Davidson v. State Tax Commission

2 Or. Tax 120, 1965 Ore. Tax LEXIS 85

• Court: Oregon Tax Court
• Decided: March 2, 1965
• Status: Published

Opinion

Edward H. Howell, Judge.

This is an appeal from an income tax assessment.

Plaintiff Walter C. Davidson worked for Safeway Stores and participated in the company retirement plan for employees. In 1960 he retired and withdrew all his interest in the fund. The State Tax Commission treated the amount received as income and plaintiff contends it should have been treated as a sale of a capital asset.

Under ORS 316.110, the payment made to an employee under a retirement plan shall be taxed to the employee in the year of receipt. In 1963, the legislature passed ORS 316.411 allowing such payment to be treated by the employee as a sale of a capital asset. Unfortunately for plaintiff, however, he had retired in 1960 and the law was not changed until 1963.

The statute allowing such payment to be treated as a capital asset was by its very terms made prospective from January 1, 1963, and not retroactive. ①

In addition, the withdrawal of the fund even prior to the enactment of ORS 316.411 could not qualify as a “sale or exchange.” 3B, Mertens, Law of Federal Income Taxation, § 22.92.

① ORS 316.411(2):

“Subsection (1) of this section, and 1963 amendments to ORS 316.408 made by section 3, chapter 388, Oregon Laws 1963, shall apply to all tax years beginning on or after January 1, 1963, and ending after September 2, 1963.”