Form Or706-A - Oregon Additional Estate Transfer Tax Return Page 3
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6Column D—Enter the proceeds from the sale, exchange,
equipment he inherited and sold. On column D he will
or conversion of the property listed in column A.
enter $202,000 the proceeds of the sale and $0 on column
E. Jack will pay additional estate transfer tax of $7,403,
Column E—Enter the amount from the proceeds that
calculated as follows:
wasn’t reinvested in a qualified natural resource property.
Line 1 ........$ 1,200,000
Line 7 ............. $ 49,024
Column F—Divide the amount of column E by column
Line 2 ...........$ 200,000
Line 8 ............. $ 59,598
D (round to two decimal places). This is the disqualified
percentage.
Line 3 ........$ 1,000,000
Line 9 ............. $ 10,574
Column G—Multiply the percentage in column F with
Line 4 ........ $ 1,950,000
Line 10 .....................42
the amount in column C. This is the disqualified value.
Line 5 ....................0.51
Line 11 ................. 0.70
Total the amounts in column G.
Line 6 ............. $ 96,125
Line 12 ............. $ 7,403
Part 3—Property replacement
Example 3
Assume the same facts as in example 2, except that David
If you’ve replaced your natural resource property with
and Jack sold the farm and the farm equipment to their
another qualified natural resource property or have
reinvested the proceeds from an involuntary conversion
brother Joseph. Because the property was sold to a family
on another qualified natural resource property complete
member, David and Jack don’t pay additional estate trans-
this section.
fer tax per ORS 118.140. David and Jack may have a capital
gain as a result of the sale of the property that would be
Column A—Enter the acquisition date of the new
reported on their personal income taxes.
property.
David and Jack will each complete and file Form OR706-
Column B—Enter the description of the newly acquired
A, parts 1, 2, 5, and 6, to report the sale of the NRC prop-
natural resource property as result of an exchange or
erty to family member.
involuntary conversion. Also describe which property
was replaced. Note: this property should be listed on
Example 4
part 2.
Anthony inherited a farm with value of $1,200,000 from
his great aunt Vanessa, who passed away June 12, 2012.
Examples
The estate claimed an NRC of $45,200 on Form OR706.
On April 12, 2014, the city annexed the farm and paid
Example 1
Anthony $1,200,000. On May 16, 2015, Anthony decided
Jack inherited a farm from his father with a date of death
to reinvest all of the proceeds from the involuntary
value of $1,000,000 and farm equipment value of $200,000.
conversion and purchased another farm for $1,200,000.
After running the farm for 18 months, Jack decided to
Anthony doesn’t have to pay additional estate transfer tax
sell the farm and all the equipment. His Schedule NRC
because he reinvested all the proceeds from the involun-
shows the following information: adjusted gross estate
tary conversion on another farm within 2 years from the
$1,950,000; tax payable $96,125; and natural resource credit
involuntary conversion. Anthony will file Form OR706-A
claimed $59,598. Jack will pay additional estate transfer
and complete parts 1, 2, 3, and 6, to notify the Department
tax of $41,719, calculated as follows:
of Revenue that the involuntary conversion took place.
Line 1 ........$ 1,200,000
Line 7 .................$ 0.00
Example 5
Line 2 ........$ 1,200,000
Line 8 ............. $ 59,598
Assume the same facts as example 4, except that Anthony
Line 3 ......................$ 0
Line 9 ............. $ 59,598
purchased another farm for $1,050,000 and purchased an
Line 4 ........ $ 1,950,000
Line 10 .....................42
RV for personal use for $150,000. Anthony would need to
Line 5 ....................0.00
Line 11 ................. 0.70
pay additional tax on the $150,000 because he didn’t rein-
vest that portion of the proceeds. The tax payable on Form
Line 6 ............. $ 96,125
Line 12 ........... $ 41,719
OR706 was $60,250, the NRC claimed was $45,200, and
Example 2
the adjusted gross estate was $1,600,000. Anthony would
Assume same facts as example 1, except Jack inherited
calculate his additional estate transfer tax as follows:
the farm equipment and his brother, David, inherited the
Line 1 ........$ 1,200,000
Line 7 ............. $ 39,765
farm. After operating the farm together for 18 months,
Line 2 ...........$ 150,000
Line 8 .............$ 45,200
David decides to lease the farmland. Jack sells his farm
equipment for $202,000 and buys a cottage with the sale
Line 3 ........ $ 1,050,000
Line 9 ...............$ 5,435
proceeds. David doesn’t have additional estate transfer
Line 4 ........$ 1,600,000
Line 10 .................... 38
tax because the land remains in qualified use. Jack will
Line 5 ....................0.66
Line 11 ................. 0.63
file OR706-A, completing parts 1, 2, 4 and 6. On part
2, column C, Jack will enter $200,000, the value of the
Line 6 .............$ 60,250
Line 12 .............$ 3,424
150-104-007 (Rev. 07-14)
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Form OR706-A Instructions
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