INHERITANCE TAX
150-118.010(1)
Imposition of Tax
A tax equal to the state death tax credit allowable for federal estate tax purposes is imposed. The tax is due in every case even though the credit may not be claimed on the federal estate tax return, Form 706.
(1) Property within the jurisdiction of the state includes the following:
(a) Resident Decedent.
(A) Real property situated in Oregon.
(B) Tangible personal property situated in Oregon.
(C) Intangible personal property wheresoever situated.
(b) Nonresident Decedent.
(A) Real property situated in Oregon.
(B) Tangible personal property situated in Oregon.
(C) Intangible personal property situated in Oregon
See ORS 118.010(4)(b) which provides an exemption as to intangible personal property of nonresident decedents.
(2) The phrase "within the jurisdiction of the state" connotes extent of power and has a broader meaning than the phrase "within the state" which denotes locality. Property may be within the jurisdiction of the state but not physically situated in the state, for example:
(a) Stock of an Oregon corporation is within the jurisdiction of this state although the certificate may not be within this state.
(b) A savings account, checking account, and certificate of deposit in an Oregon bank are within the jurisdiction of this state although the passbook or certificate may not be within this state.
(c) A promissory note given by a resident of Oregon is within the jurisdiction of this state although the note may not be within this state.
(3) The term "intangible personal property" includes stocks, bonds, notes, currency, bank deposits, accounts receivable, patents, trademarks, copyrights, royalties, goodwill, partnership interests, life insurance policies, and other choices in action.
(4) The doctrine of equitable conversion is recognized in the administration of the Oregon inheritance tax law.
[Publications: Publications referenced are available from the agency.]
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.010
Hist.: 9-71; 11-73; 9-74; 12-31-77; RD 4-1997, f. 9-12-97 cert. ef.
12-31-97
150-118.010(2)
Deductions Allowed on Either the Inheritance Tax Return or the Fiduciary Income Tax Return
Deductions allowed under sections 2053 or 2054 of the Internal Revenue Code (IRC) may be claimed on either the Oregon inheritance tax return (Form IT-1) or the Oregon fiduciary income tax return (Form 41), but not both. The personal representative of an estate may make different elections for federal and Oregon returns. If the deductions are claimed on the Oregon Form 41, attach a statement that the deductions are not being claimed on the Oregon Form IT-1. For federal purposes, those deductions may be taken on either the federal estate tax return (Form 706) or the federal estate income tax return (Form 1041) under IRC 642(g).
Example 1: Peter dies in 2004 with a gross estate of $900,000. The personal representative of the estate elects to deduct $19,500 of expenses on the federal Form 1041. For Oregon, the personal representative elects to take the deduction on the Oregon Form IT-1. The amount deducted on the federal Form 1041 must be added back to income on the Oregon Form 41.
Example 2: Sally dies in 2004 with a gross estate of $950,000. The personal representative of the estate elects to deduct $10,000 of expenses on the federal Form 1041. The personal representative does not claim these deductions on the Oregon Form IT-1. The deductions claimed on the federal Form 1041 flow through to the Oregon Form 41. No modification to income is required.
Example 3: Mildred dies in 2004 with a gross estate of $2,000,000. The personal representative of the estate elects to claim a deduction of $15,000 on the federal Form 706. For Oregon, the personal representative elects to claim the deduction on the Oregon Form 41. The election is made by subtracting the deduction from the Oregon return. The deduction is not allowed on the Oregon Form IT-1 if it was claimed on the Oregon Form 41. The personal representative must reduce the deductions by $15,000 on the Oregon Form IT-1.
[ED. NOTE: Forms referenced are available from the Agency.]
