<html><head><meta http-equiv="content-type" content="text/html; charset=utf-8"></head><body dir="auto">Philip:<div><br></div><div>You have wandered into the thicket of conflicts of laws. I haven’t researched this in our respective states’ caselaw, but here’s a moldy old law review article indicating that in your hypothetical double taxation is a distinct possibility. </div><div><br></div><div><a href="https://kb.osu.edu/dspace/bitstream/handle/1811/68428/OSLJ_V24N2_0270.pdf">https://kb.osu.edu/dspace/bitstream/handle/1811/68428/OSLJ_V24N2_0270.pdf</a></div><div><br></div><div><br></div><div>So maybe have the OR client convert the WA real property inside the LLC to an Airbnb? 😏</div><div><br></div><div>John Sullivan<br><br><div id="AppleMailSignature">Sent from my iPad</div><div><br>On Mar 15, 2018, at 4:39 PM, Eric Nelsen <<a href="mailto:Eric@sayrelawoffices.com">Eric@sayrelawoffices.com</a>> wrote:<br><br></div><blockquote type="cite"><div>
<meta http-equiv="Content-Type" content="text/html; charset=us-ascii">
<meta name="Generator" content="Microsoft Word 14 (filtered medium)">
<style><!--
/* Font Definitions */
@font-face
{font-family:Calibri;
panose-1:2 15 5 2 2 2 4 3 2 4;}
@font-face
{font-family:Tahoma;
panose-1:2 11 6 4 3 5 4 4 2 4;}
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{margin:0in;
margin-bottom:.0001pt;
font-size:11.0pt;
font-family:"Calibri","sans-serif";}
a:link, span.MsoHyperlink
{mso-style-priority:99;
color:#0563C1;
text-decoration:underline;}
a:visited, span.MsoHyperlinkFollowed
{mso-style-priority:99;
color:#954F72;
text-decoration:underline;}
span.EmailStyle17
{mso-style-type:personal;
font-family:"Calibri","sans-serif";
color:windowtext;}
span.EmailStyle18
{mso-style-type:personal-reply;
font-family:"Calibri","sans-serif";
color:#1F497D;}
.MsoChpDefault
{mso-style-type:export-only;
font-size:10.0pt;}
@page WordSection1
{size:8.5in 11.0in;
margin:1.0in 1.0in 1.0in 1.0in;}
div.WordSection1
{page:WordSection1;}
--></style><!--[if gte mso 9]><xml>
<o:shapedefaults v:ext="edit" spidmax="1026" />
</xml><![endif]--><!--[if gte mso 9]><xml>
<o:shapelayout v:ext="edit">
<o:idmap v:ext="edit" data="1" />
</o:shapelayout></xml><![endif]-->
<div class="WordSection1">
<p class="MsoNormal"><span style="color:#1F497D">Yikes--nice first post! I have no wisdom to offer but am looking forward to other responses.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<div>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Sincerely,<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Eric<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Eric C. Nelsen<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">SAYRE LAW OFFICES, PLLC<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">1417 31st Ave South<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Seattle WA 98144-3909<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">phone 206-625-0092<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">fax 206-625-9040<o:p></o:p></span></p>
</div>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<div>
<div style="border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">mailto:wsbapt-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>Philip N. Jones<br>
<b>Sent:</b> Thursday, March 15, 2018 4:26 PM<br>
<b>To:</b> <a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a><br>
<b>Subject:</b> [WSBAPT] estate taxation of LLC interests<o:p></o:p></span></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">I have been an Oregon-resident member of the WSBA for decades (I practice estate planning in Portland), and a member of this section for decades, but I have only now joined the estate/probate listserv. I look forward to the future discussions.<o:p></o:p></p>
<p class="MsoNormal">So here is my first post. This is a hypothetical; I do not really have this client.<o:p></o:p></p>
<p class="MsoNormal">Ralph lives in Washington. He owns a vacation house in Bend, Oregon. He puts the house in a single-member LLC.<o:p></o:p></p>
<p class="MsoNormal">Ralph promptly and expeditiously dies.<o:p></o:p></p>
<p class="MsoNormal">The Washington Department of Revenue states on their website and in their instructions to Addendum #4 of the Washington estate tax return that real estate in a non-true-business-purpose LLC will be taxed at its physical real estate location,
which is Oregon. So Washington does not include the vacation home in the Washington numerator of the fraction.<o:p></o:p></p>
<p class="MsoNormal">Oregon, on the other hand, in its regulations, honors LLCs regardless of business purpose, or lack thereof. LLCs are intangible, Oregon says. And Oregon does not tax intangibles of nonresidents.<o:p></o:p></p>
<p class="MsoNormal">So Ralph pays no Oregon or Washington estate tax on the vacation house. Zero. Zip. Nada.<o:p></o:p></p>
<p class="MsoNormal">Or am I missing something here?<o:p></o:p></p>
<p class="MsoNormal">That’s the good news. Now let’s reverse the situation. George lives in Oregon and puts his Wenatchee vacation house in an LLC and then dies. Washington will disregard the LLC and tax the Washington real estate. Oregon will honor the
LLC as an intangible and tax it to its resident decedent.<o:p></o:p></p>
<p class="MsoNormal">So it gets taxed in both states. Which makes George unhappy. Even though he is dead.<o:p></o:p></p>
<p class="MsoNormal">Or am I missing something here?<o:p></o:p></p>
<p class="MsoNormal">The mind reels.<o:p></o:p></p>
<p class="MsoNormal">Thanks,<o:p></o:p></p>
<p class="MsoNormal">Phil Jones<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:13.0pt;color:#365F91">Philip N. Jones</span><span style="color:#1F497D"> |</span><span style="font-size:13.0pt;color:black">Duffy Kekel LLP</span><span style="color:#1F497D"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;color:black">111 SW 5th Ave, Suite 1500, Portland OR 97204<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;color:black">(503) 226-1371 (main)| (503) 226-3574 (fax)<o:p></o:p></span></p>
<p class="MsoNormal"><a href="mailto:pjones@duffykekel.com"><span style="color:black">pjones@duffykekel.com</span></a><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
</div>
</div></blockquote><blockquote type="cite"><div><span>_______________________________________________</span><br><span>WSBAPT mailing list</span><br><span><a href="mailto:WSBAPT@lists.wsbarppt.com">WSBAPT@lists.wsbarppt.com</a></span><br><span><a href="http://mailman.fsr.com/mailman/listinfo/wsbapt">http://mailman.fsr.com/mailman/listinfo/wsbapt</a></span></div></blockquote></div></body></html>