Oregon Statutes - Chapter 316 - Personal Income Tax - Section 316.873 - Definitions for ORS 316.873 to 316.884.

As used in ORS 316.873 to 316.884:

(1) “Capital asset” means an asset defined as a capital asset under section 1221 of the Internal Revenue Code, except that it includes property, used in the taxpayer’s trade or business, of a character that is subject to the allowance for depreciation provided in section 167 of the Internal Revenue Code, or real property used in the taxpayer’s trade or business.

(2) “Commercial domicile” means commercial domicile as defined under ORS 314.610.

(3) “Expansion share” means a unit of ownership of a business that meets all of the following criteria:

(a) The unit has unlimited voting rights and the right to receive a share of the net assets of the business upon dissolution, or may at the option of the holder of the share be converted into shares with these characteristics.

(b) The unit is issued directly to the taxpayer, or to a partnership, limited liability company or S corporation of which the taxpayer is, at the time the unit is issued, a partner, member or shareholder.

(c) The business has less than $5 million in revenues during the 12 full months immediately preceding the date of the first equity investment in the business by the taxpayer.

(d) At the time the unit is issued, the business has a net equity, adjusted by adding back all dividends or distributions made by the business, that is equal to or less than the sum of all previous equity investments.

(e) At the time the unit is issued, no unit of ownership of the business is publicly traded.

(f) The unit is issued in exchange for money or property to be used in the operations of the business. A unit, the proceeds received by the business of which are used by the business to reacquire an ownership interest or other security of the business, shall not constitute an expansion share.

(4) “Gain” or “deferred gain” means gain as determined for federal income tax purposes with the modifications contained in this chapter.

(5) “Qualified business interest” means an ownership interest in a business conducting a qualified business activity.

(6) “Qualified business activity” means a business that is owned by an individual, partnership, limited liability company, S corporation or C corporation, the activity of which meets all of the following criteria:

(a) The activity is an activity listed in the Standard Industrial Classification Manual, 1987 (SIC), as published by the Office of Management and Budget, Executive Office of the President, as being any of the following:

(A) Agriculture, forestry or fishing (Division A).

(B) Mining (Division B).

(C) Construction (Division C).

(D) Manufacturing (Division D).

(E) Transportation, communications, electric, gas or sanitary service (Division E).

(F) Wholesale trade (Division F).

(G) Retail trade (Division G).

(H) Personal services (Major Group 72, Division I).

(I) Business services (Major Group 73, Division I).

(J) Automotive repair, services or parking (Major Group 75, Division I).

(K) Miscellaneous repair services (Major Group 76, Division I).

(L) Engineering, accounting, research, management or related services (Major Group 87, Division I).

(b) The business generates income from investment property only as an incidental effect of the management of working capital. For purposes of ORS 316.873 to 316.884, ownership interests in entities controlled by the business or directly involved in the support of the qualified business activity of the business do not constitute investment property.

(c) The commercial domicile of the business is in this state.

(d)(A) The employment base of the business in this state is at least as large as the employment base of the business outside this state.

(B) For purposes of this paragraph, the employment base of a business shall be the sum of the number of full-time equivalent employees and the number of full-time equivalent independent contractors located in this state or outside this state, as the case may be.

(7) “Qualified business asset” means a capital asset held for use in this state in a qualified business activity.

(8) “Related party” means an individual who is a member of the taxpayer’s family, as that term is defined in section 267 (c)(4) of the Internal Revenue Code.

(9) “Qualified investment fund” means a partnership, limited liability company or S corporation formed solely for the purpose of acquiring qualified business interests or qualified business assets and that:

(a) Invests in qualified business interests or qualified business assets; or

(b) Acquires investment property only on an interim basis or an incidental basis until a suitable qualified business interest or qualified business asset may be located by the fund.

(10) “Investment property” means property that has the capacity to produce gross income from:

(a) Interest, annuities or royalties not derived in the ordinary course of a trade or business; or

(b) Dividends, except that investment property does not include expansion shares. [1995 c.809 §2; 1997 c.839 §25]

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Last modified: August 7, 2008