The opinion
No. 5 July 21, 2022 91
IN THE OREGON TAX COURT
REGULAR DIVISION
DEPARTMENT OF REVENUE,
State of Oregon,
Plaintiff,
v.
ALASKA AIRLINES, INC.,
Defendant.
(TC 5406 & 5407)
In these consolidated cases, the parties disputed the classification of three
types of receipts under the special income tax apportionment formula for airlines
of ORS 314.280 and OAR 150-314.280-(I). Defendant argued that the flight data
from Horizon Air, a regional airline which was included on the same consolidated
return as Defendant, should not be included in the departure ratio used to deter-
mine tax liability. Defendant also asserted that gross receipts from selling tick-
ets for flights on aircraft operated by other companies (codeshare revenue) should
not be included in “transportation sales” under OAR 150-314.280-(I). The court
determined that, as part of the same consolidated group, Horizon Air’s depar-
tures must be included in the departure ratio because, as a matter of law, the
relevant factors are: (a) where flights operated by either company departed and
(b) how much revenue was collected from their parties by either company. The
court, after considering the text, context, and history of OAR 150-314.280-(I),
further concluded that codeshare revenue was not for “transporting passengers”
and therefore not “transportation sales”; the sales that produced the revenue
were not made in Oregon and so were excluded from the numerator of Alaska’s
sales factor as nonflight sales. The court also considered an evidentiary issue
regarding the codeshare agreement between Defendant and another airline and
concluded that it was submitted untimely and did not add facts that would aid the
court in reaching a conclusion.
Oral argument on cross-motions for summary judgment
was held remotely on September 15, 2021.
Marilyn J. Harbur, Senior Assistant Attorney General,
Department of Justice, Salem, filed the motion and argued
the cause for Plaintiff Department of Revenue.
Gregg D. Barton, Perkins Coie LLP, Seattle, filed the
cross-motion and argued the cause for Defendant Alaska
Airlines, Inc.
Decision rendered July 21, 2022.
ROBERT T. MANICKE, Judge.
92 Dept. of Rev. v. Alaska Airlines, Inc.
In these consolidated cases,1 the parties contest
how three types of receipts must be classified as among the
various components of the special income tax apportion-
ment formula for airlines under ORS 314.280 and OAR 150-
314.280-(I) as in effect for the calendar and tax years 2012,
2013, and 2014 (Years at Issue).2
I. FACTS
The following facts apply as of the Years at Issue
and are stipulated unless otherwise indicated. Alaska was
an Alaska corporation with its headquarters and commer-
cial domicile in Seattle, Washington. Alaska’s corporate par-
ent, Alaska Air Group, Inc. (Air Group), was a holding com-
pany that owned all the stock of Alaska and all the stock of
Horizon Air Industries, Inc. (Horizon).
Alaska was an airline that provided air transpor-
tation services to passengers to more than 100 cities in the
United States (including Oregon), Canada, and Mexico.
Horizon was a regional airline that generally serviced
smaller airports throughout the Pacific Northwest, includ-
ing Oregon, Washington, and Idaho. Alaska and Horizon
each had their own Federal Aviation Administration (FAA)
licenses and operating certificates; each operated flights
that originated or terminated in Oregon. In accordance
with Federal Aviation Administration rules, Alaska and
Horizon were each required to maintain detailed statistics
relating to their operations, including the number of depar-
tures from each airport served, the type of equipment used
for each flight, and the number of passengers or weight of
cargo carried on each flight.
Alaska entered into one or more capacity pur-
chase agreements (CPAs) with Horizon for all of Horizon’s
seat capacity. Under the CPAs, Alaska purchased and paid
1
As discussed in the Order of Consolidation dated November 6, 2020, each
party essentially cross-appealed to this division from a Magistrate Division
decision. The court refers to Defendant Alaska Airlines, Inc. as “Alaska” and to
Plaintiff Department of Revenue as the “department.”
2
References to the Oregon Revised Statutes (ORS) and Oregon Administrative
Rules (OAR) are to the 2011 editions, unless otherwise indicated. In 2016, as part
of a general renumbering that disassociated tax OARs from specific sections of
the ORS, the Secretary of State renumbered former OAR 150-314.280-(I) as OAR
150-314-0078, leaving the text unchanged.
Cite as 25 OTR 91 (2022) 93
Horizon for all the seating capacity on Horizon’s flights
for the Years at Issue. Horizon did not sell its own tickets.
Alaska marketed, advertised, and provided all reservation
and ticketing services with respect to all of the Horizon
flight capacity.
Alaska and Horizon were members of the same uni-
tary group and, together with Air Group, were included in
the same consolidated federal returns for the Years at Issue.
Alaska filed 2012, 2013, and 2014 consolidated Oregon cor-
poration excise tax returns that eliminated the CPA revenue
paid to Horizon by Alaska from income and from the sales
factor.3 On the originally filed returns, Alaska included the
flight data of Horizon in the departure ratio used to deter-
mine Oregon transportation sales. On timely filed amended
returns, Alaska removed the flight data of Horizon from the
departure ratio, claiming an overpayment of tax.
The department issued a notice of deficiency on
December 12, 2016, asserting that the flight data of Horizon
must be included in Alaska’s departure ratio, and that the
departure ratio shown on the consolidated return must
therefore be changed to 9.0671 percent, 9.6665 percent and
10.2722 percent for 2012, 2013, and 2014 respectively. If the
flight data of Horizon is not to be included in the departure
ratio shown on the consolidated return, the departure ratios
are 6.0560 percent, 6.7397 percent and 7.5691 percent for
2012, 2013, and 2014 respectively.
The notice of deficiency also increased the amount
of Alaska’s “transportation revenue” by including certain
“codeshare revenue.” The notice stated: “It is gross revenue
derived from airline ticket sales that is included as ‘trans-
portation revenue’ regardless of whether the passengers who
purchase those Alaska tickets ultimately fly on a plane oper-
ated by Alaska, or on a plane operated by another airline.”
On or about December 4, 2017, the department
issued notices of assessment and a conference decision letter
3
The parties appear to disagree about whether the consolidated Oregon
returns should have been filed under the name of Air Group as the corporate par-
ent, rather than under Alaska’s name. See OAR 150-317.710(5)(a)-(A). However,
neither party asserts that filing the returns under Air Group’s name would have
changed the amounts at issue or the legal analysis.
94 Dept. of Rev. v. Alaska Airlines, Inc.
upholding the determinations in the notice of deficiency.
Alaska timely appealed to the Magistrate Division.
