Oregon Statutes - Chapter 118 - Inheritance Tax - Section 118.140 - Exclusion of value of natural resource or commercial fishing property from gross estate; rules.

(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:

(a) Farm use, as defined in ORS 308A.056, or as one or more farm use homesites, as defined in ORS 308A.250, related to that real property; or

(b) Forestland, as defined in ORS 321.201, or 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:

(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.

(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.

(5)(a) If property initially excluded from the value of a gross estate as natural resource property under this section is not then used 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 eligible for the exclusion allowed under this section, an additional tax under ORS 118.005 to 118.840 shall be imposed.

(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 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.

(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) 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. [2007 c.843 §68]

Note: Section 69, chapter 843, Oregon Laws 2007, provides:

Sec. 69. Section 68 of this 2007 Act [118.140] applies only to decedents who die on or after January 1, 2007. [2007 c.843 §69]

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Last modified: August 7, 2008