Oregon Statutes - Chapter 316 - Personal Income Tax - Section 316.879 - Events causing deferral of gain to cease; recognition of deferred gain.

(1) If a taxpayer is granted a deferral under ORS 316.873 to 316.884, the amount of the deferred gain that is reinvested in a qualified business interest, qualified investment fund or qualified business asset shall be an adjustment to federal taxable income notwithstanding ORS 316.874 when any of the following occur:

(a) The asset ceases to be a qualified business asset.

(b) The investment fund ceases to be a qualified investment fund.

(c) The business ceases day-to-day operations or ceases to be a qualified business.

(d) The current asset value of the qualified business is reduced 50 percent or more as a result of the withdrawal of:

(A) Capital assets from the business; or

(B) Proceeds from the sale or other disposition of capital assets of the business.

(2) For purposes of subsection (1)(b) of this section, a qualified investment fund may not be disqualified upon the disqualification of one or more of the qualified business activities in which the fund holds interests, if the fund divests itself of the fundís interests in the disqualified business activity within 12 months of the date of disqualification. If the qualified investment fund does not divest itself of the fundís interests in a disqualified business activity within 12 months of the disqualification, only that portion of the gain previously deferred under ORS 316.873 to 316.884 that is attributable to the interest in the disqualified business activity shall be an adjustment to the federal taxable income of the owners of the fund.

(3)(a) Except as provided in paragraph (b) of this subsection, upon the occurrence of an event described in subsection (1) of this section requiring recognition of deferred gain, the deferred gain shall be added to federal taxable income for the tax year in which the event occurs. Except for adjustments required for purposes of this chapter other than in ORS 316.873 to 316.884, no other adjustment to federal taxable income shall be made as a result of an event requiring recognition of deferred gain described in subsection (1) of this section.

(b) A taxpayer who does not own a controlling interest in a business with respect to which an event occurs requiring recognition of gain as described in subsection (1)(a), (b) and (c) of this section may continue to defer gain by timely filing a declaration of intent to reinvest as described in ORS 316.877.

(c) If a qualified investment fund fails to divest itself of the fundís interests in a disqualified business activity within the 12-month period described in subsection (2) of this section, the deferred gain that is required to be recognized by subsection (2) of this section shall be added to federal taxable income for the tax year in which expires the 12-month period for divestment. [1995 c.809 §7]

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Last modified: August 7, 2008