In addition to seeking de novo review of the depar-
ture ratio and transportation revenue issues determined
in the notice of deficiency, Alaska asks the court to con-
sider a third issue, not determined in the notice, pursu-
ant to the court’s authority under ORS 305.575. This third
issue involves the treatment of amounts referred to as the
“Bombardier subsidy,” the facts of which are discussed below
in the analysis of the issue.
II. ISSUES
A. Are departures of aircraft operate by Horizon includible
in the taxpayer’s departure ratio?
B. Are Alaska’s gross receipts from selling tickets for
flights on aircraft operated by other companies includi-
ble in transportation revenue?
C. Are Horizon’s gross receipts from the Bombardier sub-
sidy includible in transportation revenue?
III. ANALYSIS
This case involves the special formula prescribed
for apportioning to Oregon the business income of a com-
pany whose principal business is the transportation of goods
or persons as an airline. As has been recounted in earlier
cases, the Oregon legislature in 1965 adopted a generally
applicable apportionment formula as part of the Uniform
Division of Income for Tax Purposes Act (UDITPA). See ORS
314.605 to 314.675; Crystal Communications, Inc. v. Dept. of
Rev., 353 Or 300, 302-306, 297 P3d 1256 (2013). However,
UDITPA excludes airlines and other “public utilities” from
its coverage; instead, the pre-UDITPA statute, ORS 314.280,
governs determination of the net income of a multistate air-
line.4 See Fisher Broadcasting, Inc. v. Dept. of Rev., 321 Or
341, 348-359, 898 P2d 1333 (1995). ORS 314.280(1) provides
that the department “shall have power to permit or require
4
ORS 314.615 excludes a “public utility,” as well as a “financial institution”
or an individual rendering purely personal services. A “public utility” includes
“any business entity whose principal business is ownership and operation for
public use of any plant, equipment, property, franchise, or license for * * * trans-
portation of goods or persons * * *.” ORS 314.610(6).
Cite as 25 OTR 91 (2022) 95
either the segregated method of reporting or the appor-
tionment method of reporting, under rules and regulations
adopted by the department, so as fairly and accurately to
reflect the net income of the business done within the state.”
The statute requires the department to conform its appor-
tionment rules to the “weightings” in ORS 314.650, which for
the Years at Issue means that property and payroll factors
are ignored, and only the sales factor is used to determine
Oregon’s share of the business income of an airline. See ORS
314.280(3)(a); Or Laws 2005, ch 832, §§ 48, 48a (amending
ORS 314.650; eliminating reference to property and payroll
factors in apportionment formula).
Starting in 1983 and continuing through the Years
at Issue, the department had in place OAR 150-314.280-(I)
(Oregon Airline Rule), which the department adopted from a
model regulation adopted in that year by the Multistate Tax
Commission (MTC Airline Rule).5 Section (1) of the Oregon
Airline Rule refers to UDITPA, stating:
“Where an airline has income from sources both within
and without this state, the amount of business income from
sources within this state is determined pursuant to ORS
314.610 to 314.665 except as modified by this rule.”
Section (2) reiterates that business income of an airline is to
be apportioned “using only the sales factor.” That factor is
defined in subsection (2)(d), which states:
“The transportation sales derived from transactions and
activities in the regular course of the trade or business
of the taxpayer and miscellaneous sales of merchandise,
etc., are included in the denominator of the sales factor.
(ORS 314.665 and OAR 150-314.665(1)-(A)) Passive income
items such as interest, rental income, dividends, etc., are
not included in either the numerator or the denominator
nor are the proceeds or net gains or losses from the sale of
aircraft included. The numerator of the sales factor is the
5
The as-adopted MTC Airline Rule is available at https://www.mtc.gov/
uploadedFiles/Multistate_Tax_Commission/Uniformity/Uniformity_Projects/
A_-_Z/SpecialRules-Airlines.pdf. The Oregon Airline Rule, both as of 1983 and
as of the Years at Issue, is materially identical to the as-adopted MTC Airline
Rule. The department made a nonsubstantive change in 2007, when it substi-
tuted the term “sales” in lieu of the original term “revenue” throughout the rule,
apparently overlooking one usage of “transportation revenue” in the penultimate
sentence of OAR 150-314.280-(I)(2)(d) as noted below.
96 Dept. of Rev. v. Alaska Airlines, Inc.
total sales of the taxpayer in this state during the income
year. The total sales of the taxpayer in this state during
the income year is the result of the following calculation:
The ratio of departures of aircraft in this state weighted
as to the cost and value of aircraft by type, as compared to
total departure [sic] similarly weighted, multiplied by the
total transportation revenue.[6] The product of this calcula-
tion is to be added to any nonflight sales directly attribut-
able to this state.”
Definitions of key terms appear in subsection (2)(a), includ-
ing the following:
“(J) ‘Transportation sales’ means sales from transporting
passengers, freight and mail as well as liquor sales, pet
crate rentals, etc.
“(K) ‘Departures’ means for purposes of these regulations
all takeoffs, whether they be regularly scheduled or char-
ter flights, that occur during revenue service.”
In the Magistrate Division, the department offered a for-
mulaic depiction of the sales factor, which the magistrate
reprinted in her order:
The formula illustrates features that differ from the general
UDITPA sales factor formula. The denominator is the sum
of two items (total transportation revenue and “miscella-
neous sales of merchandise, etc.”), rather than UDITPA’s
single item of “total sales of the taxpayer everywhere.” See
ORS 314.665(1). Likewise, the numerator consists of two
main parts rather than UDITPA’s single item of “sales of the
taxpayer in this state.” See id. The first part of the numera-
tor is a portion of total transportation revenue; this portion
is determined by multiplying the total by the percentage of
departures of aircraft in Oregon vs. departures everywhere.
6
The Oregon Airline Rule’s use of “transportation revenue” here is an out-
lier; elsewhere, the rule refers to “transportation sales.” The parties agree that
the terms are synonyms for purposes of this case. In this order, the court gen-
erally refers to “transportation revenue”; for purposes of this case, the court
uses “revenue” synonymously with “sales” and with “gross receipts.” See ORS
314.610(7).
Cite as 25 OTR 91 (2022) 97
The second part of the numerator is “nonflight sales directly
attributable to” Oregon. The numerator is the sum of the
first and second parts.
