Section 6166(c) provides:
(c) Special rule for interest in 2 or more closely held businesses
For purposes of this section, interest in 2 or more closely held businesses, with respect to each of which there is included in determining the value of the decedent's gross estate 20 percent or more of the total value of each such business, shall be treated as an interest in a single closely held business. For purposes of the 20-percent requirement of the preceding sentence, an interest in a closely held business which represents the surviving spouse's interest in property held by the decedent and the surviving spouse as community property or as joint tenants, tenants by the entirety, or tenants in common shall be treated as having been included in determining the value of the decedent's gross estate.
There is also an adjustment to the estate tax value of a Decedent's interest in a closely held business for purposes of the 20% test of section 6166(c) that is provided in section 6166(b)(7):
Section 6166(b)(7) provides:
(7) Partnership interests and stock which is not readily tradable
(A) In general
If the executor elects the benefits of this paragraph (at such time and in such manner as the Secretary shall by regulations prescribe), then-
(i) for purposes of paragraph (1)(B)(i) or (1)(C)(i) (whichever is appropriate) and for purposes of subsection (c), any capital interest in a partnership and any non-readily-tradable stock which (after the application of paragraph (2)) is treated as owned by the decedent shall be treated as included in determining the value of the decedent's gross estate,
(ii) the executor shall be treated as having selected under subsection (a)(3) the date prescribed by section 6151(a), and
(iii) for purposes of applying section 6601(j), the 2-percent portion (as defined in such section) shall be treated as being zero.
(B) Non-readily-tradable stock defined
For purposes of this paragraph, the term "non-readily-tradable stock" means stock for which, at the time of the decedent's death, there was no market on a stock exchange or in an over-the-counter market.
| 6166(c) Comment 1: The provision that "an interest in a closely held business which represents the surviving spouse's interest in property held by the decedent and the surviving spouse as community property or as joint tenants, tenants by the entirety, or tenants in common shall be treated as having been included in determining the value of the decedent's gross estate" mimics the langauage in §6166(b)(2)(B), which provides that stock or a partnership interest which is community property of a husband and wife, or is held by husband and wife as joint tenants, tenants by the entirety, or tenants in common, "shall be treated as owned by one shareholder or one partner, as the case may be." The former provision could permit treating a decedent's interests in 2 or more closely held businesses as an interest in a single closely held business without utilizing the family attribution election under section 6166(b)(7); the provision within §6166(b)(2)(B) is automatically utilized in counting the number of partners or shareholders, which could determine whether a decedent's interest in a partnership or in stock in a corporation does not need to satisfy the 20% tests of §6166(b)(1)(B) or (b)(1)(C). Neither provision changes the value of a decedent's interest in a closely held business that is includible in the gross estate. |
| 6166(c) Comment 2: The value of the surviving spouse's interest in the property held with the decedent as described above is not included in the decedent's gross estate. While the value of the surviving spouse's interest is added to the decedent's interest for determining whether the combined value equals 20 percent or more of the total value of the closely held business, the "closely held business amount" in the §6166(a)(2) ratio calculation is based on the estate tax value of the decedent's interest alone. |