Qualified Production Activities Income” deduction, or QPAI. If you have taken this deduction on your federal return, you must add back the amount of the deduction on your Oregon return.
Full-year residents. Report the amount you deducted as an addition on Schedule OR-ASC, Section 1.
Part-year residents and nonresidents. Enter the full amount of the deduction in the federal column and -0- in the Oregon column of Schedule OR-ASC-N/P, Section 2. You must also report the amount deducted on your federal return as an adjustment.
Federal election on interest and dividends of a minor child (code 107)
Did you report the interest or dividends of your minor child on your federal return? If so, you must add the amount subject to the special federal tax to Oregon income. You must also include any interest or dividends your child received on bonds or notes of another state or political subdivision of another state that you did not include on your federal return.
Full-year residents. Oregon taxes the smaller of line 13 or 14 from federal Form 8814. Oregon also taxes any interest or dividends your child received from state and local governments outside Oregon.
Part-year residents. Oregon taxes the interest and dividends your child received while you were an Oregon resident.
Nonresidents. Oregon generally does not tax interest or dividends received while you were a nonresident.
Fiduciary adjustments (code 133)
The same modifications that apply to an individual return also apply to an Oregon estate or trust return. Combined, this is called the fiduciary adjustment. If you’re a beneficiary of an estate or trust, you must report your share of the fiduciary adjustment. This should be shown on the Schedule K-1 which you receive from the estate or trust. Report it on Schedule OR-ASC or OR-ASC-N/P as an addition using code 133 or as a subtraction using code 310.
Part-year residents. Oregon taxes the fiduciary adjustment if it relates to Oregon income or if you were an Oregon resident on the last day of the trust’s taxable year.
Nonresidents. Oregon taxes the fiduciary adjustment if it relates to Oregon income.
Individual Development Account (IDA) (code 137)
Donation credit add-back. If you are claiming a tax credit for donations made to the IDA Initiative Fund, and you are claiming a charitable deduction on your federal return for the same donation, you must add back the amount of the credit that was also deducted from your taxable income.
Nonqualified withdrawal. Did you make a nonqualified withdrawal from your IDA during the year? If so, you must report the amount as an addition on Schedule OR-ASC or OR-ASC-N/P.
Rollover to retirement account? Did you roll funds from your IDA account over to a retirement account? Were you allowed to deduct the amount of IDA funds contributed to the retirement account as a deduction on your federal return? If so, the amount you deducted that was already subtracted as an IDA contribution on an Oregon return must be added back. Report the amount deducted on your federal return as an addition on Schedule OR-ASC or OR-ASC-NP.
Full-year residents. In Section 1 of Schedule OR-ASC, enter the amount you are adding back for the donation credit using addition code 138. Report a nonqualified withdrawal using addition code 137. Use addition code 159 to report a rollover from your IDA to a retirement savings account.
Part-year residents and nonresidents. Report the donation credit add-back as a negative modification using code 648 in Section 4 of Schedule OR-ASC-N/P. Report any nonqualified withdrawal as an addition in Section 2 of Section OR-ASC-N/P, using code 137, and any federal subtraction taken for a rollover from your IDA to a retirement savings account, using addition code 159 in section 2 of Schedule OR-ASC-NP.
Lump-sum payment from a qualified retirement plan (code 139)
Did you complete federal Form 4972 to figure the tax on your qualified lump-sum distribution using the 20 percent capital gain election and/or the 10-year tax option? If so, part or all of your lump-sum distribution was not included in your federal adjusted gross income (AGI). The excluded portion of your distribution must be included as an addition to your Oregon income.
Election to use 20 percent capital gain on federal Form 4972. Did you average the ordinary portion of your lump-sum distribution on federal Form 4972? Did you choose the 20 percent capital gain election on Form 4972? If you chose either of these options you will add to Oregon income the total amount of taxable income shown on your federal Form 1099-R.
Net operating loss for Oregon (code 116)
An Oregon net operating loss (NOL) is figured the same as in Internal Revenue Code (IRC) Section 172(c). You may have an Oregon NOL without having a federal NOL, or vice versa. Your Oregon NOL is computed under the federal method and definitions using Oregon sources without Oregon modifications, additions, and subtractions. The only Oregon modification necessary is to subtract prohibited amounts.
Oregon deferral of reinvested capital gain (code 118)
Partnership or S corporation modifications for Oregon (code 119)
If you received a Schedule K-1 from a pass-through entity (Partnership, S corporation, or LLC filing as either), then you may have Oregon additions, subtractions, or credits that flow through to your Oregon return.
Federal subsidies for employer prescription drug plan (code 123)
Employers who provide a prescription drug plan for their retired employees may receive a federal subsidy if they meet the requirements in 42 U.S.C. Section 1395w-132. This subsidy is excluded from federal taxable income under IRC Section 139A. Oregon law doesn’t allow this exclusion. If you’re an employer with a qualified plan for your retired employees and you received this subsidy, you’ll have an addition on your Oregon return.
Full-year residents. Enter the full amount of the subsidy on Schedule OR-ASC using addition code 123.
Part-year residents and nonresidents. Enter the full amount of the subsidy in the federal column of Schedule OR-ASC-NP. In the Oregon column, enter any amount received while an Oregon resident and the amount attributable to Oregon-source income while a nonresident. Use addition code 123.
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