Minnesota Section 6166 Computations

Minnesota Section 6166 Computations

 

Minnesota 6166 Computation 1A hypothetical computation based on numbers derived from those given in Estate of Donald McNeely v. United States, United States District Court, District of Minnesota, No. 0:12-cv-01973, June 12, 2014. Date of death was in 2009. The gross estate was $230,900,899, but the total estate tax was only $9,125,878, some 94% of which was deferred under a §6166 election. In this example all of the estate tax deductions are attributed to Schedules J and K. The closely held business value is very low.
Minnesota 6166 Computation 2The same facts as in Computation 1, except that we shift $173,000,000 in deductions from Schedule K to Schedule M for a marital deduction. This shift causes the §6166(b)(6) adjusted gross estate to increase by the same amount. The total estate tax and the tax payable in installments under the §6166 election remain the same, but the closely held business value greatly increases in order to maintain the same §6166(a)(2) ratio for determining the maximum amount of tax which may be paid in installments. These 2 examples show that there is a range of §2053 and §2054 deductions and closely held business values that, in tandem, can yield the same net estate tax and tax deferred under §6166 as stated in the court opinion. The Minnesota estate tax is the same as in Computation 1.
Minnesota 6166 Computation 3A 2016 date of death and a gross estate of $268,750,000. Federal and Minnesota estate tax returns are filed on their 6-month extended return due dates. Significant adjusted taxable gifts and gift tax paid or payable are reported on lines 4 and 7, respectively, on page 1 of the Federal Form 706. For Minnesota estate tax purposes, some 56% of those gifts were made after June 30, 2013. Section 6166 elections are filed with the Federal and Minnesota estate tax returns. The election statements include the secondary computations required by sections 6166(k)(5) and 2035(c)(2). There are overpayments of Federal and Minnesota non-deferred estate tax.