6166(b)(1)(C) Example 1

Section 6166(b)(1)(C)  - Example 1 
Decedent owned 19% of the voting stock of Corporation A. There are 45 or fewer shareholders. The gross value of Decedent's 19% interest is discounted 28% to arrive at its §6166(b)(4) estate tax value, which is more than 35% of the adjusted gross estate. This is the only business interest for which a §6166 election is contemplated.
Result: The discounted estate tax value of Decedent's 19% portion of the voting stock qualifies for a 14-year §6166 election under §6166(b)(1)(C)(ii).

 

Section 6166(b)(1)(C)  - Example 1 
Corporation A - 45 or Fewer Shareholders
Full value of Corporation A50,000,000.00
Outstanding shares of voting common stock10,000
Per-share value of voting common stock5,000.00
Corporation Value Included in Decedent's Gross Estate
Per-share value of voting common stock5,000.00
Valuation discounts28%
Discounted estate tax value per share3,600.00
Shares of voting common owned by Decedent at date of death1,900
§6166(b)(4) Estate tax value of Decedent's interest in Corporation A6,840,000.00
§6166(b)(6) Adjusted Gross Estate Computation
Gross estate20,840,000.00
Sections J, K, and L deductions - §2053 and §20545,250,000.00
§6166(b)(6) adjusted gross estate15,590,000.00
§6166(a)(2) Ratio Computation
Section 6166 closely held business amount6,840,000.00
Section 6166(b)(6) adjusted gross estate15,590,000.00
Section 6166(a)(2) ratio - maximum amount of tax which may be paid in installments - Qualifies for a §6166(a) 14-year Extension - ratio is greater than 0.3500000.438743

 

6166(b)(1)(C) Example 1, Comment 1:  There are 45 or fewer shareholders in Corporation A and the estate tax value of Decedent's interest in Corporation A exceeds 35% of the adjusted gross estate. The Decedent's interest in Corporation A qualifies for a §6166 extension. When there are 45 or fewer shareholders, §6166(b)(1)(C)(ii) provides an exception to the requirement that Decedent's gross estate must include 20% or more in value of the voting stock in Corporation A.

 

6166(b)(1)(C) Example 1, Comment 2:  The Decedent's interest in Closely Held Corporation A is the only Corporation interest for which a §6166 extension is sought. Section 6166(c) is therefore not relevant, and it does not matter whether the estate tax value of Decedent's interest in Corporation A is 20% or more of the total value of Corporation A (it is not).

 

 

 

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