The effect of this bifurcation of types of revenue in
both the numerator and denominator is to “source” trans-
portation revenue differently than under UDITPA. Whereas
UDITPA requires the taxpayer to determine that an item
of revenue is “in this state” before the item can appear in
the numerator, the Oregon Airline Rule requires such item-
by-item “sourcing” only for nonflight revenue. See ORS
314.665(2) (sourcing sales of tangible personal property
based on destination of the property); ORS 314.665(4) (sourc-
ing other types of sales by location of “income-producing
activity” based on “costs of performance”). For an airline’s
transportation revenue, the Oregon Airline Rule uses the
percentage of departures occurring in Oregon as a substi-
tute for any other method of sourcing. Cf. OAR 150-314.280-
(H)(3)(d) (railroads; applying ratio of miles traveled in state
vs. miles traveled everywhere); OAR 150-314.280-(J)(3)(d)
(trucking; similar).
A. Departure Ratio
Alaska argues here, as it did in the audit, that the
departure ratio should not include Horizon’s departures from
locations in Oregon. Alaska contends that, because Alaska
and Horizon are separate corporations with separate FAA
licenses and routes, each company’s revenue should be mul-
tiplied by its separate departure ratio. However, as Alaska
points out, because Horizon’s revenue consists almost
entirely of payments from Alaska under the CPA, Horizon’s
revenue is almost entirely eliminated under the federal con-
solidated return rules incorporated by ORS 317.710(5) and
ORS 317.010(3)(a). See generally StanCorp Financial Group,
Inc. v. Dept. of Rev., 21 OTR 120 (2013) (discussing elim-
ination under federal and Oregon law). It therefore is not
possible to match Horizon’s departures to Horizon’s receipts
because almost no Horizon receipts exist after elimination.
And Alaska argues that it is inappropriate to use Horizon’s
departures to source Alaska’s gross receipts.
The court rejects this argument as contrary to
Oregon’s treatment of corporations that join in a consolidated
98 Dept. of Rev. v. Alaska Airlines, Inc.
return. Under the relevant statutes, Alaska, Horizon, and
Air Group are a single taxpayer, and the special sales factor
for airlines thus includes the aggregate departures for that
single taxpayer, as well as the aggregate transportation rev-
enue for that single taxpayer. The basis for this conclusion is
as follows:
1. The statute authorizing the Oregon Airline Rule
applies “[i]f a taxpayer has income from business
activity as a * * * public utility * * * taxable both
within and without this state * * *.” ORS 314.280(1)
(emphasis added).
2. As used in ORS 314.280, “taxpayer” means a per-
son subject to one of Oregon’s net income taxes. See
ORS 314.021 (“Except where the context requires
otherwise, [ORS chapter 314] is applicable to all
laws of this state imposing taxes upon or measured
by net income.”).
3. ORS chapter 317 governs the particular net income
tax at issue here, the corporation excise tax. That
tax is imposed on “[e]very * * * business corporation
* * * doing business within this state * * *.” ORS
317.070 (emphasis added).
4. “Corporation” has a particular meaning for pur-
poses of ORS chapter 317: “Whenever two or more
corporations are required to file a consolidated
state return * * * any reference in this chapter to a
corporation for purposes of deriving Oregon taxable
income shall be treated as a reference to all corpo-
rations that are included in the consolidated state
return.” ORS 317.710(5)(c) (emphasis added).
Accordingly, when the Oregon Airline Rule states that the
“total sales of the taxpayer” in Oregon is the “total transpor-
tation revenue” times “departures of aircraft in this state
* * * compared to total departure[s],” plus “nonflight sales
directly attributable to this state,” each term, by definition,
refers respectively to the transportation sales, departures,
and nonflight sales of “all corporations that are included
in the consolidated state return,” with intercompany items
such as CPA payments eliminated. OAR 150-314.280-(I)(2)(d)
Cite as 25 OTR 91 (2022) 99
(emphasis added); ORS 317.710(5)(c) (emphasis added). It
is therefore irrelevant for purposes of the departure ratio
that Alaska and Horizon participated in a CPA by which
Alaska sold all of the tickets for flights operated by Horizon.
Regardless of any contracts between them, as a matter of
law all that is relevant is (1) where flights operated by either
company departed; and (2) how much revenue from third
parties either company collected. Alaska’s position would
allow it to have its cake (by eliminating Horizon’s CPA rev-
enue) and eat it, too (by ignoring Horizon’s departures when
sourcing ticket revenue from third parties). With respect to
this issue, the court will deny summary judgment to Alaska
and grant summary judgment to the department. Based on
the parties’ stipulations, the court holds that the Oregon
departure ratios that are required to be shown on the con-
solidated Oregon returns filed by Alaska are 9.0671 percent,
9.6665 percent and 10.2722 percent for 2012, 2013, and 2014
respectively.
B. Transportation Revenue
The parties next dispute how Alaska’s revenue from
contractual arrangements that involve flights on aircraft
operated by airlines other than Alaska and Horizon should
be included in the sales factor. The parties’ stipulations do
not address the facts of these arrangements, but they are
discussed in Air Group’s Forms 10-K submitted as stipu-
lated exhibits, and in uncontested portions of declarations
of Alaska’s tax director, Rebekah Funk.
1. Facts related to transportation revenue
Alaska had two types of arrangements with compa-
nies not under common ownership with Alaska: CPAs with
SkyWest Airlines, Inc. (SkyWest) and Peninsula Airways,
Inc. (PenAir), and “codesharing” agreements or “marketing
alliances” with more than a dozen domestic or foreign-based
carriers, primarily Delta Air Lines (Delta) and American
Airlines (American).
As to the CPAs with SkyWest and PenAir, the
uncontested evidence before the court is that SkyWest and
PenAir were independently owned and that Alaska’s CPAs
with them were “similar” to its CPA with Horizon. However,
100 Dept. of Rev. v. Alaska Airlines, Inc.
in contrast to the CPA with Horizon for “100% of its capac-
ity,” the CPAs with SkyWest and PenAir were for “certain
routes” only, and Alaska received all passenger revenue
“from those flights.”7
As to the codeshare arrangements, the following
facts are uncontested and appear in the Funk declaration.
Alaska derived codeshare revenue by making ticket sales
and reservations to passengers for flights operated by other
airlines such as American and Delta. Alaska collected the
amounts paid by passengers for tickets sold and remitted
those amounts to the airline operating the flight, net of a
portion that Alaska retained. Most of Alaska’s codeshare
relationships were free-sell codeshares, where the mar-
keting carrier sells seats on the operating carrier’s flights
from the operating carrier’s inventory but takes no inven-
tory risk. When another airline paid Alaska for a seat on
one of Alaska’s operated flights, Alaska treated that sale
7
The court assumes for purposes of this order that the parties disagree
about the treatment of Alaska’s revenue from the SkyWest and PenAir CPAs.
