Bill Text: OR HB2193 | 2011 | Regular Session | Introduced

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Bill Title: Relating to subtraction for investment of severance pay in small business; prescribing an effective date.

Spectrum: Unknown

Status: (Failed) 2011-06-30 - In committee upon adjournment. [HB2193 Detail]

Download: Oregon-2011-HB2193-Introduced.html

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     76th OREGON LEGISLATIVE ASSEMBLY--2011 Regular Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 945

                         House Bill 2193

Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
  Presession filed (at the request of House Interim Committee on
  Sustainability and Economic Development)

                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.

  Modifies definition of 'material participation' for purposes of
subtraction for investment of severance pay in small business.
Adjusts start of qualifying period from date of termination to
date of investment. Requires taxpayer to file amended return that
includes as income amount previously subtracted if subtraction is
later disallowed.
  Applies to tax years beginning on or after January 1, 2011, and
before January 1, 2014.
  Takes effect on 91st day following adjournment sine die.

                        A BILL FOR AN ACT
Relating to subtraction for investment of severance pay in small
  business; creating new provisions; amending section 2, chapter
  66, Oregon Laws 2010; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. Section 2, chapter 66, Oregon Laws 2010, is amended
to read:
   { +  Sec. 2.  + }(1) As used in this section:
  (a) 'Invest' means to exchange cash for equity, debt,
convertible debt or management responsibilities, accompanied by
terms that substantiate ownership or control of an interest in a
business. 'Invest' does not mean to make a loan to a business.
  (b) 'Material participation'   { - has the meaning given that
term in section 469 of the Internal Revenue Code. - }  { +  means
that a taxpayer has:
  (A) Worked more than 500 hours in a small business during a
calendar year;
  (B) Worked more than 100 hours, and more than any other owner
or employee, in a small business during a calendar year; or
  (C) Performed substantially all of the work of a small business
during a calendar year. + }
  (c) 'Severance pay' means funds paid to an employee upon
termination of employment, other than back wages, vacation pay or
sick pay.
  (d) 'Small business' has the meaning given that term in ORS
183.310.
  (2) There shall be subtracted from federal taxable income an
amount equal to severance pay that a taxpayer receives during the

tax year and invests in a new or existing small business in this
state if:
  (a) The investment occurs on or before the due date for the
return for the tax year or the expiration of the extension period
for filing that return, if any;
  (b) The investment continues for at least 24 months following
  { - termination of employment - }  { +  the date of
investment + };
  (c) The taxpayer materially participates in the small business;
  (d) The taxpayer has not previously claimed a subtraction under
this section; and
  (e) The small business is not the employer that paid the
severance pay and does not have any owner in common with the
employer that paid the severance pay.
  (3) The subtraction under this section may not exceed the
lesser of:
  (a) The minimum balance of principal that remains invested by
the taxpayer in the small business at the close of any month
during the 24 months following   { - termination of
employment - }  { +  the date of investment + }; or
  (b) $500,000.
  (4) If at any time the Department of Revenue  { + or a
taxpayer + } determines that   { - a - }   { + the + } taxpayer
is not in compliance with any of the provisions of this section,
the   { - department shall disallow the - }  subtraction under
this section { +  shall be disallowed + }. Upon this
disallowance,   { - the department shall determine the amount of
tax due absent the subtraction under this section and immediately
shall collect any taxes due by reason of the disallowance - }
 { +  the taxpayer shall immediately file an amended return for
the tax year in which the subtraction was made and include as an
addition to income for the tax year any amount previously
subtracted under this section + }.
  (5) The Department of Revenue shall establish by rule
procedures for administering this section, including procedures
for verifying the receipt of severance pay by the taxpayer.
  SECTION 2.  { + The amendments to section 2, chapter 66, Oregon
Laws 2010, by section 1 of this 2011 Act apply to tax years
beginning on or after January 1, 2011, and before January 1,
2014. + }
  SECTION 3.  { + This 2011 Act takes effect on the 91st day
after the date on which the 2011 session of the Seventy-sixth
Legislative Assembly adjourns sine die. + }
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