[WSBAPT] Special Notice - Estate tax treatment of real property owned by business entities
Derek Jensen
derek at jensenestatelaw.com
Fri May 29 16:04:59 PDT 2020
John,
I agree. It is not often we get a simplification.
I think this may be the answer to Phil’s question earlier about why they are making this change. Getting rid of “true business purpose” is just easier for taxpayers and the department.
Sincerely,
Derek W. Jensen, JD, LLM
Managing Attorney
Jensen Law Office, PLLC
From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of John J. Sullivan, Esq.
Sent: Friday, May 29, 2020 10:19 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
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<mailto:sullaw at comcast.net>>
Sent: Friday, May 29, 2020 10:16 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
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
djkiepe at depdslaw.com<mailto: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
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
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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