The department’s counsel so stated at oral argument, but the written record is
not entirely clear on that point. The department in its opening brief referred to
the SkyWest and PenAir CPAs in its recitation of facts, as well as to the code-
sharing agreements and later argued generally that Alaska’s ticket sales pur-
suant to “agreements with other airlines” are transportation sales. Alaska then
filed its opening brief and included Funk’s declaration, which includes seven
paragraphs specifically describing the SkyWest and PenAir CPAs, stating that
Alaska’s returns treated all such revenue as nonflight revenue for purposes of
the numerator of the sales factor, and that the returns sourced that revenue out-
side Oregon on the theory that the greatest proportion of Alaska’s costs of per-
formance with respect to that revenue was attributable to Washington, where
Alaska’s headquarters and call center agents are located. The declaration goes
on to state facts specifically relating to Alaska’s “codeshare revenue” in 14 sub-
sequent paragraphs. Attached to the declaration are two sets of calculations:
Exhibit D represents Alaska’s position regarding the proper calculation of the
sales factor and the proper amounts from Alaska’s books and records. Exhibit E
is “Alaska’s understanding of the department’s current position with respect to
the proper calculation of the sales factor. The differences of opinion are found in
the department’s inclusion of codeshare revenue in the determination of trans-
portation revenue * * *. The parties disagree as to whether codeshare revenue
is transportation revenue.” The department then filed its response and reply,
attaching a declaration of the auditor, Vivien Wrinn, which states: “I generally
agree with the numbers in Exhibit E, with the exception of the Bombardier sub-
sidy * * *. I also disagree with the term ‘commissions’ used by Alaska in describ-
ing the transportation sales revenue derived from selling airline tickets under
its code sharing agreements with other airlines.” Exhibit E contains line items
for “Alaska Transportation w/o Net Codeshare”; “Alaska Net Codeshare Revenue
Incl. as Transportation”; and “Alaska Codeshare Commission,” but Exhibit E
nowhere refers to the capacity purchase agreements with SkyWest or PenAir.
Cite as 25 OTR 91 (2022) 101
as “transportation revenue” under OAR 150-314.280-(I).
When Alaska paid another airline for a codeshare seat,
Alaska treated the receipts it retained from the passenger
as “miscellaneous sales” and “nonflight sales” under OAR
150-314.280-(I). Alaska sourced codeshare revenues outside
Oregon for purposes of the sales factor numerator, applying
cost-of-performance rules.8 Thus, the numerator of Alaska’s
Oregon sales factor did not include codeshare revenue, but
the denominator did.
2. Parties’ positions
The department contends that all of Alaska’s rev-
enue from “agreements with other airlines,” including the
SkyWest and PenAir CPAs and codeshare agreements, is
part of Alaska’s transportation revenue because that reve-
nue constitutes “sales from transporting passengers.” OAR
150-314.280-(I)(2)(J) (defining transportation sales as “sales
from transporting passengers, freight and mail as well as
liquor sales, pet crate rentals, etc.”). Alaska disagrees, argu-
ing that transportation revenue includes revenue only from
tickets on flights operated by Alaska.9
3. Analytical framework
In construing an administrative rule, the court
applies the same analytical framework that applies to the
construction of statutes. State v. Hogevoll, 348 Or 104, 109,
228 P3d 569 (2010). The court examines the text, context,
and any relevant adoption history to determine the intent
of the agency. Otnes v. PCC Structurals, Inc., 367 Or 787,
794, 484 P3d 1049 (2021). The court’s examination of text
starts with the “plain meaning” of terms, for which general
usage dictionaries are helpful, or technical sources such as
specialized dictionaries if the drafters used technical termi-
nology. See Comcast Corp. v. Dept. of Rev., 356 Or 282, 295-
96, 337 P3d 768 (2014). “Context” includes other provisions
8
Alaska’s stated rationale for applying cost-of-performance sourcing was
that Alaska negotiated its codeshare agreements and carried out the activi-
ties associated with earning codeshare revenue at its headquarters in Seattle,
Washington and through its call center agents, who were located in Washington,
Arizona, and Idaho.
9
More precisely, under the court’s analysis above, on flights operated by the
single taxpayer, i.e. either Alaska or Horizon.
102 Dept. of Rev. v. Alaska Airlines, Inc.
of the same rule, other related rules, the statute pursuant to
which the rule was created, and other related statutes. Abu-
Adas v. Employment Dept., 325 Or 480, 485, 940 P2d 1219
(1997). Dictionaries, and other sources of plain or techni-
cal meaning, or of context, should be contemporaneous with
adoption of the rule, as the purpose of the court’s analysis
is to determine the intent of those who wrote the rule. See
Comcast, 356 Or at 296, n 7, 299. In this case, as discussed,
the Oregon Airline Rule originated in 1983, when the MTC
approved the MTC Airline Rule as a model regulation and
the department adopted it nearly verbatim.
4. Text
A dictionary in common usage in 1983 defines the
first sense of the verb “transport” as follows:
“to transfer or convey from one person or place to another :
carry, move <on this vessel he ~ed a heavy load of ammuni-
tion -L.H,Bolander> <in the early days copper ore was ~ed
in wagons -Amer. Guide Series Tenn.>”
Webster’s Third New Int’l Dictionary at 2430 (1981)
(Webster’s).10 The same dictionary compares various syn-
onyms under the heading “carry,” stating:
“ TRANSPORT refers to carriage in bulk or number over
an appreciable distance and, typically, by a customary or
usual carrier agency <how many merchants and carriers
… must have been employed in transporting the materi-
als from some of those workmen to others who often live
in a very distant part of the country—Adam Smith>
TRANSPORT is also used to signify the carrying of persons
into very distant or strange spheres, especially by unusual
instrumentalities <the astrophysicist with the aid of his
spectroscope transports himself through millions of miles
10
Other senses of the word convey, or add, a figurative meaning that the
court does not find relevant here:
“2 : to carry away with strong or intensely pleasurable emotion: inflame,
enrapture (his anger ~s him) (the test of greatness in a work of art is… that
it ~s us -Herbert Read) (didn’t realize that just a man and a red cloth and a
bull could ... ~ a person -Barnaby Conrad) 3 : to convey or cause to be conveyed
into banishment usu. to a penal colony <was eventually ~ed for stealing a
gentleman’s gold watch –Osbert Sitwell> 4 Scot a : to transfer (a minister) to
another charge b : to remove (a parish church) to another part of the parish
syn see banish, carry ”
Id.
