OAR 150-317-0350: Oregon Subtraction Where Charitable Contribution Is Reduced Under Federal Law

Under IRC section 170(d)(2)(B), a corporation’s current year charitable contribution must be reduced by a corresponding increase in the corporation’s NOL carryover. To derive Oregon taxable income, the amount by which a corporation reduces its charitable contribution shall be subtracted from federal taxable income. Example: ABC corporation has current year federal taxable income (pre-NOL application) of $100,000 and NOL carry forward amounts from prior years of $120,000. The corporation has a current year charitable contribution of $15,000. Since the NOL application exceeds taxable income, ABC’s otherwise deductible $10,000 charitable contribution is converted to an additional NOL carry forward under IRC section 170(d)(2)(B). The remaining $5,000 excess contribution may be carried forward for five years under IRC section 170(d)(2)(A). For Oregon, ABC corporation reports federal taxable income (pre-NOL application) of $100,000 in the current year. The $10,000 reduction of the federal charitable contribution is shown as an “other subtraction” on the Oregon return. The remaining $5,000 excess charitable contribution is carried forward as under federal law.