ORS 317A.119 Subtraction

A taxpayer shall subtract from commercial activity sourced to this state 35 percent of the greater of the following amounts paid or incurred by the taxpayer in the tax year:

The amount of cost inputs; or

The taxpayer’s labor costs.

The amount in subsection (1)(a) or (b) of this section may not include:

Expenses from transactions among members of a unitary group, as excluded under ORS 317A.106;

Cost inputs or labor costs that are attributable to a taxpayer’s receipts from an item that is not commercial activity; or

Cost paid by a dealer for items of precious metal.

Any taxpayer having commercial activity both within and without this state shall apportion the amount of the subtraction in subsection (1) of this section, after providing for any exclusions in subsection (2) of this section, as follows:

As provided in ORS 314.650 and 314.665;

For taxpayers subject to alternative apportionment under ORS chapter 314, the required applicable apportionment method; or

As provided for by the Department of Revenue by rule.

Notwithstanding subsection (3) of this section, a unitary group with members subject to multiple apportionment methods under ORS chapter 314 shall apportion the amount of the subtraction in subsection (1) of this section, after providing for any exclusions, as provided by the department by rule.

Notwithstanding subsection (1) of this section, the subtraction under this section may not exceed 95 percent of the taxpayer’s commercial activity in this state.

A unitary group required to apportion the amount of the subtraction shall include all members of the unitary group for purposes of determining the group’s subtraction amount and apportionment ratio.