Cite as 25 OTR 91 (2022) 103
to worlds incredibly terrifying and beautiful—Waldemar
Kaempffert>”
Id. at 343.
Based on these definitions,11 the court concludes
that the plain meaning of “transport” refers to the physical
act of operating aircraft that move passengers or freight.
Nothing in the plain meaning suggests to the court that
acts such as advertising, promoting or selling tickets, or
otherwise facilitating another person’s movement of passen-
gers or freight, constitute “transporting.” The court turns to
relevant context for any additional insights on the intention
of the rule.
5. Context
For context, the court starts with the other terms
in the sentence defining “transportation sales,” namely,
“liquor sales”; and “pet crate rentals, etc.” OAR 150-314.280-
(I)(2)(J). Pouring liquor and handling pet crates are phys-
ical activities. In the context of the Oregon Airline Rule,
the court sees them as closely tied to the physical activity
of operating the aircraft.12 The court views “liquor sales”
and “pet crate rentals” as activities incidental to the phys-
ical activity of “transporting passengers.” The abbreviation
“etc.” means “and others esp. of the same kind” or “a number
of various unspecified persons or things.” Webster’s at 779.
The court concludes that the context of the entire sentence
in OAR 150-314.280-(I)(2)(J) reinforces a conclusion that
“transporting” refers to the physical activity of operating
aircraft that move passengers because the sentence includes
other physical activities incidental thereto.
The court next turns to the paragraph describing
the contents of the sales factor, OAR 150-314.280-(I)(2)(d).
11
A review of federal statutes and regulations in place in 1983 does not sug-
gest any technical meaning that differs from the plain meaning in Webster’s. See,
e.g., 49 USC § 1301(24) (1982) (defining “interstate air transportation” as “the
carriage by aircraft of persons or property as a common carrier for compensation
or hire or the carriage of mail by aircraft, in commerce” between specified United
States destinations); 14 CFR §§ 200.1 to 399.111 (1983).
12
In the absence of evidence, the court assumes that airlines in 1983 pri-
marily made liquor sales during the flight or in airport lounges where passengers
were waiting to board their flight. The court also assumes that airlines rented
pet crates primarily to passengers whose pets were traveling with them on the
same flight, or to persons wishing to ship pets as “freight.”
104 Dept. of Rev. v. Alaska Airlines, Inc.
Here the court finds two sources of revenue in the formula
other than transportation revenue. Starting with the numer-
ator, the only other term that refers to a source of revenue
is “nonflight sales.”13 The drafters left that term undefined,
and the court has not found a dictionary or other source that
defines it. The plain meaning of the prefix “non” is “not :
reverse of : absence of.” Webster’s at 1535. From that, the
court tentatively infers that the drafters intended “non-
flight” sales or revenue as a shorthand negation that means
all revenue other than revenue from “transporting passen-
gers, freight and mail as well as liquor sales, pet crate rent-
als, etc.”14 Turning to the denominator, the court reaches the
same tentative conclusion as to the undefined term “mis-
cellaneous sales of merchandise, etc.” The plain meaning of
“miscellaneous” is “comprising members or items of differ-
ent kinds : grouped together without system : assorted : het-
erogeneous.” Webster’s at 1442. The combined use of “miscel-
laneous” and “etc.” renders the phrase as a whole so broad
as to dilute the specific reference to “sales of merchandise.”
The court concludes that “miscellaneous sales of merchan-
dise, etc.” is a catchall for anything other than “transporta-
tion sales” and is thus synonymous with “nonflight sales.”
Overall, the context discussed in this paragraph does not
change the court’s initial conclusion that “transporting”
refers to the physical act of operating aircraft that move
passengers or freight.
Also within the paragraph describing the con-
tents of the sales factor is the departure ratio: “The ratio of
departures of aircraft in this state weighted as to the cost
and value of aircraft by type, as compared to total depar-
ture[s] similarly weighted * * *.” OAR 150-314.280-(I)(2)(d).
Departures of aircraft are a physical activity involving spe-
cific aircraft at specific locations. The court finds that the
use of departures as the other multiplicand in the numera-
tor supports a conclusion that “transporting,” too, refers to
13
Referred to as “nonflight revenue” in the MTC Airline Rule and in the
Oregon Airline Rule before 2007.
14
This inference is supported by the similarly binary approach found in the
examples in both the Oregon Airline Rule and the MTC Airline Rule, which refer
to “flight personnel” vs. “nonflight personnel,” and to “747’s ready for flight” vs.
“nonflight tangible personal property.” See OAR 150-314.280-(G) (example 1)
(1983); MTC Airline Rule (example 1).
Cite as 25 OTR 91 (2022) 105
the physical act of operating aircraft to move passengers or
freight, as opposed to selling tickets or otherwise facilitat-
ing another airline’s transporting activities.15
Finally, the context of the Oregon Airline Rule also
would include practices and models for generating revenue
in the airline industry at the time the rule was drafted. The
parties have supplied no evidence indicating that capacity
purchase agreements or codesharing existed as of 1983.
One-off ticket sales appear to have been common, how-
ever. The Ninth Circuit described the following scenario
as of December 3, 1984: “Most of the world’s airlines * * *
routinely sell carriage over each other’s routes on a com-
mission basis, pursuant to standard interline traffic agree-
ments promulgated by the International Air Transport
Association * * *.” Kapar v. Kuwait Airways Corp., 845 F2d
1100, 1101 (1988) (rejecting personal injury claim against
Pan American World Airways, Inc., which had issued ticket
on its own ticket stock for successive flights provided by
Kuwait Airways Corporation). But even if the court attri-
butes knowledge of this “routine” practice to the drafters of
the rules, their silence on the subject could support either
party’s position in this case. Therefore, the court assigns no
weight to this context.
Overall, the court concludes that context from other
portions of the Oregon Airline Rule, particularly the rule’s
references to “liquor sales” and “pet crate rentals, etc.” as
constituting “transportation sales,” and the sourcing of
receipts based on the location of departures and the value
of aircraft used, are consistent with the plain meaning of
“transporting passengers” as referring to the physical act
of operating aircraft to move passengers. Before examin-
ing the adoption history of the rule, the court tentatively
15
Alaska would have the court go further by concluding that the highly tax-
payer-specific nature of the departure ratio (relying on the value, cost, tax basis
of aircraft, etc.) implies that transportation sales must necessarily exclude rev-
enue from sales commissions or other services to facilitate flights on other air-
lines. While the court agrees with Alaska’s general proposition that “there must
be a relationship under OAR 150-314.280-(I) between the departure ratio and the
transportation sales to which it is applied,” the court does not go so far as to hold
that a future rule prescribing the same departure ratio would lack the requisite
relationship if it required an airline to include commission and service revenue in
a “transportation sales” multiplicand. The court expresses no view on that point.
