OAR 150-317-0400: Payments Received Under Federal Safe Harbor Lease Agreements For Transactions Entered Into in Tax Years Beginning on or After January 1, 1983

(1) Oregon law provides that safe harbor lease transactions will not be treated as a lease, or in “any other way” be recognized for Oregon tax purposes. Therefore, for safe harbor lease transactions entered into in tax years beginning on or after January 1, 1983, the following Oregon modifications are required: (a) Seller-Lessee: (A) A depreciation subtraction is allowable based upon the original cost of the safe harbor lease property. (B) Lease payments made to the purchaser-lessor and deducted for federal tax purposes must be added to income. (C) Interest payments received from the purchaser-lessor and included in income for federal tax purposes must be subtracted from income. (b) Purchaser-Lessor: (A) Depreciation deducted for federal tax purposes must be added to income. (B) Lease payments received from the seller-lessee and included for federal tax purposes must be subtracted from income. (C) Interest payments made to the seller-lessee and deducted for federal tax purposes must be added to income. (2) Legal fees, accounting costs or similar expenses incurred or paid to third parties in connection with safe harbor leases are deductible.