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Schedule OR-NRC Instructions
Oregon Natural Resource Credit 2022

This publication is a guide, not a complete statement, of Oregon Revised Statutes (ORS) and Oregon Administrative Rules (OAR).
For possible updates and more information, refer to the laws and rules on our website, www.oregon.gov/dor.

Refer to ORS 118.140 and supporting rules for additional information regarding this credit.

b. Real property used in farm use.
Schedule OR-NRC instructions
• A credit is allowed for property used in the operation of a
ORS 118.140 provides a natural resource or commercial fishing business only if the decedent or a family member,
fishing business credit, for qualified property, applying to during an aggregate period of five out of the eight years
a return of decedents dying on or after January 1, 2007. You ending on the date of the decedent’s death:
may take all, part, or none of this credit for which you qual- a. Owned a vessel used in taking food fish or shellfish
ify. Natural resource property is farm use and forestland for commercial purposes (ORS 506.006);
(ORS 308A.056, 308A.250, 321.201). Real property must be in b. Held a boat license (ORS 508.260);
Oregon [ORS 118.140(1)(L)]. Qualified property also includes c. Held a commercial fishing license (ORS 508.235); and
property used in a commercial fishing business [ORS Chap- d. Held one or more restricted fisheries permits (ORS 508)
ter 508 and Internal Revenue Code (IRC) Section 1301(b)(4)]. or an equivalent restricted vessel permit system under
the laws of another state.
To claim this credit:
Complete all parts of this schedule and file with Form OR- Oregon will allow a credit for property that meets the above
706, Oregon Estate Transfer Tax Return, 150-104-001. The execu- requirements if:
tor shall notify the family members who inherit qualifying • The property is the subject of a net cash lease to or from
property of the tax consequences if they fail to meet the the decedent or qualified beneficiary who’s a family
conditions of the credit (ORS 118.140). Every family member member.
inheriting all or part of the property must be identified in • The property is held in trust for a qualified beneficiary
part 3 and sign part 4. The executor must provide each in- who’s a family member.
heriting family member with a copy of Schedule OR-NRC, • The property replaces natural resource property and
Oregon Natural Resource Credit, 150-104-003, for their perma- the replacement property would otherwise meet the
nent tax records. definition of natural resource property, except that it
This credit is only allowed if you meet the following was acquired after the date of the decedent’s death, but
requirements: before the estate tax return is filed. Real property must
• The natural resource property is located in this state. be replaced with real property.
• The total adjusted gross estate doesn’t exceed $15 million. • When determining the period of time in which the dece-
• The total value of the Oregon natural resource property dent or a family member owned real property that was
in the estate is at least 50 percent of the Oregon adjusted received in exchange (IRC 1031), or acquired in an invol-
gross estate. untary conversion (IRC 1033), the period during which the
• Total adjusted gross estate is the total gross estate minus decedent or a family member owned the exchanged or
Schedules J, K, and L deductions. acquired real property, may be included, if the exchanged
• Oregon adjusted total gross estate is the gross estate or acquired real property was used in the farm business
minus real and personal property outside of Oregon, or forestry business.
minus Schedules J, K, and L deductions as these deduc- • Property that otherwise meets the requirements of this
tions relate to Oregon assets. section and that is owned indirectly by the decedent or a
• The natural resource property is transferred to, or held in, family member qualifies for a credit under this section,
trust for a qualified beneficiary, who is a family member. if the property is owned through an interest in a lim-
• A credit is allowed for the following real property only ited liability company, corporation, partnership, or trust
if the real property was owned by the decedent or a fam- [IRC 2032A(g)] . In order to qualify under this subsection,
ily member during an aggregate period of five out of the at least one family member must materially participate
eight years ending on the date of the decedent’s death and in the business after the transfer. For purposes of this
used in a business described in ORS 118.140(3)(d): subsection, “materially participate” means to engage in
a. Real property used as forestland or as forestland active management (IRC 2032A), of the farm business,
homesites, not to exceed 5,000 acres. forestry business, or fishing business.