106 Dept. of Rev. v. Alaska Airlines, Inc.
concludes that revenue from Alaska’s CPAs with SkyWest
and PenAir and from codeshare agreements, was not reve-
nue from “transporting passengers.”
6. Adoption history of MTC proceedings
For any additional indicia of the drafters’ intent
regarding the treatment of CPA and codeshare revenue, the
court turns to materials compiled by the MTC related to
its adoption of the MTC Airline Rule, which counsel for the
department helpfully provided. Cf. Powerex Corp. v. Dept.
of Rev., 357 Or 40, 64-65, 346 P3d 476 (2015) (considering
records of drafting of UDITPA in addition to looking to any
relevant legislative history of Oregon legislature’s later
enactment of UDITPA).16 These documents record a deep
disagreement, over multiple years, between representa-
tives of the MTC and representatives of the airline industry.
From the perspective of the MTC’s then-executive director,
Eugene Corrigan, the dispute centered on the fact that air-
line routes commonly extend over states where the aircraft
neither depart nor arrive and where the airline may or may
not otherwise do business. (The record of proceedings gen-
erally refers to such states as “flyover” states.) According to
Corrigan, the airlines initially proposed a single-factor “line-
haul” formula that would have multiplied total net income by
a fraction, of which the numerator was miles traveled over
the arrival and departure states, and the denominator was
miles traveled over all states on the route. The MTC objected
because of a prevailing theory at the time17 that flyover states
would lack jurisdiction to impose an income tax on the air-
line, causing a substantial amount of “nowhere income”:
“The problem * * * is that the airlines want to include all of
their airtime in the denominator of their factors but that
16
In this case, neither party supplied the court with any materials relating
to the department’s adoption of the MTC Airline Rule.
17
The theory that a “flyover” state may not subject an airline to tax was artic-
ulated publicly in a meeting of the National Association of Tax Administrators in
1973. See Proceeding of the Annual Conference of the National Association of Tax
Administrators 97-98 (1973) (“It was the consensus, although not the unanimous
view, of the committee members, that pure fly-over operations alone (no landings
or take-offs or other operations in the state) do not provide sufficient nexus to
support an assertion of tax jurisdiction.”) quoted in Jerome R. Hellerstein, Walter
Hellerstein & Andrew Appleby, 1 State Taxation, (3d ed, 2022) at 10.03 n 113. The
court today expresses no view about this jurisdictional topic.
Cite as 25 OTR 91 (2022) 107
they would exclude from the numerators of most states,
even many of the states in which they admittedly do busi-
ness, so-called flyover airtime. The result is that much
of their income is not attributable to any state or other
jurisdiction. We typically refer to such income as ‘nowhere
income.’ For the purposes of this document, I refer to it as
‘extraterrestrial’ or ‘E.T.’ income.”
Memorandum from Eugene Corrigan to MTC Executive
Committee, July 12, 1983.
The MTC’s approach, a version of which ultimately
prevailed, sought to eliminate all “nowhere income” and
instead to achieve “100% accountability.” Minutes of Dec 6,
1982, hearing; statements of Corrigan. The as-adopted sales
factor multiplies all transportation revenue by the departure
ratio, which ratio does not use mileage flown, and thus alto-
gether ignores flyover states and reflects only states where
the airline’s aircraft pick up passengers. A state from which
an aircraft departs is highly likely to have jurisdiction to
impose its income tax. See generally Jerome R. Hellerstein,
Walter Hellerstein & Andrew Appleby, 1 State Taxation, (3d
ed, 2022) ¶ 10.03[6][b] (discussing jurisdictional limitations).
The departure ratio thus achieves the MTC’s goal of “100%
accountability,” notwithstanding the airlines’ objections
that the ratio tends to overstate the contribution that states
of departure (and arrival) make to the economic activity of
the airline.
From this record, the court concludes that the
drafters of the MTC Airline Rule were not concerned with
sourcing revenue that airlines might receive from contracts
with each other. The adoption history documents do not
mention those activities. The court finds no indication that
the drafters saw revenue from “transporting passengers”
as anything other than revenue from carrying passengers
on planes directly operated by the recipient of the revenue.
Nothing in the adoption history changes the court’s conclu-
sion above.
The court pauses to discuss an argument the depart-
ment makes based on the adoption history. The depart-
ment asserts that Alaska’s position would violate the draft-
ers’ intent by creating “nowhere income.” This argument
108 Dept. of Rev. v. Alaska Airlines, Inc.
seriously misuses the term “nowhere income.” Abundant
authority, including the Oregon Supreme Court’s opinion in
AT&T Corp. v. Dept. of Rev., shows that the term refers to
the possibility that apportionment rules might assign reve-
nue to a state that lacks jurisdiction to impose an income tax
on the taxpayer. 357 Or 691, 707, 358 P3d 973 (2015) (refer-
ring to “nowhere income” arising from sale of tangible per-
sonal property “when the taxpayer cannot be taxed in the
purchaser’s state”) (emphasis added); see also Hellerstein,
et al., 1 State Taxation ¶ 9.16[3] (referring to “nowhere
income” as “income that is taxable by no state”) (emphasis
added); ASARCO Inc. v. Idaho State Tax Comm’n, 458 US
307, 345, 102 S Ct 3103, 73 L Ed 2d 787 (1982) (O’Connor, J.,
dissenting) (“there is the disturbing possibility that no State
could satisfy the requirements of the Due Process Clause as
interpreted today by the Court, so that the contested income
would be, in the words of state tax administrators, ‘nowhere
income.’ ”) (emphasis added). The fact that a state having
jurisdiction might choose to not impose a net income tax does
not make the income so attributed into “nowhere income,”
so long as that state is not prohibited by the United States
Constitution or a federal statute from imposing such a tax.
See ORS 314.620(2) (taxpayer considered “taxable in another
state” under UDITPA if the state “has jurisdiction to subject
the taxpayer to a net income tax regardless of whether, in
fact, the state does or does not.”) (emphasis added).
