Business Tax Administrative Rule 600.17-1
Net Operating Losses
Portland City Code (PCC) 7.02.600(I) and Multnomah County Code (MCC) 12.600(I), state that in determining income, a Net Operating Loss (NOL) deduction is allowed in certain situations. This deduction is subject to several restrictions.
It is the taxpayer’s responsibility to calculate, claim and support this deduction. In calculating the available NOL for a taxpayer, the NOL amount must be reduced by the amount of a deduction allowed or allowable in each subsequent year. Due to the taxpayer’s firsthand knowledge of their own tax return and the potential complexities of their specific NOL calculation, the Revenue Division is not required to perform this calculation on the taxpayer’s behalf.
The Revenue Division can track the NOL generation and usage for a taxpayer, but this information is primarily used to ensure that a taxpayer is not claiming losses in excess of the amount to which they are entitled. The Revenue Division can, at its own discretion, correct an NOL in a taxpayer’s favor, but this is limited to ensure the efficient administration of the tax.
According to PCC 7.02.600(I)(1) and MCC 12.600(I)(1), an NOL may not be carried forward from any license/income tax year during which the taxfiler conducted no business within the City/County or the taxfiler was otherwise exempt from payment of the business license/income tax. However, in cases where the taxpayer has conducted business in the City/County and they are exempt from payment of the tax under the gross receipts exemption (PCC 7.02.400(C) and MCC 12.400(C)) for that tax year, they may petition the Revenue Division Director to claim an NOL generated during that tax year. These petitions will only be considered if the Combined Tax Return for the applicable tax year is completed and filed with payment of the $100 minimum tax due (plus any penalties or interest, if applicable) for the City/County. These petitions will not be considered in cases where a taxpayer has zero gross income in the City/County for the applicable tax year.