(a) "Farm income":
(A) Means taxable income attributable to a farming business; and
(B) Includes gain from the sale or other disposition of property (other than land) regularly used by the taxpayer in the farming business for a substantial period of time.
(b) "Farming business" has the meaning given that term in section 263A(e)(4) of the Internal Revenue Code.
(c) "Taxable income" has the meaning given that term in ORS 316.022.
(d) "Taxpayer" means a person subject to tax under ORS chapter 316, but does not include an estate or trust.
(2) A taxpayer may elect to have personal income taxes for the tax year determined under this section in lieu of ORS chapter 316 if the individual is engaged in a farming business for the tax year and has farm income for the tax year.
(3) The taxpayer shall make the election in the manner provided by the Department of Revenue. In making the election, the taxpayer shall determine the amount of farm income that is to be considered elected farm income. The election shall apply only to the tax year for which the election is made.
(4) Upon making the election, the tax imposed under this section shall equal:
(a) The tax computed under ORS chapter 316 on the taxable income of the taxpayer reduced by the income that is elected farm income under subsection (3) of this section; plus
(b) The cumulative increase in the tax computed under ORS chapter 316 that would result if the taxable income of the taxpayer for each of the three prior tax years were increased by an amount equal to one-third of the income that is elected farm income under subsection (3) of this section.
(5) Any tax credit that would be allowable against the tax computed under ORS chapter 316 may be allowed against the tax computed under this section.
(6) The department shall:
(a) Prescribe the manner in which an election under this section is made; and
(b) Adopt rules on:
(A) The order and manner in which items of income, gain, deduction, loss or limitation on tax shall be taken into account in computing the tax under this section; and
(B) The treatment of a short tax year for purposes of this section. [2001 c.252 §2]
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