Avoiding nowhere income was, indeed, a concern of
the MTC, but the adoption history uses that term in the uni-
versally accepted sense, to refer to apportionment to states
that lacked jurisdiction to tax, as was surmised to occur
under the airline industry’s line-haul proposal. Alaska’s
interpretation that revenue from the SkyWest and PenAir
CPAs and from codesharing constitutes “nonflight sales”
does not create nowhere income but instead sources that
revenue to Washington, where Alaska is headquartered
and has substantial operations. By misusing the term, the
department appears to make the overblown argument that
Alaska’s interpretation is invalid simply because it results
in revenue being assigned to a state other than Oregon.
Overall, the adoption history of the Oregon Airline
Rule does not change the court’s conclusion that revenue
Cite as 25 OTR 91 (2022) 109
from Alaska’s CPAs with SkyWest and PenAir, and from
codeshare agreements, was not revenue from “transporting
passengers.”
7. Court’s conclusions as to transportation revenue
The court agrees with Alaska that its revenue from
the SkyWest and PenAir CPAs does not constitute trans-
portation revenue. The evidence is that the CPAs allowed
Alaska to sell tickets to passengers for flights on airplanes
operated by those airlines, not by Alaska. Alaska paid
SkyWest and PenAir for the right to sell all such tickets
on specified routes. Alaska retained the difference between
the two amounts. Although neither party introduced either
CPA into evidence, the parties do not dispute the foregoing
essential terms.
As to Alaska’s revenue from its codeshare agree-
ments, the court reaches the same conclusion. Under the
codeshare agreements, Alaska received revenue either from
another airline or from a passenger buying a ticket. The
department does not dispute that, when another airline paid
Alaska for a seat on one of Alaska’s operated flights, Alaska
properly treated that sale as “transportation revenue” under
OAR 150-314.280-(I). When Alaska paid another airline for
a codeshare seat on a plane operated by the other airline,
Alaska treated its receipts from the purchasing passenger
as “nonflight sales” and “miscellaneous sales” under OAR
150-314.280-(I) and forwarded most of the revenue to the
other airline. The department represented at oral argument
that it considered only the amounts Alaska retained to be
gross receipts.
The court concludes that amounts Alaska retained
from the CPAs with SkyWest and PenAir, and from code-
share agreements, are not for “transporting passengers”
and therefore are not “transportation sales.” Those amounts
are catchall (“nonflight” or “miscellaneous”) items that
must be sourced pursuant to the standard UDITPA rules.
See MTC Airline Rule, § (1); OAR 150-314.280-(I)(1); ORS
314.665(4) (“Sales, other than sales of tangible personal
property, are in this state if (a) the income-producing activ-
ity is performed in this state; or (b) the income-producing
activity is performed both in and outside this state and a
110 Dept. of Rev. v. Alaska Airlines, Inc.
greater proportion of the income-producing activity is per-
formed in this state than in any other state, based on costs
of performance.”). The uncontested facts are that Alaska
incurred the greatest proportion of the direct costs of earn-
ing its revenues from the SkyWest and PenAir CPAs, and
from the codeshare agreements, in Washington. The court
thus concludes that these retained amounts are sales not
within Oregon; they are nonflight sales that are excluded
from the numerator of Alaska’s sales factor; and they are
included in the denominator of Alaska’s sales factor as “mis-
cellaneous sales of merchandise, etc.”
8. Admissibility of codeshare agreement
Before moving to the final substantive issue, the
court addresses an evidentiary and procedural issue related
to the dispute over transportation revenue. Approximately
three weeks before oral argument, Alaska submitted an
excerpt from its codeshare agreement with American spec-
ifying the percentage of “codeshare commission” revenue
payable for different classes of tickets. On the day before
oral argument, the department submitted the entire agree-
ment. Alaska objects to the admission of the entire code-
share agreement for various reasons, including untimeli-
ness and immateriality. The department urges that ORS
40.040 (OEC 106) compels its admission and that the entire
agreement is relevant to show that “the codeshare passen-
gers are the passengers of the Marketing Carrier (Alaska
Airlines) not the Operating Carrier (American Airlines).”
The court has reviewed the entire codeshare agree-
ment for the purpose of determining whether to admit it.
The entire agreement undoubtedly fits within the standard
of OEC 106, in the sense that it is a complete copy of a doc-
ument of which an excerpt was admitted. That does not
end the inquiry, however, because OEC 106 requires that
the whole document be “otherwise admissible.” The court
therefore considers Alaska’s timeliness and materiality
arguments.
Regarding timeliness, the court starts by putting
the department’s filing in context. As is common in this
division of the court, the parties, having gone through
two administrative processes before the department, and
Cite as 25 OTR 91 (2022) 111
having litigated the case in the Magistrate Division, elected
to develop the facts needed for this division by writing nar-
rative stipulations and by stipulating to the authenticity
of various documentary exhibits. This involved a process
of informal exchanges of drafts and proposed exhibits, of
which the court was aware from a series of case manage-
ment conferences. The process culminated in the filing of a
set of stipulations and exhibits on March 23, 2021, which the
parties could then use in drafting their four briefs pursuant
to the briefing schedule that the parties themselves nego-
tiated and presented to the court for approval. As is also
common, the parties provided additional evidence by decla-
rations submitted with their briefs, in the form of witness
testimony and exhibits. The court is of the view that this
type of informal process of factual development, on a time-
line agreed to by both parties, is generally efficient for both
parties and for the court. It allows substantial flexibility
that makes it easier for all concerned to focus on substantive
issues as opposed to tactical procedural disputes. However,
its effectiveness depends on parties deciding on their posi-
tions, and the factual basis therefor, within the agreed time-
line. The submission of a new exhibit on the day before oral
argument disrupts the process and thwarts its goals.
The department does not dispute that it never asked
Alaska for a copy of a codeshare agreement until a few days
before oral argument. The court is not required to admit the
entire codeshare agreement in this circumstance. See Nolan
v. Jackson National Life Ins. Co., 155 Or App 420, 428, 963
P2d 162 (1998) (trial court did not abuse its discretion by
rejecting affidavits submitted untimely, even if admitting
them would not have prejudiced opposing party).
Regarding the materiality of the entire codeshare
agreement, the court does not see that it adds facts that
would help the court reach a conclusion.18 See, e.g., Black v.
Nelson, 246 Or 161, 164, 424 P2d 251, 253 (1967) (“The rule
is that when a conversation or writing, in part, is received
in evidence from one party, the remainder of the writing or
18
For that matter, the court notes that it has not found a reason to refer to
the excerpt of the codeshare agreement that Alaska submitted three weeks before
oral argument. The department has not asked the court to exclude the excerpt,
however; therefore, it remains in evidence.