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.010
Hist.: REV 2-2004(Temp), f. 4-30-04 cert. ef. 5-1-04 thru 9-30-04;
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
150-118.010(3)
Apportionment of Tax
(1) Where property is left in two or more states by a decedent, the maximum state tax credit allowed against the federal estate tax is apportioned. The numerator of the apportionment formula is the value for federal estate tax purposes of the property within the jurisdiction of this state notwithstanding that some of such property for Oregon inheritance tax purposes may be exempt, deductible, appraised at different values or considered in computing a credit. The denominator of the apportionment formula is the value of the gross estate for federal estate tax purposes.
(2) The executor shall, upon demand, file a copy of the federal estate tax return and such other information deemed necessary by the Department in the computation of the additional tax. In case of failure to file such returns as these rules provide, the Department shall compute the tax upon the basis of the best information available.
(3) If the amount of federal estate tax is increased or decreased subsequently, the pick-up tax imposed upon such estate shall be changed accordingly. In such case it is the duty of the executor to notify the Department of the changes.
(4) Example of apportionment of federal credit where decedent leaves property in three states that impose death taxes: [Example not included. See ED. NOTE.]
[ED. NOTE: Examples referenced are available from the agency.]
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.010
Hist.: 9-71; 12-19-75, Renumbered; 1-1-77, 12-31-77, Renumbered; TC
19-1979, f. 12-20-79, cert. ef. 12-31-79; TC 8-1980, f. 11-28-80,
cert. ef. 12-31-80; Repealed by RD 4-1997, f. 9-12-97 cert. ef.
12-31-97, Renumbered from 150-118.100(2)
150-118.010(4)(b)
Reciprocal Exemption of Intangible Personal Property of Nonresident Decedent
Intangible personal property within the jurisdiction of the state of Oregon and owned by a nonresident of this state is exempt from inheritance tax if a like exemption is made by the laws of the state or country of decedent's residence in favor of residents of this state. There is no such exemption allowed as to property owned by a deceased resident of a state which does not impose a death tax. However, if a state has a death tax law which does not impose a tax on intangible personal property owned by a nonresident of that state, the "like exemption" requirement of ORS 118.010(4)(b) is satisfied, and Oregon would exempt intangible personal property owned by a deceased resident of that state. A nonresident is one who at the time of death had a permanent dwelling place and an official or legal residence outside the State of Oregon. To have a change of domicile there must be:
(1) Residence in a new place;
(2) Intent to abandon the old domicile; and
(3) Intent to acquire a new domicile (196 Or 256).
NOTE: For definition of the term "intangible personal property," see OAR 150-118.010(1).
[Publications: Publications referenced are available from the agency.]
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.010
Hist.: 9-74; 12-19-75; RD 4-1997, f. 9-12-97, cert. ef. 12-31-97,
Renumbered from 150-118.060
150-118.010(7)
Separate Oregon Elections
(1) For deaths after December 31, 2001, the Oregon inheritance tax is computed using the Internal Revenue Code (IRC) in effect on December 31, 2000. Federal changes enacted after this date, including the "Economic Growth and Tax Relief Reconciliation Act of 2001", do not affect the computation of Oregon tax. Oregon allows separate elections, including but not limited to elections provided by IRC Sections 2031(c), 2032, 2032A, 2033A, 2056 and 2056A, that would have been allowed under federal law in effect as of December 31, 2000, whether or not a federal estate tax return is filed. The Oregon elections are irrevocable. If a federal estate tax return is not required with respect to the decedent's death, the Oregon elections must be made in the same manner as required under the IRC on a return filed with the Oregon Department of Revenue.
Example 1: The personal representative may not make a qualified terminal interest property (QTIP) election on the 2004 Oregon Inheritance Tax Return under the following circumstances. Harold dies in 2004 with an estate valued at $950,000. He is survived by his wife, Wanda. They had provided for a credit shelter trust funded by an amount equal to the unused federal exclusion amount. The trust is set up to distribute or accumulate income to someone other than the spouse and allows for discretionary distribution of income to the surviving spouse. The trust does not qualify for a QTIP election under IRC 2056(b)(7), as in effect as of December 31, 2000..
