Or. Admin. R. 150-318-0040 - Income Subject to Tax Under Ors Chapter 318

150-318-0040
Income Subject to Tax Under ORS Chapter 318

(1) The Oregon Corporation Income Tax is imposed on corporations with income derived from sources within this state. The term “income derived from sources within this state” means income from activities in this state that are insufficient to constitute “doing business.” “Doing business” is defined in ORS 317.010(4).

(2) Oregon’s jurisdiction to tax is limited by the Due Process Clause of the U.S. Constitution, which requires the existence of some minimum connection between the state and the person, property or transaction it seeks to tax. This minimum connection, making income subject to the Oregon income tax, may be satisfied by:

(a) Maintaining tangible or intangible property in Oregon;

(b) Entering into franchising or licensing agreements for use of a franchise or license in Oregon;

(c) Receiving franchise fees or royalties from Oregon sources;

(d) Selling or otherwise disposing of a franchise or license used in Oregon;

(e) Selling or otherwise transferring tangible personal property pursuant to a franchise or license to a franchisee or licensee within the state; or

(f) An isolated sale of real property in this state.

(3) A corporation with receipts from royalties or franchise fees or the sale or transfer of tangible personal property pursuant to franchise or license agreements may be subject to the Corporation Excise Tax if the corporation engages in activities that rise to the level of doing business in Oregon. Such activities include inspection of the franchisees’ businesses or records and providing training in Oregon to franchisees. Such a corporation is not subject to the Corporation Income Tax.