112 Dept. of Rev. v. Alaska Airlines, Inc.
conversation, to be competent, must be material, and affect in
some way the part already given in evidence.”) (internal quo-
tation omitted). Unsurprisingly for an agreement between
two publicly traded corporations, it is complex and multifac-
eted, but fundamentally it covers flights in which one airline
is the “marketing carrier,” and the other is the “operating
carrier.” The agreement defines “marketing carrier” as “the
Party whose Code is shown in the carrier Code box of a flight
coupon for a Codeshare Flight but which is not the Operating
Carrier.” (Emphasis added.) The “operating carrier” is “the
airline having operational control of an aircraft used for a
given Codeshare Flight.” The agreement thus clearly identi-
fies which airline physically carries the passenger.
Focusing on the provisions raised by the depart-
ment at oral argument, the agreement covers passenger
service, ensuring that an operating carrier provides code-
share passengers “the same standard of customer service as
it provides to its own passengers traveling in the same class
of service,” which standard must be “reasonably in accor-
dance with” the Marketing Carrier’s standard of service on
its flights. It addresses training, generally requiring each
party to “provide or arrange, at its own cost and expense, all
initial and recurring training of its personnel to facilitate
the Codeshare Flights and operations at airports served
by the Codeshare Flights,” including training on passenger
service, reservations and sales activities and in-flight ser-
vice. It includes indemnification provisions whereby, among
other things, the operating carrier generally agrees to hold
the marketing carrier harmless for certain damages due to
personal injury of persons “being transported by * * * the
Operating Carrier” and the marketing carrier generally
holds the operating carrier harmless for certain damages
from passenger claims based on the marketing carrier’s
“failure to properly issue and complete transportation docu-
mentation * * *.” It establishes a joint management commit-
tee consisting of an equal number of representatives from
each party, charged with overseeing and improving the
transactions and relationships comprising the agreement.
The court finds nothing in these elements of the
agreement that in any way alters the fact that only one air-
line operates the aircraft that moves any one passenger:
Cite as 25 OTR 91 (2022) 113
the “Operating Carrier.” Contrary to the department’s
assertion, nothing in the agreement makes “the codeshare
passengers * * * the passengers of the Marketing Carrier
(Alaska Airlines) not the Operating Carrier (American
Airlines).” The fact that airlines see fit to conform their ser-
vice standards within certain tolerances, train their own
personnel in how to apply the agreement, and allocate risk
in the event of lawsuits suggests, at most, that each airline
wants to coordinate closely with the other in order to keep
passengers on both airlines satisfied and to ensure repeat
business for both parties. These facts are already clear from
the existing record in Alaska’s Forms 10K, which describe
the benefits of codesharing and other airline “alliances,”
including “offering our customers more travel destinations
and better mileage credit/redemption opportunities”; “giv-
ing us access to more connecting traffic from other airlines”;
and making Alaska’s mileage plan more valuable while also
promoting Alaska flights by encouraging members of other
mileage plans to earn miles on Alaska flights.” The agree-
ment does not somehow contractually convert American’s
passengers into Alaska passengers when American is the
operating carrier, and the court does not see how it could.
Rather, the agreement appears to have the unremarkable
but important aim—also described in existing evidence—
of filling more seats on flights operated by Alaska by mak-
ing it easier for passengers to transfer from a leg flown by
Alaska to other destinations conveniently and with a similar
degree of comfort. The agreement also appears to fill seats
on Alaska inbound flights, by making it easier for passen-
gers originating from remote destinations on other airlines
to make their final leg on Alaska or Horizon, with the added
hope that those passengers will choose Alaska or Horizon on
some future occasion.
C. Bombardier Subsidy
The final issue before the court is whether the
Bombardier subsidy, a recurring payment to Horizon in the
amount of $3,440,808.60 in each of the Years at Issue, was
transportation revenue.19 In briefing in this division, the
19
Alaska refers to this amount variously as the Bombardier subsidy, the
“fleet transition subsidy,” or the “market transition subsidy.”
114 Dept. of Rev. v. Alaska Airlines, Inc.
department initially objected to any reduction in the amount
of the deficiency on account of the Bombardier subsidy, con-
tending that Alaska had not adequately substantiated the
basis for a reduction; Alaska contended that the department
had not requested substantiation. However, several weeks
before oral argument, on August 25, 2021, Alaska sub-
mitted a Second Declaration of Rebekah Funk explaining
that Horizon received the Bombardier subsidy amounts in
consideration for Horizon’s agreement to purchase certain
aircraft from aircraft manufacturer Bombardier. Attached
to the declaration are copies of relevant documents, includ-
ing a “Contract Change Order” between Horizon and
Bombardier Inc. describing terms of a “market transition
subsidy” involving per-aircraft payments over a period of
years. At oral argument, the department through counsel
acknowledged in light of the declaration and exhibit that
the Bombardier subsidy was not transportation revenue but
was instead nonflight revenue. Because the sales factor pro-
vision in subsection (2)(d) of the Oregon Airline Rule does
not specify how to determine whether an item of nonflight
revenue belongs in the numerator, pursuant to subsection
(1) of the Oregon Airline Rule, this determination must be
made under the general rules of UDITPA. See Pennzoil Co.
v. Dept. of Rev., 15 OTR 101, 111 (2000) (“the court finds that
negotiating the Getty contract was an activity in the regu-
lar course of Pennzoil’s unitary business. Any income arising
from that transaction or activity is business income appor-
tionable under UDITPA.”) (emphasis added), aff’d 332 Or
542, 33 P3d 314 (2001); OAR 150-314.665(4)(3)(a) (“Where
the income producing activity in respect to business income
from intangible personal property can be readily identified,
such income is included in the denominator of the sales fac-
tor and, if the income producing activity occurs in this state,
in the numerator of the sales factor as well.”).
IV. ORDERS
Now, therefore,
IT IS ORDERED that, as to the “departure ratio”
question discussed in Issue A, Defendant’s Cross-Motion
for Summary Judgment is denied and Plaintiff’s Motion for
Summary Judgment is granted;
Cite as 25 OTR 91 (2022) 115
IT IS FURTHER ORDERED that, as to the defi-
nition of “transportation revenue” discussed in Issue B,
Plaintiff’s Motion for Summary Judgment is denied and
Defendant’s Cross-Motion for Summary Judgment is
granted; and
IT IS FURTHER ORDERED that, as to the
Bombardier subsidy discussed in Issue C, Plaintiff’s Motion
for Summary Judgment is denied and Defendant’s Cross-
Motion for Summary Judgment is granted.
Costs to neither party.