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<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F3864">Regarding the history of the business purpose test, DOR brought this to the WSBA Estate & Gift Tax Committee as a trial balloon quite a few years ago. The response from the Committee of overwhelmingly
negative—there is simply no authority in the statute for such a test, and DOR would lose revenue from all the Washington decedents with non-business LLCs holding recreational property in other states (around here, primarily Idaho lake homes). DOR representatives
seemed never to have thought of that. The idea seemed dead for maybe a year or two, but then the business purpose test showed up in the instructions to the WA estate tax return. Depending upon how cynical you are, you might think DOR decided they wouldn’t
put the test in a WAC because there was no legal authority to do so, but they could quietly slip it into instructions to a form and then use it when they thought it advantageous. My understanding is that the issue came up again at an E> Committee meeting
within the last year or so, the DOR rep at the meeting (who seems to have a better understanding of the estate tax than some of her predecessors) said she would look into it, and out came this notice. I haven’t been as active on the E> Committee lately
as I once was, so someone who is pretty active now may correct me on the more recent history.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F3864"><o:p> </o:p></span></p>
<div>
<p class="MsoNormal"><b><span style="color:#1F497D">________________________________________<o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="color:#1F497D">THOMAS M. CULBERTSON </span></b><b><span style="font-size:14.0pt;color:#1F497D"> </span></b><span style="font-size:14.0pt;color:#1F497D">I
</span><span style="font-size:10.0pt;color:#1F497D"> Lukins & Annis, PS<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;color:#1F497D">717 W. Sprague Ave, Suite 1600, Spokane, WA 99201<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;color:#1F497D">(509) 455-9555</span><span style="color:#1F497D">
</span><span style="font-size:12.0pt;color:#1F497D"> I </span><span style="font-size:10.0pt;color:#1F497D"> fax (509) 363-2500</span><span style="font-size:12.0pt;color:#1F497D"> I
</span><span style="font-size:10.0pt;color:#1F497D"> </span><span style="color:#1F497D"><a href="mailto:tculbertson@lukins.com"><span style="font-size:10.0pt">tculbertson@lukins.com</span></a></span><span style="font-size:10.0pt;color:#1F497D">
<o:p></o:p></span></p>
</div>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F3864"><o:p> </o:p></span></p>
<div>
<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> wsbapt-bounces@lists.wsbarppt.com <wsbapt-bounces@lists.wsbarppt.com>
<b>On Behalf Of </b>Cyrus Field<br>
<b>Sent:</b> Friday, May 29, 2020 11:46 AM<br>
<b>To:</b> 'WSBA Probate & Trust Listserv' <wsbapt@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBAPT] [ADV] Re: Special Notice - Estate tax treatment of real property owned by business entities<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">But doesn’t it depend where client is moving to? For instance, Oregon has just $1 million dollar exemption and Wa just under $2.2 million. Say Oregon resident owns RP in Washington and Oregon, each with FMV of $1 M. If Or resident puts
Wa property in LLC, then Or gloms on to LLC interest as intangible property and will tax accordingly. But if interest left as real property (or placed in trust), it is effectively excluded from Oregon tax based on prorating formula. That was my understanding
anyways but have not had to address issue for a while. Thanks for any enlightenment, Cy<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><i>Cyrus W. Field, Attorney at Law (admitted in Washington and Oregon)<o:p></o:p></i></p>
<p class="MsoNormal"><i>phone: 360-472-1223 Mail: POB 367, Shaw Island, WA 98286 Office: 640 Mullis St. Friday Harbor, WA</i><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:8.0pt">******************************************************************<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:8.0pt">The information contained in this e-mail message, including attachments, may be privileged, confidential and protected from disclosure. If you are not the intended recipient, any dissemination, distribution
or copying is strictly prohibited. If you think you have received this e-mail in error, please e-mail the sender at
<a href="mailto:cyfield@rockisland.com">cyfield@rockisland.com</a> and destroy or delete the original and any copies.
<o:p></o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<div>
<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Diane J. Kiepe<br>
<b>Sent:</b> Friday, May 29, 2020 9:40 AM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> [ADV] Re: [WSBAPT] Special Notice - Estate tax treatment of real property owned by business entities<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:14.0pt">The first two have assets includable for WA estate tax purposes because they hold intangibles here as residents.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt">The second two –<u> now</u> 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).<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt">Remember too, for planning purposes, this addresses LLCs only, not trusts.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt">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.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt"><o:p> </o:p></span></p>
<div>
<p class="MsoNormal"><i><span style="font-family:"Script MT Bold"">Diane J. Kiepe<o:p></o:p></span></i></p>
<p class="MsoNormal"><i><span style="font-family:"Script MT Bold""><o:p> </o:p></span></i></p>
<p class="MsoNormal">Diane J. Kiepe<o:p></o:p></p>
<p class="MsoNormal">Douglas Eden<o:p></o:p></p>
<p class="MsoNormal">717 W. Sprague Ave.<o:p></o:p></p>
<p class="MsoNormal">Suite 1500<o:p></o:p></p>
<p class="MsoNormal">Spokane, WA 99201<o:p></o:p></p>
<p class="MsoNormal"><a href="mailto:djkiepe@depdslaw.com"><span style="color:#0563C1">djkiepe@depdslaw.com</span></a><o:p></o:p></p>
<p class="MsoNormal">509-455-5300<o:p></o:p></p>
</div>
<p class="MsoNormal"><span style="font-size:14.0pt"><o:p> </o:p></span></p>
<div>
<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Karl Flaccus<br>
