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Oregon Tax Court applies broadened transactional approach, narrowed cost analysis to source receipts for online university

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The Oregon Tax Court recently considered the apportionment of an online university’s income from online courses under the cost of performance (COP) method and determined that the “income-producing activity” related to the provision of a course section to multiple students, rather than an individual transaction with each student. The income-producing activity of providing course sections was composed of faculty, curriculum development, and software platform activities, but only the faculty costs were direct costs to be used in the COP calculation.