Form Or706-A - Oregon Additional Estate Transfer Tax Return Page 3
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5Instructions for Form OR706-A, Oregon Additional Estate Transfer Tax Return
Use this form only if you inherited natural resource property in tax year 2012 or later. If you inherited natural
resource property in tax year 2011 or prior, use Form IT-1A, Oregon Additional Inheritance Tax Return.
Definitions
to a family member, the seller may have a capital gain
which would be reported on their personal income
The terms we use in these instructions are defined
taxes.
in Oregon Revised Statute (ORS) 118.140 and Oregon
Administrative Rule (OAR) 150-118.140.
See example 3.
“Property” means natural resource property or commer-
Even if you don’t owe tax, you must complete and file
cial fishing property used for the natural resource credit
Form OR706-A to notify us of a change in property own-
on Form OR706.
ership. Complete only parts 1, 2, 5, and 6 of this form.
“Property owner” means you, the person who received
Replacement of Natural Resource property
property from the decedent.
and Involuntary Conversions
“Qualified use” means to use the property as a natural
Read below for information on when to file a return in the
resource or commercial fishing business property.
case of replacement property or involuntary conversion.
“Disqualified property” means property that:
Replacement of property. After the credit is claimed,
• You disposed of, or stopped qualified use of, before
you may replace natural resource property with real or
five out of eight calendar years had passed after the
personal property, as long as the replacement property
decedent’s death.
is used as natural resource property and all proceeds are
• Was subject to an involuntary conversion and you did
reinvested in natural resource property. Real property for
not reinvest all of the proceeds from the involuntary
which the credit was claimed may only be replaced with
conversion.
real property. The replacement property must be acquired
“Involuntary conversion” as defined in the Internal Rev-
within one year to avoid a disposition and additional tax.
enue Code (IRC), section 1033.
See example 4.
Taxable events
Involuntary conversions. If, within two years of an invol-
untary conversion, you reinvest all proceeds in qualified
The property owner causes a taxable event if the property
replacement property, you won’t owe additional estate
is not used as set out in ORS 118.140.
transfer tax. Complete parts 1-3 and 6 to notify us that an
• The property is disposed of or the qualified use of the
involuntary conversion took place, even though you owe
property stops before it is used for five out of eight
no tax. If you don’t replace the property within two years
calendar years after the decedent’s death.
of the involuntary conversion, you’ll owe additional tax.
• Involuntary conversions—you may owe additional tax
Partially taxable involuntary conversions. If you paid
if you don’t reinvest the proceeds or reinvest only part
less for the qualified replacement property than you re-
of the proceeds from the involuntary conversion.
ceived in the involuntary conversion or you don’t reinvest
As the property owner, you are responsible for reporting
the entire amount received from the conversion, then the
and paying any additional estate transfer tax imposed
conversion is partially taxable. See example 5.
by ORS 118.140. You must file Oregon Form OR706-A to
report the taxable event. The additional tax is limited to
Return due date
the tax credit claimed on Form OR706. See example 1.
Generally. File Form OR706-A and pay any additional
If you and other qualified family members shared owner-
taxes due within six months after you disposed of the
ship of the property and you stop the qualified use, your
property or ended the qualifying use.
additional tax will be based only on your share of the
property. See example 2.
Exhange or involuntary conversion
The tax return and additional tax are due six months from
Nontaxable events for disposition to a family
the taxable event. A taxable event takes place only when
member
your property isn’t replaced within the allowed time. For
Property is not disqualified if you transfer the property to:
example, if your property is subject to an involuntary
conversion on February 15, 2012, you have until February
1. Another member of the decedent’s family; or
15, 2014 to replace the natural resource property. If you
2. The decedent’s registered domestic partner; or
don’t do so by February 15, 2014, a taxable event has taken
3. Another entity eligible for the credit. Note: Nontaxable
place. The additional Estate transfer tax return is due six
months from the taxable event (in this example, August
events described above relate only to the addition estate
15, 2014, six months from February 15, 2014).
transfer tax per chapter 118. If a sale takes place, even
150-104-007 (Rev. 01-13)
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Form OR706-A Instructions
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