Chapter 28 Oregon Laws 2008 Special Session
AN ACT
HB 3618
Relating to tax credits; creating new provisions; amending ORS 118.140;
and prescribing an effective date.
Be It Enacted by the People of
the State of
SECTION 1.
ORS 118.140 is amended to read:
118.140. (1) As used in
this section, “natural resource property” means real property[,] as defined in ORS 307.010[, lawfully qualified, at the decedent’s
death, for designation as] that at the decedent’s death:
(a) Is in farm
use, as defined in ORS 308A.056, or is used as one or more farm use
homesites, as defined in ORS 308A.250, related to that real property; or
(b) Is used as
forestland, as defined in ORS 321.201, or is used as one or more
forestland homesites, as defined in ORS 308A.250, related to that real
property, not to exceed 5,000 acres.
[(2) For purposes of computing the tax imposed under ORS 118.010, the
gross estate of a decedent may not include the value of:]
(2)(a) A credit
against the taxes otherwise due under ORS 118.005 to 118.840 shall be allowed
based upon the value of the following property:
[(a)] (A) Natural resource property[, to the extent the value of natural resource property does not exceed
$7.5 million; or].
[(b) Property used in commercial fishing operations and any property
used in processing or marketing of the product of those commercial fishing
operations, to the extent the value of the property described in this paragraph
does not exceed $7.5 million.]
(B) If the decedent
or a person described in subsection (3)(c) of this section was licensed under
ORS chapter 508, property that is:
(i) Used in the conduct
of a fishing business as defined in section 1301(b)(4) of the Internal Revenue
Code, including boats, gear, equipment, vessel licenses and permits and commercial
fishing licenses and permits; or
(ii) Used to process and
sell the catch of a commercial fishing business in fresh, canned or smoked form
directly to consumers, including a restaurant with seating capacity of less
than 15 seats at which catch from the fishing business is prepared and sold.
(C) Tangible and
intangible personal property devoted to use as a farm or used for farm or
forestry purposes, including:
(i) Timber, trees and
improvements;
(ii) Crops, both growing
and stored; and
(iii) Forestry and
farming equipment.
(D) Working capital of a
farm, natural resource-based business or fishing business owned by the decedent
at the decedent’s death.
(b) A taxpayer may:
(A) Elect not to claim
the credit allowed under this section;
(B) Elect to claim less
than the full amount of the credit allowed under this section; or
(C) Elect to claim the
credit only for the value of certain assets.
(c) If the value of
property for which the credit allowed under this section is claimed is at least
the amount in column 1, but less than the amount in column 2, the credit is the
amount in column 3, increased by the excess above the amount in column 1
multiplied by the percentage in column 4:
____________________________________________________________________________
1 2 3 4
$0 $100,000 $0
100,000 150,000 0 0.8%
150,000 200,000 400 1.6%
200,000 300,000 1,200 2.4%
300,000 500,000 3,600 3.2%
500,000 700,000 10,000 4.0%
700,000 900,000 18,000 4.8%
900,000 1,100,000 27,600 5.6%
1,100,000 1,600,000 38,800 6.4%
1,600,000 2,100,000 70,800 7.2%
2,100,000 2,600,000 106,800 8.0%
2,600,000 3,100,000 146,800 8.8%
3,100,000 3,600,000 190,800 9.6%
3,600,000 4,100,000 238,800 10.4%
4,100,000 5,100,000 290,800 11.2%
5,100,000 6,100,000 402,800 12.0%
6,100,000 7,100,000 522,800 12.8%
7,100,000 7,500,000 650,800 13.6%
7,500,000 8,100,000 402,800 13.0%
8,100,000 9,100,000 253,344 12.5%
9,100,000 10,100,000 146,800 12.0%
10,100,000 11,100,000 35,400 11.2%
11,100,000 12,100,000 15,520 7.7%
12,100,000 13,100,000 8,000 5.7%
13,100,000 14,100,000 0 3.7%
14,100,000 15,100,000 0 1.7%
15,100,000 0 0%
____________________________________________________________________________
[(3) Subsection (2) of this section applies only if the property that is
excluded from the value of the gross estate under subsection (2) of this
section is transferred to:]
[(a) The spouse of the decedent;]
[(b) A natural or adopted child of the decedent;]
[(c) A natural or adopted grandchild of the decedent;]
[(d) A natural or adopted brother or sister of the decedent; or]
[(e) A natural or adopted niece or nephew of the decedent.]
[(4)(a) For each calendar year beginning on or after January 1, 2009,
the Department of Revenue shall recompute the maximum excluded value of the gross
estate provided for in subsection (2) of this section by the change in the cost
of living, if any. The computation shall be as follows:]
[(A) Divide the average U.S. City Average Consumer Price Index for the
12 consecutive months ending January 1 of the calendar year prior to the
calculation by the average U.S. City Average Consumer Price Index for the
calendar year 2007.]
[(B) Multiply $7.5 million by the indexing factor determined as provided
in subparagraph (A) of this paragraph.]
[(b) As used in this subsection, “U.S. City Average Consumer Price Index”
means the U.S. City Average Consumer Price Index for All Urban Consumers (All
Items) as published by the Bureau of Labor Statistics of the United States
Department of Labor.]
