used to calculate the natural resource credit, multiplied by
Credit Computation
[(five minus the number of years the property was used as
natural resource property) divided by five]. The property
The natural resource credit is computed by multiplying
the tax that would be payable (ORS 118.005 to ORS 118.840),
owner will pay the additional tax at the time of the dis-
absent the credit by a ratio, the numerator of which is an
position of the property or the disqualifying event. Each
amount equal to the lesser of the amount of natural resource
property owner will need to file Form OR706-A, Additional
property or $7.5 million, and the denominator of which is an
Oregon Estate Transfer Tax Return, 150-104-007. This return
amount equal to the total adjusted gross estate.
and the additional tax are due six months after the date of
Example: If an estate had a adjusted gross estate of
disposition of the property. For examples of the additional
$2,000,000, natural resource property of $1,200,000, and tax
tax due, see Form OR706-A and instructions.
payable to Oregon of $101,250, the credit would be $60,750,
computed as follows:
• The payment of federal estate taxes, state inheritance, or
101,250 * (1,200,000 / 2,000,000) = 60,750
estate taxes from cash or other assets for which a natural
resource credit was claimed, shall be a disposition and an
Annual Certification for Natural
additional tax shall be imposed.
Resource Credit
[ORS 118.140(10)]
• The conveyance after the decedent’s death of property
that otherwise meets the requirements of this section
The heir who inherits the natural resource property will
and is conveyed as a qualified conservation contribution
need to file the Annual Certification for Natural Resource Credit
Property or Commercial Fishing Business Credit Property form,
[IRC 170(h)], is not a disposition requiring payment of
150-104-008, with us. This form certifies the heir’s continued
additional tax under this subsection.
qualified use of the property, this form is due April 15th.
• Natural resource property may be replaced with real
property or personal property after the credit is claimed
Disposition of natural resource property
and does not result in a disposition subject to an addition-
and additional tax due
[ORS 118.140(9)(a)]
al tax if the replacement property is used in the operation
An additional tax may be imposed per ORS 118.005 to
of the farm business, forestry business or fishing busi-
118.540 if the natural resource property or commercial fish-
ness. Real property for which a credit is claimed under
ing business property is disposed of or is transferred to a
this section may be replaced only with real property that
person other than a family member or another eligible entity,
would otherwise qualify as natural resource property.
before the property is used for five out of eight years after
The replacement must be made within one year to avoid
the date of death.
a disposition and additional tax, with the exception that
The additional tax liability is the amount of the additional
involuntarily converted replacement property must occur
tax that would have been imposed, had the disqualified
property not been included in the numerator of the ratio
within two years (IRC 1033).
150-104-003 (Rev. 06-12)
Instructions for Schedule NRC for Form OR706, page 2 of 5