Business Tax Administrative Rule 110.94-1
Income, as defined by the Business License Law and the Business Income Tax Law, is net income of any business, as required to be reported to the State of Oregon. Oregon modifications to business income are those additions and subtractions to a business' federal net income required by state law to determine net income for Oregon purposes. These modifications arise from differences between federal and Oregon tax laws that may be in effect from time to time. Oregon modifications to business income are required adjustments to determine a business' net income for business license and business income tax purposes. Modifications that relate to personal incomes or expenses are not allowed adjustments for business license or business income tax purposes.
Example 1: Joe Marshall, a sole proprietor, owns an equipment rental business in Portland that is reported on a Federal Schedule C. Mr. Marshall itemizes his personal deductions on a Schedule A, and generally receives a state tax refund each year. During 1994, Mr. Marshall purchased additional business equipment that he will depreciate by different methods for federal and state purposes. His Oregon depreciation difference is the only Oregon modification allowed for business license and business income tax purposes.
Example 2: Jones & Smith, a partnership located in Portland, has filed its 1993 partnership return. The Oregon Form 65 indicated modifications to federal income for state filing purposes. These modifications to net income are allowed for business license and business income tax purposes.
(PCC 7.02.110 / MCC 12.100)