No intercompany elimination for dividends paid by insurance subsidiary, Oregon Tax Court holds


A corporation could not eliminate dividends received from its wholly owned subsidiary, an insurance company, because the insurance subsidiary was excluded from the parent's consolidated Oregon corporation excise (income) tax return, the Oregon Tax Court held. Under Oregon law (ORS 317.710(5)(b)), if an entity is required to use a different apportionment formula than a corporation with which it is affiliated, the entity is not permitted to be included in the same Oregon consolidated return even if it was included in the same federal consolidated return. As the insurance subsidiary was required to use an industry-specific apportionment formula and file a separate Oregon return, the dividends it paid to its parent may not be eliminated from the parent's Oregon consolidated return, the tax court concluded. [Stancorp Financial Group, Inc. v. Department of Revenue, Or. Tax Ct., TC-MD 070881B, 8/22/11]

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