Example 2: The personal representative may make a QTIP election on the 2004 Oregon Inheritance Tax Return under the following circumstances. Winifred dies in 2004 with an estate valued at $1,500,000. She is survived by her husband, Harvey. They had provided for a credit shelter trust funded by an amount equal to the unused federal exclusion amount. The trust provides for all income to be distributed to the surviving spouse and otherwise qualifies for the federal QTIP election. The personal representative files a 2004 federal estate tax return without claiming a QTIP election. The personal representative may file the 2004 Oregon return claiming a QTIP election because that election would have been allowed under federal law effective on December 31, 2000.
(2) If a QTIP election is taken when the first spouse dies, the estate of the surviving spouse must include the value of any property included in the QTIP election provided in IRC 2044. The Oregon and federal gross estate amount will be different for the surviving spouse's estate when a separate election is taken for Oregon only.
Example 3. Same situation as example 2. The personal representative claimed an Oregon only QTIP election on Winifred's Oregon IT-1 return. Harvey dies in 2005. Harvey's estate for Oregon will include the value of the Oregon only QTIP taken for Winifred per IRC 2044 "Certain property for which a marital deduction was previously allowed". Harvey's gross estate for Oregon and for federal will be different because of the Oregon only QTIP election taken on Winifred's Oregon IT-1 return.
(3) For purposes of the Oregon tax, the obligations of electing parties, agreements required of persons benefiting from elections, and the inclusion of property in the gross estate of a surviving beneficiary are the same as under the IRC.
[Publications: Publications referenced are available from the agency.]
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.010
Hist.: REV 2-2004(Temp), f. 4-30-04 cert. ef. 5-1-04 thru 9-30-04;
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
150-118.100(1)
Payment of Tax
The tax under subsection (2) of ORS 118.010 shall be paid to the Department at the same time the federal estate tax is payable. Under Estate Tax Regulation 20.6151-1, the tax shown on the estate tax return is to be paid at the time fixed for filing the return (determined without regard to any extension of time for filing the return). Estate Tax Regulation 20.6075-1 provides that the estate tax return must be filed on or before the due date. The due date is the day of the ninth calendar month after the decedent's death numerically corresponding to the day of the calendar month on which death occurred, except that, if there is no numerically corresponding day in such ninth month, the last day of the ninth month is the due date. For example, if the decedent dies on July 31, 1996, the tax must be paid on or before April 30, 1997.
[Publications: Publications referenced are available from the agency.]
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.100
Hist.: 12-19-75; 12-31-77, Renumbered; TC 9-1978, f. 12-5-78, cert.
ef. 12-31-78; RD 4-1997, f. 9-12-97 cert. ef. 12-31-97, Renumbered
from 150-118.110(3)
150-118.140
Inheritance Tax Credit for Natural Resource or Commercial Fishing Propert
(1) Definitions. The following definitions apply for purposes of ORS 118.140 and this rule:
(a) “Active Management” is defined by Internal Revenue Code (IRC) Section 2032A(e)(12) and means the making of the management decisions of a business (other than the daily operating decisions). Treasury Regulations 20.2032A-3(e) through (g) provide additional examples of active management.
(b) “Adjusted gross estate” means the value of the gross estate reduced by the sum of the amounts allowable as a deduction under either IRC sections 2053 or 2054, or both. The amount is determined on the basis of the facts and circumstances in existence on the date (including extensions) for filing the return of tax imposed by chapter 118 (or, if earlier, the date on which the return is filed).
(c) “Current assets” means the sum of cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses and other assets of the qualified natural resource business that can be converted to cash within one year. Current assets do not include assets not used in the qualified natural resource business, long-term assets such as capital or sinking funds, or personal assets.
(d) “Current liabilities” means the sum of all money owed to the qualified natural resource business that is required to be paid within one year.
(e) “Domestic partner” means an individual who has entered into a domestic partnership as defined in the Oregon Family Fairness Act; Chapter 99, Oregon Laws 2007 (notes following ORS 106.990).
