Several Illinois section 6166 computation scenarios are presented. The computations in scenarios 1 and 2 are based on one set of facts. A different set of facts is used in scenarios 3 and 4. Included in each set of computations is computer-generated IRS Form 4349, Computation of Estate Tax Due With Return and Annual Installment, and the corresponding Illinois estate tax calculator computation.
Scenarios 1 and 2
July 12, 2011 Date of Death
| 20,000,000 | Gross estate |
| 850,000 | Total Schedules J, K, and L deductions before interest |
| 19,150,000 | Adjusted gross estate pursuant to section 6166(b)(6) |
| 750,000 | Property included in the gross estate located outside Illinois |
| 600,000 | Total adjusted taxable gifts made more than 3 years before death |
| 14,500,000 | Estate tax value of the 6166 business interest located in Illinois |
See Illinois on-line Estate Tax Calculator for 2011
BASIC INFORMATION Illinois Section 6166 Computation - Scenario 1 | |
|---|---|
| Jul-12-2011 | Date of death |
| Apr-12-2012 | Return due date. Federal and Illinois estate tax returns are filed with §6166 election statement. Non-deferred tax is paid to IRS and Illinois. The return is accepted as filed by IRS. See the Apr-12-2012 computations. |
| Apr-12-2013 | First anniversary date - interest due is timely paid to IRS and Illinois. See the Apr-12-2013 computations. |
| Jun-03-2013 | Supplemental return is filed to claim a deduction for interest paid to Illinois. |
| Dec-10-2013 | Cincinnati Campus review of supplemental return completed. Estate agrees to tax changes by signing the waiver, Form 890. Tax decrease and interest adjustments assessed by IRS. See the Dec-10-2013 computations. |
| Apr-12-2014 | Second anniversary date. Billing notice reflects adjustments from the supplemental return. Interest due is timely paid to IRS and Illinois. See the Apr-12-2014 computations. |
BASIC INFORMATION Illinois Section 6166 Computation - Scenario 2 | |
|---|---|
| Jul-12-2011 | Date of death |
| Apr-12-2012 | Return due date. Federal and Illinois estate tax returns filed with §6166 election statement. Non-deferred tax paid to IRS and Illinois. The return is selected for field examination by IRS. See the Apr-12-2012 computations. |
| Apr-12-2013 | First anniversary date - interest due is timely paid to IRS and Illinois. See the Apr-12-2013 computations. |
| Apr-12-2014 | Second anniversary date - interest due is timely paid to IRS and Illinois.See the Apr-12-2014 computations. |
| Aug-13-2014 | IRS field examination completed. Agreed deficiency. Catch-up payments made to IRS and Illinois. See the Aug-13-2014 deficiency computations. |
| Apr-12-2015 | Third anniversary date. Billing notice reflects adjustments from the field examination and catch-up payments. Interest due is timely paid to IRS and Illinois. See the Apr-12-2015 computations. |
Scenarios 3 and 4
May 31, 2015 Date of Death
| 40,000,000 | Gross estate |
| 1,850,000 | Total Schedules J, K, and L deductions before interest |
| 38,150,000 | Adjusted gross estate pursuant to section 6166(b)(6) |
| 750,000 | Property included in the gross estate located outside Illinois |
| 600,000 | Total adjusted taxable gifts made more than 3 years before death |
| 29,500,000 | Estate tax value of the 6166 business interest located in Illinois |
See Illinois on-line Estate Tax Calculator for 2015
BASIC INFORMATION Illinois Section 6166 Computation - Scenario 3 | |
|---|---|
| May-31-2015 | Date of death |
| Feb-29-2016 | Return due date; Form 4768 submitted to request an extension of time to file the return. Estimated non-deferred tax paid to IRS and Illinois. |
| Aug-29-2016 | Extended return due date - Form 706 timely filed with §6166 election statement. Non-deferred tax was underpaid. Additional non-deferred tax plus interest is paid with the return filing. The Section 2058 state death tax deduction limited to the amount actually paid to Illinois. Return selected for IRS field examination. |
| Feb-28-2017 | First anniversary date - interest due is timely paid to IRS and Illinois. |
| Feb-28-2018 | Second anniversary date - interest due is timely paid to IRS and Illinois. |
| Sep-14-2018 | IRS field examination completed. Agreed deficiency. Catch-up payments are made to IRS and Illinois. |
| Feb-28-2019 | Third anniversary date. Billing notice reflects the IRS adjustments and catch-up payments. Interest due is timely paid to IRS and Illinois. |
| Jan-30-2020 | Estate sells the §6166 business (a §6166(g)(1) acceleration event) but does not then notify IRS of the sale. |
| Feb-29-2020 | Fourth anniversary date. Interest payments requested by IRS and Illinois do not reflect the sale. Estate pays the billed interest to IRS and Illinois and notifies IRS on the billing statement Certification of Unchanged Status that the business was sold on Jan-30-2020. |
| Mar-17-2020 | IRS bill for the entire balance of tax and interest at regular underpayment interest rates from the date of sale to Mar-27-2020, the requested payment date, is sent to the estate. |
| Mar-27-2020 | Entire balance of tax and interest is paid to IRS and Illinois. |
| Jun-05-2020 | Supplemental return filed. Deductions claimed for Federal and Illinois interest accrued after the date the business was sold. |
| Oct-05-2020 | IRS computation completed. Computations and waiver, Form 890, sent to the estate. Refunds of Federal and Illinois tax and interest are due the estate. |
BASIC INFORMATION Illinois Section 6166 Computation - Scenario 4 | |
|---|---|
| May-31-2015 | Date of death |
| Feb-29-2016 | Return due date; Form 4768 submitted to request an extension of time to file the return. Estimated non-deferred tax paid to IRS and Illinois. |
| Aug-29-2016 | Extended return due date - Form 706 timely filed with §6166 election statement. Non-deferred tax was overpaid. Estate elects to defer the maximum amount of tax eligible for deferral. Section 2058 state death tax deduction limited to amount actually paid to Illinois. Return selected for IRS field examination. |
| Feb-28-2017 | First anniversary date - interest due is timely paid to IRS and Illinois. |
| Feb-28-2018 | Second anniversary date - interest due is timely paid to IRS and Illinois. |
| Sep-14-2018 | IRS field examination completed. Agreed deficiency. Catch-up payments made to IRS and Illinois. |
| Feb-28-2019 | Third anniversary date. Billing notice reflects the IRS adjustments and catch-up payments. Interest due is timely paid to IRS and Illinois. |
| Feb-29-2020 | Fourth anniversary date - interest due is timely paid to IRS and Illinois. |
| Feb-28-2021 | Fifth anniversary date - interest due and the first installment of deferred tax are timely paid to IRS and Illinois. |
| Nov-03-2021 | The estate voluntarily pays off the entire balance of tax and interest due IRS and Illinois by using an interrelated "up-front" interest deduction computation. After all assessments and payments have posted the accounts are at zero balance. No refunds of tax or interest are due the estate (Illinois is presumed to follow the Federal up-front deduction procedure). |