Modified Factors for Carriers of Freight or Passengers: General Rule

# (1)

(1) Apportionable income is apportioned to this state by use of the formula provided in ORS 314.650 as it applies to the tax year involved. For tax years beginning on or after July 1, 2005, ORS 314.650 provides for apportionment using only the sales factor.

# (2)

(2) A substantial portion of the net income of taxpayers engaged in the transportation of freight or passengers within and without Oregon results from the movement of revenue-producing equipment, drivers, and other personnel. It is therefore necessary in calculating the apportionment factor of such carriers to reflect the results of the movement of such equipment and personnel by using revenue miles traveled both within and without the state. Thus, the apportionment formula of such transportation companies is to be computed as follows in tax years beginning before July 1, 2005:

(a) Tangible Property. Fixed properties, such as buildings and land used in the business, shop equipment, and cars and trucks used in gathering or delivering local freight, are assigned to the state in which such properties are located. The value of trucks or other equipment used in over-the-road hauling or other transportation is assigned to this state on a revenue miles basis. For example, if ten percent of a taxpayer's revenue miles are in Oregon, then ten percent of the value of the revenue-producing equipment is included as part of the Oregon property factor.

(b) Payroll. The wages and salaries of employees assigned to fixed locations within this state are included in the Oregon payroll factor. The wages of over-the-road or other transportation equipment are assigned to this state upon the basis of revenue miles. The wages of such personnel are apportioned to Oregon in the proportion that revenue miles traveled within this state bear to total revenue miles traveled everywhere.

(c) Sales. Sales are assigned to this state in the proportion that the revenue miles traveled within the state bear to the total revenue miles traveled everywhere.