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150-101-284 (Rev. 08-23-19)
2020 Form OR-18-WC Instructions
If you use the installment method under IRC Section 453 to
report the gain associated with the conveyance, this reduces
the gain used to calculate the tax payment. Reduce the gain
for the year by the amount that is deferred. The authorized
agent is only required to submit a tax payment on the first
installment of an installment sale.
Example 3: Matt sold his rental triplex and he needs to de-
termine his adjusted basis. He purchased the property 15
years ago for $400,000 (line 1). He renovated the property
and spent an additional $200,000 (line 2). He will enter a
total of $600,000 on line 4. Matt has claimed straight-line
depreciation on the property over the last 15 years total-
ing $327,270 ($21,818 each year for 15 years). He will enter
$327,270 on line 5 and enter his adjusted basis of $272,730
($600,000 – $327,270) on line 6. He had ordinary selling costs
of $50,000 (line 7), so his adjusted basis plus selling costs on
line 8 are $322,730. Matt sold the property for $750,000 (line
9), and none of his gain is excludable. Matt’s gain includable
in taxable income (line 12) is $427,270 ($750,000 – $322,730).
Example 4: Sarah’s filing status is single. She sold her per-
sonal residence and needs to determine her adjusted basis
She purchased the property eight years ago for $225,000 (line
1). She has not made any capital improvements nor had any
allowable depreciation, so her adjusted basis is $225,000 (line
6). Sarah’s selling costs are $20,000 (line 7), and her adjusted
basis plus selling costs equal $245,000 (line 8). She sold the
property for $690,000 (line 9). Her gain on line 10 is $445,000
($690,000 – $245,000). Under IRC Section 121, Sarah may
exclude $250,000 of the gain from the sale of her personal
residence from taxation, so she enters ‘121’ and $250,000 on
line 11, so her taxable gain on line 12 is $195,000 ($445,000
– $250,000).
Example 5: Edward sold a large acreage and his gain on line
10 is $600,000. He and the transferee entered into a land-sale
contract where the transferee pays Edward over five years
with 40 percent paid in the first year and the remainder paid
evenly each subsequent year. For tax purposes, IRC Section
453 allows Edward to recognize only $240,000 ($600,000 x
40%) of the gain in the year of the conveyance, so he enters
‘453’ and $360,000 ($600,000 – $240,000) on line 11 so he can
subtract the deferred gain. The authorized agent will calcu-
late the tax payment only on $240,000 of the gain recognized
in the year of the sale (line 12).
Part E: Calculation of tax payment
If a transferor isn’t exempt from the tax payment require-
ments or doesn’t complete Part C indicating an exemption,
the authorized agent must withhold from the proceeds and
submit the smallest of:
• Four percent of the consideration (sales price);
• Eight percent of the gain that is includable in Oregon
taxable income; or
• The net proceeds disbursed to the transferor.
To determine the proper tax payment, the transferor must
complete Part D, “Calculation of gain,” and provide it to
the authorized agent handling the transaction in the time
specified by the authorized agent (but no later than the
closing date). If the transferor doesn’t provide this to the
authorized agent by the closing date, the authorized agent
must complete Parts A, B, and E of Form OR-18-WC and
remit 4 percent of the consideration for the conveyance, or,
if less, the entire net proceeds.
Calculating the tax payment
The authorized agent must complete Part E if a nonexempt
transferor is not claiming an exemption in Part C. Also com-
plete Part A if the transferor has not done so.
Line 13—Consideration percentage
The consideration for the conveyance is the amount given to
the transferor in exchange for the transferor’s interest in the
real property and is generally the sales price. Consideration
includes cash, assumed debt, and the fair market value of
any property given to the transferor.
Multiply the amount the transferor provided on line 9 by
4 percent (0.04). If the transferor has not completed Part D
(and is not exempt), determine the consideration and enter
4 percent of that amount here.
Line 14—Net proceeds to seller
Net proceeds is the amount from the conveyance that is to
be disbursed to the transferor. Generally, this is the amount
of “cash to seller” shown on the HUD-1 settlement sheet.
Example 6: Katie sold a small commercial building for
$500,000. She still owed $205,000 on it. Her selling expenses
from the property were $20,000 and included typical costs.
The amount on the HUD-1 settlement sheet on the “cash-
to-seller” line was $275,000. The escrow agent is scheduled
to disburse $275,000 from this conveyance. The authorized
agent will enter “net proceeds”of $275,000 on line 14.
Example 7: Same facts as Example 6, except that Katie en-
tered into a like-kind exchange to defer part of the gain. The
escrow agent forwarded $200,000 of the amount due to Katie
to a qualified intermediary. The escrow agent is scheduled
to disburse $75,000 to Katie, so this is the amount that will
be entered as the net proceeds on line 14.
Line 15—Taxable gain percentage
Multiply the amount the transferor provided on line 12 by
8 percent (0.08). If the transferor has not completed Part D
(and is not exempt), enter the amount from line 13.
Line 16—Tax payment
Compare lines 13, 14, and 15, then enter the smallest amount
here. This is the amount to retain and submit to us on behalf
of the transferor.