<b>Sent:</b> Friday, May 29, 2020 9:32 AM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBAPT] Special Notice - Estate tax treatment of real property owned by business entities<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E">Maybe someone could provide an explanation of what this means in these circumstances:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E">A Washington resident owns a nonbusiness out-of-state vacation home in an LLC.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E">A Washington resident owns an out-of-state rental home in an LLC.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E">An out-of-state resident owns a Washington vacation home in an LLC.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E">An out-of-state resident owns a Washington rental home in an LLC.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E">Thanks in advance.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E"><o:p> </o:p></span></p>
<div>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E">Karl<o:p></o:p></span></p>
<p class="MsoNormal"><i><span style="font-family:"Times New Roman",serif;color:#0F243E"><o:p> </o:p></span></i></p>
<p class="MsoNormal"><i><span style="font-family:"Times New Roman",serif;color:#0F243E">F</span></i><i><span style="font-size:9.0pt;font-family:"Times New Roman",serif;color:#0F243E">LACCUS</span></i><i><span style="font-family:"Times New Roman",serif;color:#0F243E">
L</span></i><i><span style="font-size:10.0pt;font-family:"Times New Roman",serif;color:#0F243E">A</span></i><i><span style="font-size:9.0pt;font-family:"Times New Roman",serif;color:#0F243E">W</span></i><i><span style="font-family:"Times New Roman",serif;color:#0F243E"><o:p></o:p></span></i></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;color:#0F243E">7010 35th Ave. N.E.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;color:#0F243E">Seattle, Washington 98115<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;color:#0F243E">206 523-0297</span><span style="color:#0F243E"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#0F243E"><o:p> </o:p></span></p>
<p class="MsoNormal"><i><span style="font-family:"Times New Roman",serif;color:#0F243E">I</span></i><i><span style="font-size:9.0pt;font-family:"Times New Roman",serif;color:#0F243E">nformation 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.<o:p></o:p></span></i></p>
</div>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0F243E"><o:p> </o:p></span></p>
<div>
<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Philip N. Jones<br>
<b>Sent:</b> Thursday, May 28, 2020 4:27 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBAPT] Special Notice - Estate tax treatment of real property owned by business entities<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">A very interesting new development. Washington and Oregon are apparently now on the same page on this issue.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">Phil Jones<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">Portland, OR<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<div>
<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">
wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Derek Jensen<br>
<b>Sent:</b> Thursday, May 28, 2020 4:22 PM<br>
<b>To:</b> <a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a><br>
<b>Subject:</b> [WSBAPT] FW: Special Notice - Estate tax treatment of real property owned by business entities<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Just received in my in-box: New treatment for real property owned by business entities.
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<div>
<p class="MsoNormal" style="background:white"><span style="font-family:"Helvetica",sans-serif;color:#833C0B">Sincerely,</span><span style="color:#833C0B"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-family:"Helvetica",sans-serif;color:#833C0B"> </span><span style="color:#833C0B"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:14.0pt;font-family:"Helvetica",sans-serif;color:#833C0B">Derek W. Jensen,
</span><span style="font-family:"Helvetica",sans-serif;color:#833C0B">JD, LLM</span><span style="color:#833C0B"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-family:"Helvetica",sans-serif;color:#833C0B">Managing Attorney</span><span style="color:#833C0B"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:10.0pt;font-family:"Helvetica",sans-serif;color:#833C0B">Jensen Law Office, PLLC</span><span style="color:#833C0B"><o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="color:#833C0B"><o:p> </o:p></span></p>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<div>
<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> Corinna O'Connor <<a href="mailto:corinnao@DOR.WA.GOV">corinnao@DOR.WA.GOV</a>>
<br>
<b>Sent:</b> Thursday, May 28, 2020 4:10 PM<br>
<b>To:</b> <a href="mailto:ESTATE-TAX-NOTIFICATIONS@LISTSERV.DOR.WA.GOV">ESTATE-TAX-NOTIFICATIONS@LISTSERV.DOR.WA.GOV</a><br>
<b>Subject:</b> Special Notice - Estate tax treatment of real property owned by business entities<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p><span style="font-family:"Arial",sans-serif">The Department of Revenue has issued a special notice in regards to the estate tax treatment of real property owned by business entities.</span><o:p></o:p></p>
<p><span style="font-family:"Arial",sans-serif">This special notice is effective June 1, 2020 and can be found by clicking the following link.</span><o:p></o:p></p>
<p><a href="https://dor.wa.gov/sites/default/files/legacy/Docs/Pubs/SpecialNotices/2020/sn_20_EstateTaxTreatment.pdf"><span style="font-family:"Arial",sans-serif">https://dor.wa.gov/sites/default/files/legacy/Docs/Pubs/SpecialNotices/2020/sn_20_EstateTaxTreatment.pdf</span></a><o:p></o:p></p>
<p><span style="font-family:"Arial",sans-serif">The special notice is located under the Forms & Publication section of the Estate Tax section on the department's homepage, as well.</span><o:p></o:p></p>
<p><a href="https://dor.wa.gov/taxes-rates/other-taxes/estate-tax"><span style="font-size:13.5pt;font-family:"Arial",sans-serif">https://dor.wa.gov/taxes-rates/other-taxes/estate-tax</span></a><o:p></o:p></p>
<p><span style="font-family:"Arial",sans-serif">For questions, please call the estate tax team at 360-534-1503, option 2, or send an e-mail to
</span><a href="mailto:estates@dor.wa.gov"><span style="font-family:"Arial",sans-serif">estates@dor.wa.gov</span></a><span style="font-family:"Arial",sans-serif">. </span><o:p></o:p></p>
<p class="MsoNormal">To join or leave this list, change your settings, or view the the list archives, go to
<a href="https://listserv.wa.gov/cgi-bin/wa?A0=estate-tax-notifications">
https://listserv.wa.gov/cgi-bin/wa?A0=estate-tax-notifications</a> <o:p></o:p></p>
</div>
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