This is super helpful- I was looking for an example like this, thank you! My interpretation is different though- for the example taxpayer scenario to have a $40k exempt balance at start of year 1 (and only incurring an incremental $5k from year 1 to year 2) implies that a multi-year balance was built up and is now being drawn down. It doesn't make a clear statement on any particular time limitation for building up that balance, and the OR-17 assessment questions seems to give the benefit of ambiguity to the taxpayer. But it does seem to open up other interesting scenarios (i.e- what if you sold the treasuries years prior and re-invested in something else? did you 'lock in' a tax exemption benefit during which you received coupon payments, which is still received at distribution, regardless of what investment activity occurred subsequently?)From OR-17. It appears that you can take the US govt obligations earned that year in your IRA and pro rate that with your distribution. There does not appear to be a carry forward. Page 88 of OR-17. I'mnot aware of any otehr states that have this, although I am sure there may be some. Sorry for the formatting, but go to the instructions and work thru it
MikeU.S. government interest in IRA
or Keogh distributions (ORS 316.681)
[Subtraction code 331]
Interest and dividends on U.S. bonds and notes are
exempt from state tax. See “Interest and dividends
on U.S. bonds and notes.” Answer these questions
to see if you have a subtraction on your Oregon
return for exempt income related to your retirement
distributions:
1. Did you have any distributions from a self-
employed retirement plan or an IRA?
2. Was any part of your self-employed retirement
plan or your IRA invested in U.S. bonds and notes?
3. Did you include your self-employed retirement
plan or IRA distribution in your 2021 federal AGI?
If you answered “yes” to all the questions above,
you may take a subtraction on Schedule OR-ASC or
OR-ASC-NP for the retirement plan exempt earnings
included in your distribution.
Use a worksheet like the one shown in the exam-
ple here or in OAR 150-316-0525 to calculate your
subtraction. Keep the worksheet with your records;
we may ask for it later.
Example: Donna retired last year and began tak-
ing distributions of $10,000 each year from her IRA.
The IRA is invested in U.S. government securities so
Donna uses the following information to calculate
her subtraction for years 1 and 2:
Year 1 Year 2
Current year earnings $4,000 $5,000
Current year distribution $10,000 $10,000
Account balance at 12/31 $100,000 $95,000
Total exempt earnings on
account at 12/31 $ 40,000 $45,000
Worksheet Year 1 Year 2
1. Total account balance
at year end. $100,000 $95,000
2. Current year
distribution. + 10,000 + 10,000
3. Line 1 plus line 2. $110,000 $105,000
4. Total exempt earnings
on account at year end. $ 40,000 $45,000
5. Total exempt part of
distributions from all
prior years. – 0 – $3,636
6. Line 4 minus line 5,
but not less than zero. $40,000 $41,364
7. Line 6 divided by line 3.
Oregon exempt ratio. 0.3636 0.3939
8. Line 2 multiplied by
line 7. Oregon exempt
portion of current year’s
distribution. $3,636 $3,939
Statistics: Posted by flannelman01 — Sun Mar 10, 2024 6:09 pm — Replies 7 — Views 257