Oregon Supreme Court Finds Goodwill Proceeds Excludable From Sales Factor

The Oregon Supreme Court has affirmed an Oregon Tax Court decision holding that a taxpayer's gross receipts from the sale of goodwill should be excluded from the sales factor used to compute its Oregon corporate excise (income) tax liability.¹ In doing so, the Court clarified that for purposes of Oregon sales factor apportionment, an Oregon statute specifically excludes gross receipts from the sale of "intangible assets" (of which goodwill is classified) unless those gross receipts are derived from the taxpayer's primary business activity.² The Court rejected the Tax Court's conclusion that "intangible assets" means only "liquid assets," and held that the term carries its ordinary meaning.