(2) The credit shall be allowed under this section only if the taxpayer’s federal tax liability is determined under section 1341(a) of the Internal Revenue Code.
(3) The amount of the credit shall equal the difference between:
(a) The taxpayer’s actual Oregon state tax liability for the tax year for which the claim of right income was included in gross income for federal tax purposes; and
(b) The taxpayer’s Oregon state tax liability for that tax year, had the claim of right income not been included in gross income for federal tax purposes.
(4) A credit under this section shall be allowed only for the tax year for which the taxpayer’s federal tax liability is determined under section 1341 of the Internal Revenue Code for federal tax purposes.
(5) If the amount allowable as a credit under this section, when added to the sum of the amounts allowable as a payment of tax under ORS 314.505 to 314.525, 316.187 and 316.583, other payments of tax and other refundable credit amounts, exceeds the taxes imposed by ORS chapters 314, 315, 316, 317 and 318 (reduced by any nonrefundable credits allowed for the tax year), the excess shall be treated as an overpayment of tax and shall be refunded or applied in the same manner as other tax overpayments.
(6) As used in this section, "claim of right income" means:
(a) An item included in federal gross income for a prior tax year because it appeared that the taxpayer had an unrestricted right to the item; and
(b) An item for which the taxpayer’s federal tax liability is adjusted under section 1341 of the Internal Revenue Code because the taxpayer did not have an unrestricted right to the item of gross income. [1999 c.1007 §2; 2001 c.660 §19]
Note: Sections 7, 8 and 10 to 13, chapter 589, Oregon Laws 2021, provide:
Sec. 7. Section 8 of this 2021 Act is added to and made a part of ORS chapter 315. [2021 c.589 §7]
Sec. 8. (1) If a pass-through entity, as defined in section 2 of this 2021 Act, elects to owe and pay the pass-through business alternative income tax determined under section 3 of this 2021 Act, a taxpayer that is a member of the pass-through entity shall be allowed a credit against the taxes that are otherwise due under ORS chapter 316. For each pass-through entity of which the taxpayer is a member, the credit allowed under this section shall equal the member’s pro rata share of the tax paid for the tax year under section 3 of this 2021 Act.
(2) If the amount allowable as a credit under this section, when added to the sum of the amounts allowable as payment of tax under ORS 316.187 or 316.583, other tax prepayment amounts and other refundable credit amounts, exceeds the taxes imposed by ORS chapters 314 and 316 for the tax year after application of any nonrefundable credits allowable for purposes of ORS chapter 316 for the tax year, the amount of the excess shall be refunded to the taxpayer as provided in ORS 316.502. [2021 c.589 §8]
Sec. 10. Sections 3 and 8 of this 2021 Act apply to tax years beginning on or after January 1, 2022, and before January 1, 2024. [2021 c.589 §10]
Sec. 11. Sections 3 and 8 of this 2021 Act are repealed. [2021 c.589 §11]
Sec. 12. The repeal of sections 3 and 8 of this 2021 Act by section 11 of this 2021 Act applies to any tax year that begins on or after January 1, 2022, and before January 1, 2024, and to which section 164(b)(6) of the Internal Revenue Code is not applicable. [2021 c.589 §12]
Sec. 13. The repeal of sections 3 and 8 of this 2021 Act by section 11 of this 2021 Act becomes operative on the date on which section 164(b)(6) of the Internal Revenue Code is repealed. [2021 c.589 §13]