OAR 150-317-0620: Modified Federal Consolidated Taxable Income — Contribution Deduction for the Oregon Consolidated Group

(1) In general. The contribution deduction allowed corporations subject to taxation under Oregon Revised Statutes (ORS) Chapter 317 or 318, that file federal consolidated returns, is limited to the lesser of: (a) The contributions made by the members of the unitary group; or (b) 10 percent of the modified federal consolidated taxable income of the members of the unitary group. Example 1: Corporation A files a consolidated federal return for tax year 2010. A's federal return consists of two unitary groups of corporations, one of which is required to file an Oregon return. Corporation B is a member of the unitary group of corporations required to file a 2010 Oregon return. B contributed $1,000,000 to charities. No other corporation included in A's consolidated federal return made contributions in 2010. For tax year 2010, A has federal consolidated taxable income of $20,000,000 before any contribution deduction. The unitary group required to file the Oregon return has modified federal consolidated taxable income of $500,000 before any contribution deduction. Under Treasury Regulations adopted under section 1502 of the Internal Revenue Code (IRC), A is allowed to claim a contribution deduction of $1,000,000 (the lesser of the amount paid by all members of the federal consolidated group or 10 percent of the federal consolidated taxable income of the entire group before the contribution deduction). For Oregon purposes, however, the unitary group is allowed a contribution deduction of $50,000 (the lesser of the $1,000,000 paid by members of the unitary group or 10 percent of the $500,000 modified federal consolidated taxable income before the contribution deduction). Example 2: Assume the same facts as in Example 1 except that the unitary group required to file an Oregon return has modified federal consolidated net loss of $100,000. This unitary group has no allowable contribution deduction even though A will be permitted to deduct the entire contribution on its 2010 consolidated federal return. Example 3: Assume the same facts as in Example 1 except that no member of the unitary group required to file an Oregon return made any contribution and members of the nonunitary group made the $1,000,000 contribution. For federal purposes, the consolidated group is permitted to claim a deduction for the contributions made by any member of the group. However, for Oregon purposes, no deduction is allowed. (2) Carryover of excess contributions. (a) Any contribution not used in the tax year is carried over to the next tax year. In no case shall a contribution be carried over for more than five succeeding tax years. Any contribution not used is lost. (b) Contribution carryovers for any consolidated return tax year shall consist of any excess contributions of the unitary group, plus any excess contributions of members of the group arising in separate return tax years of such members and which may be carried over to the taxable year pursuant to the principles of IRC section 170. However, such consolidated contribution carryovers shall not include any excess contributions apportioned to a corporation for a separate return tax year pursuant to Treasury Regulations adopted under section 1502 of the IRC. Example 4: Assume the same facts as in Example 1 except that the unitary group has modified federal consolidated taxable income of $5,000. The allowable contribution deduction is limited to $500 (the lesser of the $1,000,000 contributed or 10 percent of the group's $5,000 modified federal consolidated taxable income). The unitary group is allowed to carry over $999,500 to the group's next tax year, 2011. None of the amount may be carried over beyond tax year 2015 (five years from the tax year in which the amount was contributed). Example 5: Assume the same facts as in Example 4 except that in tax year 2010 A acquired Corporation C. C will be included in A's 2011 consolidated federal return and is unitary with the group required to file an Oregon return. In 2010, C had a contribution carryover of $200,000. Its income and deductions were used in computing the unitary group's 2011 Oregon consolidated taxable income. Since C is unitary with the group required to file an Oregon return, the unitary group's carryover for tax year 2011 is $1,199,500 ($999,500 plus $200,000). (c) Excess contribution carryovers are applied to a given tax year in the same manner as provided under IRC sections 170 and 381 as they apply to the unitary group required to file an Oregon return. [Publications: Contact the Oregon Department of Revenue for information about 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).]