OAR 150-314-0437: Gross Receipts Related to Deferred Gain or Loss

(1) In general. In all cases where gain or loss is realized for accounting purposes in the year of the associated transaction, but not fully recognized for tax purposes in that year, the total gross receipts from the transaction must be included in the sales factor for the year of the transaction if the associated gain or loss is considered apportionable income or loss under ORS 314.610, except where: (a) The gross receipts are excluded from “sales” under ORS 314.665(6)(a) and (6)(c); or (b) The net gain rather than gross receipts is included in the sales factor under ORS 314.665(6)(b). Also see OAR 150-314-0355 regarding the apportionment of installment sale income and OAR 150-314-0385 regarding apportionment of deferred gain subject to tax in a year after the year of disposition. Example 1: Big Equipment Sales Corporation (BESC) has locations in Oregon and Idaho. BESC sold a large piece of construction equipment in 2017 on an installment contract. The total sales price was $1,000,000. BESC must include the full sales price of $1,000,000 in the sales factor for tax year 2017. (2) Gross receipts from deferred gain on exchanges of property. In regard to exchanges of property qualifying for the deferral of tax on the gain or loss under section ORS 317.327 and sections 1031 or 1033 of the Internal Revenue Code, “gross receipts” means the fair market value of the property acquired on the date of exchange. Example 2: Major Manufacturing Corporation (MMC) exchanges tangible personal property used in its business activity in Oregon for property of like kind in California during tax year 2016. The fair market value of the acquired property is $800,000 on the date of the exchange. The gross receipts from the exchange of property are not excluded from MMC’s “sales” under ORS 314.665(6)(a) or (6)(c). MMC’s sales factor numerator and denominator for tax year 2016 must include $800,000, the gross receipts from the exchange as measured in 2016. [Publications: Contact the Oregon Department of Revenue to learn how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and 183.355(1)(b).]