Periods of Less than 12 Months Are Tax Years

# (1)

(1) Under Oregon's tie to federal accounting periods, an Oregon return shall cover the same period as the corresponding federal return. See also OAR 150-314-0005.

# (2)

(2) Internal Revenue Code Regulation 1.1502-76 provides that any period of less than 12 months for which either a separate return or a consolidated return is filed shall be considered as a separate taxable year.

Example: Corporation X and its federal consolidated subsidiaries have a fiscal year end of June 30. On January 31, 1989, Corporation X sold Corporation Y (one of its 100 percent owned subsidiaries included in its consolidated returns) to Corporation Z. Corporation Z has a fiscal year ending May 31, 1988 and Corporation Y is required to change its tax year to be the same.

Corporation Y must file two short-period returns for federal and Oregon tax purposes (one for July 1, 1988, through January 31, 1989, and another for February 1 through May 31, 1989). Each short-period return shall count as a tax year for purposes of net operating loss and tax credit carryovers. If Corporation Y was not unitary with Corporation X or Corporation Z, it shall file separate Oregon returns for the two periods. For tax years beginning before January 1, 1986, Corporation Y was allowed by the department to file one Oregon return with the two short-period federal returns attached.

[Publications: Publications referenced are available from the agency.]