150-104-003-1 (Rev. 07-20-22) Page 1 of 2 Instructions for Schedule OR-NRC

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Credit computation and is conveyed as a qualified conservation contribution
[IRC 170(h)], isn’t a disposition subject to an additional tax
The natural resource credit is computed by multiplying under this subsection.
the tax that would be payable under ORS 118.005 to ORS • Qualifying property may be replaced with real prop-
118.540, absent the credit by a ratio, the numerator of which erty or personal property after the credit is claimed and
is an amount equal to the lesser of the amount of Oregon doesn’t result in a disposition subject to an additional
natural resource property claimed or $7.5 million, and the tax if the replacement property is used in the operation
denominator of which is an amount equal to the total ad- of the farm business, forestry business, or fishing busi-
justed gross estate. ness. Real property for which a credit is claimed under
Example: If an estate had a total adjusted gross estate of this section may be replaced only with real property that
$6 million, an Oregon adjusted gross estate of $2 million, would otherwise qualify as natural resource property.
Oregon natural resource property of $1.2 million and tax The replacement must be made within one year to avoid
payable to Oregon of $179,025, the credit would be $35,805, a disposition and additional tax, with the exception that
computed as follows: involuntarily converted replacement property must occur
$179,025 x (1,200,000 ÷ 6,000,000) = $35,805 within two years (IRC 1033).

Do you have questions or need help?
Annual certification for natural resource
credit [ORS 118.140(10)]
Internet
The heir(s) who inherits the qualifying property will need to
file the Form OR-NRC-CERT, Annual Certification for Natural www.oregon.gov/dor
Resource Credit, 150-104-008, with us. This form certifies the • Download forms, instructions, and publications.
property remains in qualified use for the natural resource • Search FAQ.
credit. This form is due annually, by April 15th.
Email
Disposition of qualifying property and
additional tax due [ORS 118.140(9)(a)] estate.help.dor@ dor.oregon.gov
This email address isn’t secure and confidentiality can’t be ensured. Gen-
An additional tax may be imposed per ORS 118.005 to eral tax and policy questions only. We ask that professional tax preparers
118.540 if the qualifying property is disposed of or is trans- and attorneys research questions before contacting us.
ferred to a person other than a family member or another
eligible entity, before the property is used for five out of eight
years after the date of death. Correspondence
The additional tax liability is the amount of the additional
Estate Tax Unit, Business Division
tax that would have been imposed, had the disqualified
Oregon Department of Revenue
property not been included in the numerator of the ratio
used to calculate the natural resource credit, multiplied by PO Box 14110
[(60 months minus the number of months the property was Salem OR 97309-0910
used as natural resource property) divided by 60 months]. Fax: 503-945-8787, Estate Tax Unit
The property owner will pay the additional tax at the time
of the disposition of the property or the disqualifying event. Phone
Each property owner will need to file Form OR-706-R, Repay-
ment of Oregon Natural Resource Credit, 150-104-007. 503-378-4988 or 800-356-4222
This return and the additional tax are due within six months
Monday–Friday, 7:30 a.m.–5 p.m.
after the date of disposition of the property or the disqualify-
Closed Thursdays from 9–11 a.m. Closed holidays.
ing event. For examples of the additional tax due, see Form
OR-706-R and instructions. Wait times may vary.
• The payment of federal estate taxes, state inheritance, or Contact us for ADA accommodations or assistance in other
estate taxes from cash or other assets for which a natural languages.
resource credit was claimed, shall be a disposition and an
additional tax shall be imposed. In person
• The conveyance after the decedent’s death of property
that otherwise meets the requirements of this section Find directions and hours on our website.

150-104-003-1 (Rev. 07-20-22) Page 2 of 2 Instructions for Schedule OR-NRC

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