(f) “Member of family” means, with respect to a decedent:
(A) An ancestor of the decedent;
(B) The spouse or domestic partner of the decedent;
(C) A lineal descendant of the decedent, of the decedent’s spouse or domestic partner, or of a parent of the decedent, or
(D) The spouse or domestic partner of any lineal descendant described in paragraph (C). For purposes of the preceding sentence, a legally adopted child of an individual is treated as the child of such individual by blood.
(g) “Working capital” means current assets less current liabilities.
(h) “Working capital of a farm, natural resource-based business or fishing business” means working capital in an amount that represents the funds needed to operate the business annually.
(2) Federal Elections Binding for Oregon. Because ORS 118.007 ties Oregon inheritance tax law to the Internal Revenue Code (IRC) as it existed on December 31, 2000, elections that were available on December 31, 2000, and that are made for federal estate tax purposes are binding for Oregon inheritance tax purposes unless specifically provided otherwise by statute or rule. Property that is excluded from the estate due to claiming a marital deduction under IRC ¦2056 cannot be included in the Oregon estate in order to claim a tax credit under this section.
Example 1: Edwina passed away on July 1, 2007; her husband survives her. The value of her gross estate is $8,000,000, made up entirely of natural resource property. For federal estate tax purposes, the estate elects a marital deduction of $6,000,000. The unified credit offsets tax otherwise due on the balance of the estate, $2,000,000, and there is no federal tax due. For Oregon purposes, the $6,000,000 marital deduction election applies. In addition, the estate may elect to establish a Special Oregon Marital property trust as provided in ORS 118.016 to shelter $1,000,000 of the value of the estate (the difference between the $1,000,000 Oregon taxable estate and the $2,000,000 federal taxable estate). Alternatively, the estate may use any portion of the $2,000,000 in value to claim a natural resource credit against tax imposed on the estate.
(3) Active Management by a Member of Family. If natural resource property or a commercial fishing business is owned indirectly by the decedent or a member of the family, the following requirements must be met to qualify for a credit under ORS 118.140:
(a) At least one member of the family must engage in active management of the natural resource property or commercial fishing business after the transfer.
(A) The determination of whether active management occurs is factual, and the requirement can be met even though no self-employment tax is payable by the member of the family with respect to income derived from the farm or other trade or business operation.
(B) Among the farming activities, various combinations of which constitute active management, are inspecting growing crops, reviewing and approving annual crop plans in advance of planting, making a substantial number of the management decisions of the business operation, and approving expenditures for other than nominal operating expenses in advance of the time the amounts are expended.
(C) Examples of active management decisions are what crops to plant or how many cattle to raise, what fields to leave fallow, where and when to market crops and other business products, how to finance business operations, and what capital expenditures the trade or business should make.
(b) An otherwise qualifying natural resource property or commercial fishing business qualifies for the credit without active management if it is the subject of a net cash lease or percentage lease from the decedent or a member of the decedent’s family.
(c) The property also qualifies for the credit if it is held in trust for a member of the family or if the property is transferred directly to a member of the family.
(d) If an indirect interest is held in trust for a member of the family, it qualifies as long as a member of the family is engaged in the active management of the business.
(e) The trustee does not have to be engaged in active management if these requirements are met.
(4) Prior Use Requirement.
(a) An estate that otherwise qualifies for the commercial fishing business property credit is not required to meet the aggregate use period of five out of eight years ending on the date of the decedent’s death.
(b) Active management of the natural resource property is not a requirement prior to death.
Example 2: Kelly died on April 3, 2007. Kelly owned and operated Kelly’s Fishing Boat business starting in February 2005. The estate files the tax return with the department on June 17, 2008, claiming the commercial fishing business credit, and pays the inheritance tax due. The estate may claim the commercial fishing business credit providing all other requirements to qualify for the credit are met.
(5) Future Use Requirement. In order for the estate to meet the requirements of ORS 118.140(7)(a) the following apply.
