[WSBAPT] Irrev trust selling Oregon real estate

[Philip N. Jones]

The Oregon fiduciary income tax (reportable on Oregon Form 41) applies to both resident Oregon trusts and nonresident trusts, but in different ways.  A trust is deemed to be a resident trust if the trust has one Oregon trustee or co-trustee, or the administration of the trust is carried on in Oregon.  ORS 316.282(1)(d); OAR 150-316-0400(4), (5) ex. 3. Administration is defined as fiduciary decision-making, not incidental execution of decisions made by others.  ORS 316.282(3); OAR 150-316-0400(5).  A resident trust is a trust with a resident fiduciary or if the administration is being carried on in Oregon, even if the trustee is a corporate trustee with headquarters elsewhere.  ORS 316.282(1)(d); OAR 150-316-0400(5).  Nonresident trusts are defined as trusts other than resident trusts.  ORS 316.302.  The calculation of the Oregon fiduciary income tax on resident trusts and estates is made in much the same manner as the Oregon individual income tax, with some exceptions.  ORS 316.267; ORS 316.272; OAR 150-316-0400(6).  Similarly, Oregon taxes the Oregon-source income of nonresident trusts and nonresident estates as if the trust or estate were a nonresident individual.  ORS 316.307(3); ORS 316.312; OAR 150-316-0420.  The Oregon tax applies to both ordinary income and capital gains, at the same rates; capital gains are not taxed at a lower rate, with some exceptions.  The taxable income of an estate or trust is based on federal taxable income, but an Oregon fiduciary adjustment is made.  ORS 316.282; ORS 316.287; OAR 150-316-0410.  The initial (lowest) rate of the Oregon fiduciary income tax is 5% on the first $3,250 of taxable income; the maximum rate is 9.9% on income in excess of $125,000.  ORS 316.037; ORS 316.282.  As a general rule, Oregon taxes resident estates and trusts on both Oregon-source income and non-Oregon source income, but under some circumstances Oregon grants a credit for fiduciary income taxes paid to other states.  ORS 316.082 (residents); ORS 316.131 and 316.292 (nonresidents).  A nonresident beneficiary of a trust or an estate (resident or nonresident) is taxed in the same manner as if the beneficiary had received the income directly, and not through a trust or an estate.  OAR 150-316-0400(7).  As a result, a nonresident beneficiary of a resident Oregon trust will be taxed in Oregon if the income resulted from the ownership or disposition of tangible property (real or personal) in Oregon, or from the operation of a trade or business in Oregon.  ORS 316.127; OAR 150-316-0171.
Phil Jones
Portland, OR


Philip N. Jones
Duffy Kekel LLP
900 S.W. Fifth Ave. Suite 2500
Portland, OR 97204
pjones at duffykekel.com<mailto:pjones at duffykekel.com>
(503) 226-1371 - office
(503) 853-1482 - cell
(503) 226-3574 - fax

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Eric Nelsen
Sent: Thursday, June 17, 2021 5:48 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Irrev trust selling Oregon real estate

I have an Oregon irrevocable trust (RLT now irrevocable after death of grantor) selling real estate, and need to figure out Oregon tax issues and what forms to use. Is there a kind colleague who could give me some preliminary guidance so I can start to figure it out?

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

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