[WSBAPT] Special Notice - Estate tax treatment of real property owned by business entities

Fri May 29 10:18:43 PDT 2020

Oh! I sent this before reading the update. Reason prevails for once at the DOR! I’m pleasantly surprised!

From: John J. Sullivan, Esq. <sullaw at comcast.net> 
Sent: Friday, May 29, 2020 10:16 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: RE: [WSBAPT] Special Notice - Estate tax treatment of real property owned by business entities

Agreed. 

I had one client who resided here. They owned a house in Sun Valley, ID. And a condo in Manhattan. Placing the ID realty in a revocable trust it is still sourced to ID which has no estate tax. Placing the NY condo in an LLC renders it personalty that is sourced here to WA, where the rates are not as high as the stand alone estate tax in NY.

Be careful. I believe the DOR still takes the position that WA realty held by a nonresident in a single member LLC remains realty sourced here. I disagree, but there you have it. One option to consider to counter their argument is to operate it as an AirBnb when not spending time in it here in WA. If the LLC is an operating business it is respected. 

John J. Sullivan

From: wsbapt-bounces at lists.wsbarppt.com <mailto:wsbapt-bounces at lists.wsbarppt.com>  <wsbapt-bounces at lists.wsbarppt.com <mailto:wsbapt-bounces at lists.wsbarppt.com> > On Behalf Of Diane J. Kiepe
Sent: Friday, May 29, 2020 9:40 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com <mailto:wsbapt at lists.wsbarppt.com> >
Subject: Re: [WSBAPT] Special Notice - Estate tax treatment of real property owned by business entities

The first two have assets includable for WA estate tax purposes because they hold intangibles here as residents.

The second two – now are not deemed to hold an intangible property because the LLC interest is what they own and that follows them to t heir state of residency.  Previously there was further analysis required (business vs nonbusiness purpose of property).

Remember too, for planning purposes, this addresses LLCs only, not trusts.  

That is my reading – and my take away is people leaving WA to reside elsewhere but leave property here are  well served by placing the same in an LLC.

Diane J. Kiepe

Diane J. Kiepe

Douglas Eden

717 W. Sprague Ave.

Suite 1500

Spokane, WA  99201

 <mailto:djkiepe at depdslaw.com> djkiepe at depdslaw.com

509-455-5300

From: wsbapt-bounces at lists.wsbarppt.com <mailto:wsbapt-bounces at lists.wsbarppt.com>  <wsbapt-bounces at lists.wsbarppt.com <mailto:wsbapt-bounces at lists.wsbarppt.com> > On Behalf Of Karl Flaccus
Sent: Friday, May 29, 2020 9:32 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com <mailto:wsbapt at lists.wsbarppt.com> >
Subject: Re: [WSBAPT] Special Notice - Estate tax treatment of real property owned by business entities

Maybe someone could provide an explanation of what this means in these circumstances:

A Washington resident owns a nonbusiness out-of-state vacation home in an LLC. 

A Washington resident owns an out-of-state rental home in an LLC.

An out-of-state resident owns a Washington vacation home in an LLC.  

An out-of-state resident owns a Washington rental home in an LLC.  

Thanks in advance. 

Karl

FLACCUS LAW

7010 35th Ave. N.E.

Seattle, Washington  98115

206 523-0297

Information in this e-mail message is privileged, confidential, and intended only for the use of the recipient named. If you received this in error, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited – please notify us by telephone immediately at (206) 523-0297, and delete the original message. Thank you.

From: wsbapt-bounces at lists.wsbarppt.com <mailto:wsbapt-bounces at lists.wsbarppt.com>  <wsbapt-bounces at lists.wsbarppt.com <mailto:wsbapt-bounces at lists.wsbarppt.com> > On Behalf Of Philip N. Jones
Sent: Thursday, May 28, 2020 4:27 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com <mailto:wsbapt at lists.wsbarppt.com> >
Subject: Re: [WSBAPT] Special Notice - Estate tax treatment of real property owned by business entities

A very interesting new development.  Washington and Oregon are apparently now on the same page on this issue.

Phil Jones

Portland, OR

From: wsbapt-bounces at lists.wsbarppt.com <mailto:wsbapt-bounces at lists.wsbarppt.com>  <wsbapt-bounces at lists.wsbarppt.com <mailto:wsbapt-bounces at lists.wsbarppt.com> > On Behalf Of Derek Jensen
Sent: Thursday, May 28, 2020 4:22 PM
To: wsbapt at lists.wsbarppt.com <mailto:wsbapt at lists.wsbarppt.com> 
Subject: [WSBAPT] FW: Special Notice - Estate tax treatment of real property owned by business entities

Just received in my in-box: New treatment for real property owned by business entities. 

Sincerely,

Derek W. Jensen, JD, LLM

Managing Attorney

Jensen Law Office, PLLC

From: Corinna O'Connor <corinnao at DOR.WA.GOV <mailto:corinnao at DOR.WA.GOV> > 
Sent: Thursday, May 28, 2020 4:10 PM
To: ESTATE-TAX-NOTIFICATIONS at LISTSERV.DOR.WA.GOV <mailto:ESTATE-TAX-NOTIFICATIONS at LISTSERV.DOR.WA.GOV> 
Subject: Special Notice - Estate tax treatment of real property owned by business entities

The Department of Revenue has issued a special notice in regards to the estate tax treatment of real property owned by business entities.

This special notice is effective June 1, 2020 and can be found by clicking the following link.

 <https://dor.wa.gov/sites/default/files/legacy/Docs/Pubs/SpecialNotices/2020/sn_20_EstateTaxTreatment.pdf> https://dor.wa.gov/sites/default/files/legacy/Docs/Pubs/SpecialNotices/2020/sn_20_EstateTaxTreatment.pdf

The special notice is located under the Forms & Publication section of the Estate Tax section on the department's homepage, as well.

 <https://dor.wa.gov/taxes-rates/other-taxes/estate-tax> https://dor.wa.gov/taxes-rates/other-taxes/estate-tax

For questions, please call the estate tax team at 360-534-1503, option 2, or send an e-mail to estates at dor.wa.gov <mailto:estates at dor.wa.gov> . 

To join or leave this list, change your settings, or view the the list archives, go to https:listserv.wa.gov/cgi-bin/wa?A0=estate-tax-notifications 

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