(a) Cash and like cash assets that are included in the credit calculation as working capital must be spent on the operation of the business either during the year of death or any of the eight calendar years following the decedent’s death. Current assets remaining unspent on January 1 of the ninth calendar year following the decedent’s death are subject to recapture of tax under ORS 118.140(7)(a).
(b) Payment of federal estate taxes or state inheritance taxes is not considered to be an expense incurred in operation of the natural resource business. Thus, use of cash or other assets to pay those taxes results in recapture of the credit to the extent the cash or asset was used as the basis for the credit.
Example 3: The Smith estate claimed a credit in 2007 based on farming assets worth $1,000,000. In 2009, the estate sold a combine for $100,000 to pay additional federal estate tax resulting from an audit. Sale of the combine results in recapture of the tax credit because the combine was not used in the farming business for 5 of the 8 years following the decedent’s death.
(6) Claiming a Partial Credit. In determining whether the value of the credit property is at least 50 percent of the total estate, all of the eligible property must be considered, regardless of an election to claim only a partial credit under ORS 118.140(2)(b)(C).
(7) Working Capital. The determination of whether an amount qualifies as “working capital of a farm, natural resource-based business or fishing business” is based on the facts and circumstances existing at the decedent’s death. However, the department will presume that working capital that does not exceed the highest amount of working capital present at any time during the five years prior to the year of the date of death qualifies as “working capital of a farm, natural resource-based business or fishing business.” This presumption may be overcome by the facts in a particular case, including, but not limited to, the growth rate of the business, the length of the business cycle or the proximity of the date of death to the harvest date.
(8) Interest and Penalty. The department will not charge penalty or interest if an estate claims a natural resource property or commercial fishing business property credit or if the estate is directly affected by the changes made to ORS 118.140 by chapter 28, Oregon Laws 2008 and the return is filed and tax is paid before September 1, 2008. This provision applies to estates of decedents dying on or after January 1, 2007, and before December 1, 2007.
Example 4: John died on June 23, 2007. The regular due date of the inheritance tax return is March 23, 2008. The estate files the return with the department on August 29, 2008, claiming the natural resource credit, and pays the inheritance tax due. Because the return is filed and the tax is paid before September 1, 2008, the interest and penalty which would otherwise result from late filing and late payment is cancelled.
Stat.
Auth.: ORS 305.100 & 118.140
Stats.
Implemented: ORS 118.140
Hist.:
REV 4-2008(Temp), f. & cert. ef. 5-23-08 thru 11-17-08; REV 13-2008, f. &
cert. ef. 11-3-08
150-118.160-(B)
Inheritance Tax Return; Extension of Time to File
(1) Generally, for deaths occurring on or after January 1, 1987, an Oregon inheritance tax return shall not be filed unless a federal estate tax return (Form 706) is required to be filed. However, the executor shall file a return when requested in writing by the department. The return shall be in a format specified in the request.
(2) The executor shall, not more than nine months after the date of the decedent's death, file with the Department an inheritance tax return, Form IT-1. A copy of the federal estate tax return must be filed with the return.
(3) If the executor cannot file a return within nine months, the Department may allow additional time, usually not to exceed six months, to file the return. A request for an extension of time must be filed with the Department within nine months after the date of death, and must show a good and sufficient cause for being unable to file a timely return. However, the Department will consider that an extension of time to file an Oregon inheritance tax return has been granted if the executor has obtained from the Internal Revenue Service an extension of time to file the federal estate tax return. In such event, no request need be made to the Department prior to filing the Oregon return. A copy of the approved federal extension must be attached to the front of the Oregon return and will serve as evidence of a granted extension by the Department. If the Internal Revenue Service denies the extension request, but grants a period of time from the date of denial in which to file the federal return without imposition of delinquency charges, the Department will not impose delinquency charges if the Oregon return is received by the Department within one month from the last date on which the Internal Revenue Service would accept the federal return without imposition of delinquency charges. A copy of the denied extension request must be attached to the front of the Oregon return at the time of filing. An extension of time to file shall not relieve the estate from the five percent penalty for failure to pay. Also, interest shall accrue during the extension period.
