75th OREGON LEGISLATIVE ASSEMBLY--2009 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2583
House Bill 3305
Sponsored by Representatives BOONE, CLEM, KRIEGER; Senator GIROD
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
For purposes of natural resource property or commercial fishing
property inheritance tax credit, allows credit equal to tax
otherwise due for eligible property with value less than $7.5
million and phases out credit for property with value up to $15
million. Defines terms related to working capital. Provides for
exemption from taxation if property is sold and proceeds used to
pay tax. Adjusts limit of value of property eligible for credit
and credit amounts for inflation. Provides that certain federal
elections are not binding on Oregon estates.
Applies to estates of decedents who die on or after effective
date of Act.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to inheritance tax credits; creating new provisions;
amending ORS 118.140; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 118.140, as amended by section 1, chapter 28,
Oregon Laws 2008, is amended to read:
118.140. (1) As used in this section { - , - } { + :
(a) 'Cash conversion cycle' means the aggregate amount of time:
(A) Necessary to produce, process and sell inventory;
(B) Necessary to collect receivables; and
(C) Available to a business to satisfy accounts payable without
incurring a penalty.
(b) 'Material property' includes machinery, equipment, timber,
trees, crops, vineyards, nursery stock, real property
improvements and boats used by a business for the production of
inventory, distribution and sales.
(c) 'Material property recovery account' means an account that
holds assets specifically identified as intended for recovery and
replacement of material property.
(d) + } 'Natural resource property' means real property as
defined in ORS 307.010 that at the decedent's death:
{ - (a) - } { + (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) - } { + (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.
{ + (e) 'Working capital' includes commercially or privately
held liquid assets and securities in a material property recovery
account for material property recovery and replacement of
tangible property used for business purposes. + }
(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) Natural resource property.
(B) If the decedent or a person described in subsection
{ - (3)(c) - } { + (3)(a)(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. { + Other than the value of a material property recovery
account, working capital may not exceed for a period longer than
the cash conversion cycle of the business, 20 percent of the
total value of assets and assets owned by the business. If a
business has debt obligations that exceed the value of all
commercially and privately held liquid assets and securities,
other than those in a material property recovery account, it
shall be considered to have no working capital. + }
(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) The amount of the credit allowed under this section
shall equal the tax that would otherwise be imposed on the
property for which the credit is allowed, if not for the
credit. + }
{ - (c) - } { + (d) + } If the value of property for which
the credit allowed under this section is claimed { + is at least
$7.5 million and + } is at least the amount in column 1, but less
than the amount in column 2, the credit { - is - } { + shall
be + } the amount in column 3, increased by the excess above the
amount in column 1 multiplied by the percentage in column 4:
_________________________________________________________________
____NOTE_TO_WEB_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
1 2 3 4
____NOTE_TO_WEB_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
{ -
$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 2,600,000106,800 8.0%
2,600,000 3,100,000146,800 8.8%
3,100,000 3,600,000190,800 9.6%
3,600,000 4,100,000238,800 10.4%
4,100,000 5,100,000290,800 11.2%
5,100,000 6,100,000402,800 12.0%
6,100,000 7,100,000522,800 12.8%
7,100,000 7,500,000650,800 13.6% - }
7,500,000 8,100,000402,800 13.0%
8,100,000 9,100,000253,344 12.5%
9,100,000 10,100,000146,800 12.0%
10,100,00011,100,000 35,400 11.2%
11,100,00012,100,000 15,520 7.7%
12,100,00013,100,000 8,000 5.7%
13,100,00014,100,000 0 3.7%
14,100,00015,100,000 0 1.7%
15,100,000 0 0%
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
_________________________________________________________________
(3) { + (a) + } Except as provided in { - subsections - }
{ + subsection + } (4)
{ - and (5) - } of this section, a credit is allowed under
this section only if:
{ - (a) - } { + (A) + } The total adjusted gross estate
does not exceed $15 million;
{ - (b) - } { + (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) - } { + (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) - } { + (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.
