Oregon Administrative Rules
Chapter 150 - DEPARTMENT OF REVENUE
Division 316 - PERSONAL INCOME TAX GENERAL PROVISIONS
Section 150-316-0230 - Subtraction for Previously Taxed Contributions
Universal Citation: OR Admin Rules 150-316-0230
Current through Register Vol. 63, No. 9, September 1, 2024
(1)
(a) For
tax years beginning on or after January 1, 1991, Oregon will allow resident
taxpayers a subtraction for distributions from an individual retirement
account, Keogh plan or Simplified Employee Pension plan for the contributions
to the plan that have already been taxed by another state. The subtraction is
allowed only if all of the following conditions are met:
(A) The distributions consist of
contributions made during a period in which the taxpayer was a nonresident of
Oregon;
(B) The distributions
consist of contributions made during a period in which the taxpayer was a
resident of a state that imposes an income tax;
(C) The distributions consist of
contributions for which no deduction, exclusion or exemption for the
contributions was allowed or allowable in the state in which the taxpayer was a
resident prior to becoming an Oregon resident; and
(D) No deduction, exclusion, subtraction or
other tax benefit has been allowed for the distributions by another state
before the taxpayer becomes a resident of Oregon.
Example
1
: In 1997 Sam was a resident of a state that
imposes no income tax. He made a deductible IRA contribution in 1997. In 1998
Sam converted his regular IRA of $2,000 to a Roth IRA. The distribution will be
reported over a 4-year period. Sam became a permanent Oregon resident on April
1, 1998. Sam is not entitled to a subtraction because the contributions were
not previously taxed. Sam will be taxed on $375 (3/4 of $500 for the period
April through December 1998) on his 1998 part year Oregon return. If Sam
remains an Oregon resident he will be taxed on $500 in 1999, 2000 and
2001.
(b) If
any portion of the distributions received by a resident of Oregon qualify for
the subtraction, those distributions first received by the taxpayer are allowed
to be subtracted. The subtraction continues until the distributions that
qualify for the subtraction are recovered. Any distributions received after
that are fully taxable to the Oregon resident.
(c) The following contributions do not
qualify for the subtraction:
(A)
Contributions made during a period when the taxpayer was a nonresident required
to file an Oregon return to the extent that a deduction or exclusion was
allowable for those contributions; or
(B) Contributions made during a period when
the taxpayer was a resident of a state that does not impose an income tax; or
(C) Contributions for which the
taxpayer was allowed a credit for taxes paid to another state.
Example 2
: Taxpayer is a
resident of California from 1980 to 1990 and qualifies to make contributions to
an individual retirement account for both federal and California. Taxpayer
contributes $1,500 in 1980 and 1981 and from 1982 to 1990 contributes $2,000
per year. Both California and federal allowed a maximum $1,500 deduction for
1980 and 1981. For 1982 through 1986, federal allowed a maximum $2,000
deduction while California only allowed a maximum deduction of $1,500. For 1987
through 1990, both federal and California allowed a maximum deduction of
$2,000. Taxpayer made contributions of $2,500 ($500 ´ 5 years) while a
California resident for which no deduction was allowed on the California
return.
Taxpayer retires and moves to Oregon in June 1991 and begins to receive payments from the IRA account established in California. Oregon taxes all of the IRA distributions received after June 1991 but will allow the taxpayer a subtraction on the Oregon return for the $2,500 of contributions which were not deductible.
Taxpayer receives 7 payments of $350 in 1991 for a total of $2,450 ($350 ´ 7). Taxpayer would claim a subtraction of $2,450 for 1991. In 1992, the taxpayer received 12 payments of $350 for a total of $4,200 ($350 ´ 12). The taxpayer would be able to subtract the balance of $50 ($2,500 - $2,450). From that point on, no subtraction is allowed on the Oregon return for recovery of contributions.
(2) If the taxpayer has already received distributions from an IRA, Keogh or SEP that is a recovery of contributions that meet the provisions of Section (1), then the taxpayer will be allowed a subtraction in 1991 for those contributions. Taxpayer will then be allowed a subtraction each year until all qualifying contributions are recovered. From that point on, no subtraction is allowed on the Oregon return for recovery of contributions.
Example 3
: Use the same facts as Example 2, except that the taxpayer
retires and moves to Oregon in June 1989. Taxpayer made contributions while a
California resident for which no deduction was allowed of $2,500 ($500 ´
5 years). The taxpayer has already received $2,450 ($350 ´ 7 months) of
IRA distributions in 1989 and $4,200 ($350 ´ 12) of IRA distributions in
1990. For tax year 1991, taxpayer may claim a subtraction of $2,500, the full
amount of contributions for which no deduction was allowed on the California
return. The $2,500 subtraction consists of recovery of contributions of $2,450
in 1989 and $50 of recovery of contributions in 1990. After that, no
subtraction is allowed on the Oregon return for recovery of contributions since
the taxpayer has recovered all $2,500 of qualifying contributions.
Example 4
: Use the same facts
as Example 3. The taxpayer retires and moves to Oregon in June 1989 but instead
of receiving periodic payments, the taxpayer withdraws the entire balance of
the IRA from California as a lump-sum distribution. The lump-sum distribution
is taxable by both Oregon and California. Taxpayer made contributions while a
California resident for which no deduction was allowed of $2,500 ($500 ´
5 years). For tax year 1991, the taxpayer will claim a one time subtraction for
all contributions for which no deduction was allowed on the California return.
The subtraction is limited to federal adjusted gross income and cannot create a
net operating loss. If the taxpayer does not claim a subtraction for all of the
contributions for which no deduction was allowed due to the federal adjusted
gross income limitation, no subtraction may be claimed in subsequent years for
the balance of the contributions. Taxpayer has adjusted gross income of $18,000
so may claim the full subtraction of $2,500 in 1991.
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 316.159
Disclaimer: These regulations may not be the most recent version. Oregon may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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