[Publications: Publications referenced are available from the agency.]
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.160
Hist.: TC 9-1978, f. 12-5-78, cert. ef. 12-31-78, Renumbered from
150-188.160(2); RD 15-1987, f. 12-10-87 cert. ef. 12-31-87; RD
4-1997, f. 9-12-97, cert. ef. 12-31-97
150-118.171
Procedure for Determination
(1) The following sections of ORS Chapter 305 relate to determination of inheritance taxes and appeals:
(a) Audit of returns, 305.265;
(b) Determination of deficiencies, 305.265;
(c) Assessments, 305.265;
(d) Claims for refund, 305.270;
(e) Conferences, 305.265 and 305.270;
(f) Appeals to Director, 305.275 and 305.280;
(g) Appeals to Tax Court, 305.515 and 305.560.
(2) A claim for refund of inheritance tax shall be by letter or an amended return; however, the Department may require an amended return. A tax paid before the due date is considered as having been paid on the due date for purposes of determining whether the claim for refund was filed within three years from the payment of the tax.
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.171
Hist.: 12-31-77
150-118.225
Extension of Time to Pay Tax
(1)(a) An application for extension of time to pay the inheritance tax shown on the return shall be by letter mailed to the Department within nine months after the date of decedent’s death or within the time of any extension granted for filing of the return.
(b) An application for extension of time to pay a tax deficiency shall be by letter mailed to the Department within thirty days from the date of mailing of the notice of deficiency. The department shall consider that an extension of time to pay the tax has been granted if the executor has obtained an approved federal extension and collateral has been provided to the department. The extended period for the department shall agree with the extended period for federal purposes. The federal extension must be submitted with the return. An approved federal extension to pay shall not waive the penalties for late filing and interest shall accrue during the extension period.
(2) An extension of time will be granted for reasonable cause. For example, reasonable cause will generally exist where:
(a) Funds are not available to pay the tax except by disposing of property at a sacrifice price (less than market value) or by borrowing money at a rate in excess of the mortgage money market (on terms that would inflict loss on the estate), or
(b) The gross taxable estate includes a beneficial interest in a closely held business where the value of such interest exceeds either 35 percent of the gross taxable estate or 50 percent of the net taxable estate. For purposes of the 35 percent and 50 percent tests provided in this paragraph, interest in two or more closely held businesses shall be treated as an interest in a single closely held business.
(3) The time to pay the tax shall be extended only on the portion of the tax attributable to the interest in the closely held business.
(4) For purposes of this rule, “interest in a closely held business” means an interest as described below determined immediately before the decedent’s death:
(a) An interest as a proprietor in a trade or business carried on as a proprietorship;
(b) An interest as a partner in a partnership carrying on a trade or business if 20 percent or more of the total capital interest in such partnership is included in the gross taxable estate, or such partnership has 15 or fewer partners;
(c) Stock in a corporation carrying on a trade or business if 20 percent or more of the voting stock of such corporation is included in the gross taxable estate, or such corporation had 15 or fewer shareholders. Stock or a partnership interest which is held by a husband and wife as community property or as joint tenants, tenants by the entirety, or tenants in common shall be treated as owned by one shareholder or one partner, whichever is applicable.
(d) A “trade or business” does not include an investment or holding company.
(5) If the time for payment has been extended, the amount extended shall be paid in equal annual installments plus accrued interest. If any installment is not paid on or before the date fixed for its payment, the unpaid portion of the tax payable in installments shall be paid upon notice and demand from the Department.