{ + (b) For each 12-month period beginning on or after July
1, 2010, the Department of Revenue shall adjust the limitation
provided under paragraph (a)(A) of this subsection and the dollar
amounts set out in the rate brackets in subsection (2)(d) of this
section according to the change in the cost of living, if any.
The computation shall be as follows:
(A) Divide the average Portland Consumer Price Index for the 12
consecutive months ending January 1 of the calendar year prior to
the calculation by the Consumer Price Index for the calendar year
2008.
(B) Multiply the limitation provided under paragraph (a)(A) of
this subsection and the dollar amounts set out in the rate
brackets in subsection (2)(d) of this section by the indexing
factor determined as provided in subparagraph (A) of this
paragraph.
(c) As used in this subsection, 'Portland Consumer Price Index'
means the Portland Consumer Price Index for All Urban Consumers
for All Items, as published by the Bureau of Labor Statistics of
the United States Department of Labor. + }
(4) Property that otherwise meets the requirements of this
section shall be allowed a credit under this section if { + the
property meets any of the following conditions + }:
(a) The property is the subject of a net cash lease to or from
the decedent or a transferee described in subsection
{ - (3)(c) - } { + (3)(a)(C) + } of this section { - ; or - }
{ + . + }
(b) The property is held in trust for a person described in
subsection { - (3)(c) - } { + (3)(a)(C) + } of this section.
{ - (5) - } { + (c) + } { - Property that otherwise meets
the requirements of this section and that - } { + The property
+ }is owned indirectly by the decedent or a member of the family
described in subsection
{ - (3)(c) - } { + (3)(a)(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 - } { + paragraph + }, 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 - } { + paragraph + },
'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 - }
{ + paragraph + } consistent with this definition.
{ - (6) - } { + (d) + } { - Property that otherwise meets
the requirements of this section and - } { + The property
+ }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 - } { + and + } 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.
{ + (e) The property is claimed as a marital deduction under
section 2056 of the Internal Revenue Code or claimed as exempt or
excluded property under section 2010 of the Internal Revenue
Code. The executor shall make a written election identifying the
property for which a credit allowed under this section is
claimed. Any property described in this paragraph for which the
executor elects to claim a credit allowed under this section
shall be ineligible for a marital deduction under section 2056 of
the Internal Revenue Code, as that section applies to this
chapter, and for treatment as special marital property under ORS
118.016. + }
{ - (7)(a) - } { + (5)(a) + } 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 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 member of the family, or the registered
domestic partner, of the decedent or to another entity eligible
for the credit allowed under this section. 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 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 the responsibility of the owner of the property at the
time of the disposition or disqualifying event.
(c) Prior to the transfer of property under this section, the
executor 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.
{ + (d) Property described in subsection (4)(d) of this
section is exempt from the additional tax imposed under this
subsection if the proceeds are used to pay federal estate taxes
or the tax under this chapter that would be due if the property
were included in the decedent's taxable estate. + }
{ - (8) - } { + (6) + } The department shall adopt rules
consistent with those adopted under the Internal Revenue Code to
administer this section.
SECTION 2. { + Section 3 of this 2009 Act is added to and made
a part of ORS 118.005 to 118.840. + }
SECTION 3. { + For purposes of this chapter, elections under
federal law are not binding on Oregon inheritance tax liability
if the executor notifies the Department of Revenue at the time of
filing of any federal elections, exemptions, credits or
deductions that are not used on the Oregon inheritance tax
return. + }
SECTION 4. { + Section 3 of this 2009 Act and the amendments
to ORS 118.140 by section 1 of this 2009 Act apply to the estates
of decedents who die on or after the effective date of this 2009
Act. + }
SECTION 5. { + This 2009 Act takes effect on the 91st day
after the date on which the regular session of the Seventy-fifth
Legislative Assembly adjourns sine die. + }
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