[(c) If any change in the maximum excluded value of the gross estate
determined under paragraph (a) of this subsection is not a multiple of $500,
the change shall be rounded to the nearest $500.]
(3) Except as
provided in subsections (4) and (5) of this section, a credit is allowed under
this section only if:
(a) The total adjusted
gross estate does not exceed $15 million;
(b) The total value of
property for which the credit established under this section is allowable is at
least 50 percent of the total adjusted gross estate;
(c) The property is
transferred to a member of the family, as that term is defined in section 2032A
of the Internal Revenue Code, or the registered domestic partner, of the
decedent; and
(d) During an aggregate
period of five out of the eight years ending on the date of the decedent’s
death, the decedent, a member of the decedent’s family or the decedent’s
registered domestic partner owned the property and the property was devoted to
use as a farm or used for farm or forest purposes.
(4) Property that otherwise
meets the requirements of this section shall be allowed a credit under this
section if:
(a) The property is the
subject of a net cash lease to or from the decedent or a transferee described
in subsection (3)(c) of this section; or
(b) The property is held
in trust for a person described in subsection (3)(c) of this section.
(5) Property that
otherwise meets the requirements of this section and that is owned indirectly
by the decedent or a member of the family described in subsection (3)(c) of this
section, or the registered domestic partner, of the decedent shall qualify for
a credit under this section if the property is owned through an interest in a
limited liability company or in a corporation, partnership or trust as the
terms corporation, partnership or trust are used in section 2032A(g) of the
Internal Revenue Code. In order to qualify for a credit under this subsection,
at least one member of the family, or the registered domestic partner, of the
decedent must materially participate in the business after the transfer. For
purposes of this subsection, “materially participate” means to engage in active
management, as defined in section 2032A of the Internal Revenue Code, of
natural resource property or a fishing business. The Department of Revenue may
adopt rules to administer this subsection consistent with this definition.
(6) Property that
otherwise meets the requirements of this section and is involuntarily
converted, as that term is used in section 1033 of the Internal Revenue Code,
shall qualify for a credit under this section if the proceeds of conversion are
used to acquire replacement property, the cost of which equals or exceeds the
amount realized on the conversion. The replacement property must also meet the
requirements of this section.
[(5)(a)] (7)(a) [If
property initially excluded from the value of a gross estate as natural
resource property] An additional tax under ORS 118.005 to 118.840 shall
be imposed if property for which a credit is allowed under this section is
not [then] used in commercial
fishing operations or as natural resource property for at least five out of
the eight calendar years following the decedent’s death or is disposed of by
the transferee other than by disposition to another [family member who is] member of the family, or the registered
domestic partner, of the decedent or to another entity eligible for the [exclusion] credit allowed under
this section[, an additional tax under
ORS 118.005 to 118.840 shall be imposed]. Property that otherwise meets
the requirements of this section and is conveyed after the decedent’s death as
a qualified conservation contribution, as that term is defined in section
170(h) of the Internal Revenue Code, shall continue to qualify for a credit
under this section.
(b) The additional tax
liability shall be [an amount that is no
greater than the amount of additional taxes that would have been due had the
property been included in the gross estate, but at least the amount of such
additional taxes] the amount of the credit allowed on the disqualified
property multiplied by ((five minus the number of years the property was
used as natural resource property) divided by five). The additional tax
liability shall be [apportioned to the
estate for any time period prior to transfer and apportioned to the transferee
for any time period thereafter.] the responsibility of the owner of the
property at the time of the disposition or disqualifying event.
(c) Prior to the
transfer of property [treated as natural
resource property] under this section, the executor [or the decedent] shall notify the transferee of the potential for
tax consequences to the transferee if the transferee fails to meet the
conditions of paragraph (a) of this subsection. The transferee’s written
acknowledgment of this notice shall be attached to the inheritance tax return.
[(6)] (8) The department [of
Revenue] shall adopt rules consistent with those adopted under [section 2032A of] the Internal Revenue
Code[, as that section was amended and in
effect on December 31, 2006,] to administer this section.
SECTION 2. Inheritance
tax returns claiming a credit under ORS 118.140 are not due, and no tax is owed
by those estates, prior to June 30, 2008. No later than July 1, 2008, the
Department of Revenue shall adopt by rule procedures and filing deadlines
necessary to administer ORS 118.140 as it applies to estates of decedents dying
on or after January 1, 2007, and before the effective date of this 2008 Act.
The department shall cancel any interest or penalty that would otherwise result
from noncompliance with ORS 118.140 by estates of decedents dying on or after
January 1, 2007, and before the effective date of this 2008 Act.
SECTION 3. The
amendments to ORS 118.140 by section 1 of this 2008 Act apply to estates of
decedents who die on or after January 1, 2007.
SECTION 4. This
2008 Act takes effect on the 91st day after the date on which the special
session of the Seventy-fourth Legislative Assembly adjourns sine die.
Approved by the Governor March 11, 2008
Filed in the office of Secretary of State March 11, 2008
Effective date May 23, 2008
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