(6) An extension of time for payment of tax shall generally cease to apply, and any unpaid portion of the tax payable in installments shall be paid upon notice and demand from the Department if:
(a) One-third or more in value of an interest in a closely held business is sold, exchanged or otherwise disposed of; or
(b) Aggregate withdrawals of money and other property from the closely held business equal or exceed one-third of the value of such closely held business.
(7) Collateral acceptable to the Department will generally include the following:
(a) First mortgage on real property having a value of double the extended tax;
(b) Assignment of a contract and deed for the sale of real property where the market value of the contract is double the amount of the extended tax;
(c) A surety bond in double the amount of the extended tax executed by a corporation licensed to do business in the State of Oregon. Such bond shall be renewed every five years.
(8) Examples of reasonable cause:
(a) “A” died January 10, 1997, leaving a gross estate of $1,200,000 of which $700,000 was the value of a retail store operated by the decedent. The balance of the estate was listed securities, cash, a family residence and miscellaneous personal effects. The taxable estate was $850,000 on which the Oregon tax was $25,200. The portion that could be extended is $20,753. ($700,000 divided by $850,000) multiplied by $25,200 equals $20,753.
(b) “B” died February 1, 1997, leaving a taxable estate of $1,000,000 of which $700,000 was stock in a closely held corporation. The balance of the property was listed securities and personal effects. The corporation was a holding company with the majority of corporate assets invested in real estate. It was not shown that money could only be borrowed on terms that would inflict loss upon the estate. An extension would not be granted.
(c) “C” died January 1, 1997, leaving a taxable estate of $1,000,000. The estate included farm land valued at $500,000. The balance of the estate was real property, listed securities, cash and personal effects. The farm land was leased for cash rent. Because this is an investment in real property, it would not be considered a trade or business and the tax would not be extended.
(d) “D” died May 10, 1997, leaving a taxable estate of $750,000 including a tree farm valued at $400,000. The farm consisted of all pre-merchantable timber. It was shown that the farm could only be sold at a sacrifice price in a depressed market and that money could only be borrowed on terms that would inflict loss upon the estate. The tax of $10,880 would be extended. ($400,000 divided by $750,000) multiplied by $20,400 equals $10,880.
(e) “E” died May 10, 1997, leaving a taxable estate of $5,000,000 of which tree farms were valued at $1,000,000. The balance of the estate was comprised of merchantable timber and timberlands valued at $2,000,000 and an interest in a closely held lumber manufacturing company valued at $2,000,000. Only the portion of the tax attributable to the closely held business ($156,640) would qualify for the extension. Other reasonable causes were not shown. ($2,000,000 divided by $5,000,000) multiplied by $391,600 equals $156,640.
Stat.
Auth.: ORS 305.100
Stats.
Implemented: ORS 118.225
Hist.:
12-31-77; TC 9-1978, f. 12-5-78, cert. ef. 12-31-78; TC 19-1979, f. 12-20-79, cert.
ef. 12-31-79; RD 4-1997, f. 9-12-97, cert. ef. 12-31-97; REV 10-2009, f. 12-21-09
cert. ef. 1-1-10
150-118.250(1)
Inheritance Tax Receipt
The department shall issue a receipt to the estates of decedents dying on or after January 1, 1987, for the payment of tax imposed under ORS 118.010. Filing the receipt with the probate court is not a prerequisite to obtaining the court's approval of final account, nor should the receipt be deemed to be a final determination of the inheritance tax liability if additional tax under ORS 118.010 is later determined to be due.
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.250
Hist.: 9-74; 12-31-77; RD 15-1987, f. 12-10-87, cert. ef. 12-31-87;
RD 4-1997, f. 9-12-97, cert. ef. 12-31-97
150-118.260(1)-(A)
Penalty if No Return Filed
If no inheritance tax return is filed within nine months after date of death and no extension of time to file is granted, there shall be added to the tax a penalty of 5 percent of the tax required to be shown on the return. If the failure to file an inheritance tax return continues beyond three months after the due date, a penalty of 20 percent of the tax shall be added to the tax in addition to the 5 percent penalty. If there is a deficiency due to fraud with intent to evade tax, there shall be assessed a penalty of 100 percent of the total deficiency. The 5 percent and 20 percent penalties do not apply to the amount of tax paid within nine months following the date of death. See OAR 150-305.145(A) and (B) for waiver of the penalties for late filing.
