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LIC-6.09 - Qualified Retirement Plans

QUALIFIED RETIREMENT PLANS
Administrative Rules Adopted by Bureau of Licenses Pursuant to Rule-Making Authority
ARB-LIC-6.09

 
For taxable years which begin on or after January 1, 1993, contributions made by an employer into a Qualified Retirement Plan will be allowed as a deduction for purposes of the Business License and Business Income Tax laws. To be "qualified", a plan must meet the requirements of IRC Sec. 401(a). If the plan allows nondeductible employee contributions, those contributions are not an allowed deduction for business license or business income tax purposes. An Individual Retirement Account (IRA) established by an individual who does not operate a Schedule C trade or business activity is not an allowed deduction.
Example 1: Adams and Baker Partnership is owned by 15 partners. Each partner receives pass-through ordinary net income from self employment. Additionally, the partnership passes through a deduction of $15,000 for each partner's Keogh plan contributions. Since the Keogh is a qualified plan, a deduction will be allowed for the Keogh contributions when determining the partnership net income.
 
Example 2: Connie Cole, a sole proprietor, makes annual tax deferred contributions into a qualified simplified employee plan of $10,000 from her interior design business. When calculating her net income, a deduction will be allowed for the contributions to the simplified employee plan.
 
Example 3: Stan Stevens is required to file a combined license/tax return for the rents he receives from a commercial building located in Portland. He also receives wages as a night watchman. Stan's total income reported on his federal form 1040 would allow him to fund a fully deductible IRA in the amount of $2,000 based on his taxable compensation from his night watchman job. However, the IRA is not an allowed deduction for business license or business income tax purposes since it is not funded by the taxable compensation of a Schedule C trade or business. Rents reported on Schedule E are not considered taxable compensation for IRA purposes.

 
REFERENCES
 
Portland City Code Section 7.02.600
 
Multnomah County Code Section 5.60.600

 
HISTORY
 
Submitted for inclusion in PPD September 17, 2002.
Originally adopted as Bureau of Licenses Administrative Rule 600.94-3 August 29, 1994.

Table of Contents
LIC-6.01 - Payments Deemed to be Compensation to Owners
LIC-6.02 - Self-Employment Tax Deduction and Health Care Premium Deduction
LIC-6.03 - Change of Ownership During the Year and Calculation of the Compensation Allowance Deduction
LIC-6.04 - Patronage Dividends
LIC-6.05 - Short Periods Count as Tax Year
LIC-6.06 - Definition of Controlling Shareholders and Calculation of Number of Controlling Shareholders
LIC-6.07 - Treatment of Currently Taxed Pass-Through Income
LIC-6.08 - Partnerships - Partner Level Deduction Election
LIC-6.09 - Qualified Retirement Plans
LIC-6.10 - De Minimus Business Activity for Personal Services
LIC-6.11 - Apportionment of Gains and Incomes Due to Sale of a Business
LIC-6.12 - Business Activity and Apportionment of Sales of Tangible Personal Property
LIC-6.13 - De Minimus Business Activity for Tangible Personal Property
LIC-6.14 - Apportionment of Gross Income from Business Activities Other than Sales of Tangible Personal Property
LIC-6.15 - Apportionment for Banking Income
LIC-6.16 - Apportionment for Domestic Insurers
LIC-6.17 - Apportionment for Freight Carriers
LIC-6.18 - Apportionment for Passenger Carriers
LIC-6.19 - Apportionment for Incomes Subject to PCC Chapters 7.12 or 7.14
LIC-6.20 - Apportionment for Providers of Electronic or Telephonic Services