(1) A resident individual shall be allowed a credit against the tax otherwise due under this chapter for the amount of any income tax imposed on the individual, or on an Oregon S corporation or Oregon partnership of which the individual is a member (to the extent of the individual’s pro rata share of the S corporation or distributive share of the partnership), for the tax year by another state on income derived from sources therein and that is also subject to tax under this chapter.
(2) The credit provided under this section shall not exceed the proportion of the tax otherwise due under this chapter that the amount of the modified adjusted gross income of the taxpayer derived from sources in the other state bears to the entire modified adjusted gross income of the taxpayer.
(3) The Department of Revenue shall provide by rule the procedure for obtaining credit provided by this section and the proof required. The requirement of proof may be waived partially, conditionally or absolutely, as provided under ORS 315.063.
(4) No credit allowed under this section or ORS 316.292 shall be applied in calculating tax due under this chapter if the tax upon which the credit is based has been claimed as a deduction, unless the tax upon which the credit is based is restored to income on the Oregon return.
(5) Credit shall not be allowed under this section for income taxes paid to a state that allows a nonresident a credit against the income taxes imposed by that state for taxes paid or payable to the state of residence. It is the purpose of this subsection to avoid duplicative taxation through use of a nonresident, rather than a resident, credit for taxes paid or payable to another state.
(6) The Department of Revenue may adopt rules under this section that provide a credit against the tax imposed by this chapter when the department considers the credit necessary to avoid taxation of the same income by this state and another state.
(7) As used in this section:
(a) “Modified adjusted gross income” means federal adjusted gross income as modified by this chapter and the other laws of this state applicable to personal income taxation.
(b) “Oregon partnership” means an entity that is treated as a partnership for Oregon excise and income tax purposes.
(c) “Oregon S corporation” means a corporation that has elected S corporation status for Oregon excise and income tax purposes.
(d) “State” means a state, district, territory or possession of the United States.
(8) For purposes of this section:
(a) A direct tax imposed upon income of an Oregon S corporation is an income tax imposed on the Oregon S corporation.
(b) An excise tax that is measured by income of an Oregon S corporation is an income tax imposed on the Oregon S corporation.
(c) An excise tax is measured by income only if the statute imposing the excise tax provides that the base for the excise tax:
(A) Includes revenue from sales and from services rendered, and income from investments; and
(B) Permits a deduction for the cost of goods sold and the cost of services rendered.