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.260
Hist.: 11-73; 12-19-75; RD 4-1997, f. 9-12-97, cert. ef. 12-31-97,
Renumbered from 150-118.260(1)
150-118.260(1)-(B)
Penalty for Late payment
If the tax is not timely paid and no extension of time to pay is granted, a five percent penalty for late payment shall be added to the tax. See OAR 150-305.145(3)(A) for waiver of the penalty. Waiver of the penalty for late payment will not waive the penalty for late filing. Interest accrues during the late payment period.
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.260
Hist.: RD 4-1997, f. 9-12-97, cert. ef. 12-31-97
150-118.260(4)
Interest
(1) Interest shall be charged from nine months after date of death until date of payment. See ORS 305.220 and the rules there under for applicable interest rates.
(2) Interest for fractional months is computed on a daily basis.
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.260
Hist.: 12-19-75, Renumbered from 118.260(2); 12-31-82; RD 15-1987, f.
12-10-87, cert. ef. 12-31-87
150-118.260(6)
Refund of Excess Payment
Where payment exceeds the amount of tax shown by the return or as determined by audit of the return, the excess shall be refunded without application from the taxpayer. The Department does not have authority to pay interest on the refund for interest periods beginning prior to May 31, 1982.
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.260(6)
Hist.: TC 10-1978, f. 12-5-78, cert. ef. 12-31-78
150-118.300
Bond for Deferment of Tax
Any person or corporation acquiring a beneficial interest in property subject to Oregon inheritance tax may elect to defer payment of the tax until such person comes into actual possession or enjoyment. The election to defer payment of the tax must be in writing signed by the person beneficially interested, must be filed with the Director within nine months from the date of death of the decedent, and must state that the person has not come into actual possession or enjoyment of the property.
(1) If the beneficial interest is in real property, as defined in ORS 111.005(28), no bond need be given for the payment of the tax. If the beneficial interest is in personal property, as defined in ORS 111.005(25), the person or persons shall give a bond to the State of Oregon in double the amount of the tax, with such sureties as the Director may approve, conditioned for the payment of the tax and accrued interest at such time and period as the person or persons beneficially interested shall come into actual possession or enjoyment of the property.
(2) A bond is acceptable if it is executed by a company licensed by the State Department of Commerce, Insurance Division, to issue surety insurance in the State of Oregon, and in such form as may be approved by the Director of the Department of Revenue or if it is executed by a corporate surety (other than a surety company) provided such corporate surety establishes that it is within its corporate powers to act as surety for another individual, partnership, association, or corporation. Also a bond is satisfactory if, executed by two or more individual sureties, secured by a mortgage on real or personal property, by a certified, cashier's or treasurer's check drawn on any bank authorized by the State Banking Division to do business in the State of Oregon, or by a United States postal, bank, express, or telegraph money order, by corporate bonds or stocks, or by bonds issued by the State of Oregon, or by a political subdivision thereof, approved by the Director, or secured by any other acceptable collateral. All such collateral shall be deposited with the Director or, in his discretion, with a responsible financial institution acting as escrow agent.
(3) Where a bond is executed by two or more individual sureties, each such surety must reside within the State of Oregon, have property (including Oregon real property) subject to execution of a current market value, above all encumbrances, equal to the penalty of the bond, agree not to encumber the property offered as security while the bond continues in effect and file annually an affidavit as to the adequacy of the security.
(4) A full return of the property in question shall be made to the Director within six months of the date on which the person or persons beneficially interested therein shall come into actual possession or enjoyment of the property.
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 118.300
Hist.: Eff. 9/71, Amended 12/19/75, 12/31/77
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