Section 6166(b)(6) Computation Examples
| Section 6166(b)(6) Example 1 | A regular §6166(b)(6) adjusted gross estate computation without any complications. The return is filed on the return due date. The §6166 Notice of Election elects to defer the maximum amount of tax eligible for deferral under §6166(a)(2). |
| Section 6166(b)(6) Example 2 | The regular §6166(b)(6) adjusted gross estate computation from Example 1 is brought forward and modified. Form 4768 is filed on the return due date of Nov-17-2016 to request an automatic 6-month extension of time to file. Estimated non-deferred tax of $2,500,000 is paid with Form 4768. A protective section 6161 extension of time to pay is also made. The return is filed on the 6-month extended due date of May-17-2017. The §6166 Notice of Election shows that the correct non-deferred tax is $2,803,802.19. The balance of non-deferred tax of $303,802.19 plus interest of $4,550.13 accrued thereon is paid with the return. The interest of $4,550.13 is interrelated with the Federal estate tax and is allowed as a deduction on Schedule J, and is included in the §6166(b)(6) adjusted gross estate computation. |
| The interest of $4,550.13 is calculated at regular underpayment interest rates of 3% on the unpaid non-deferred tax and is immediately due and payable. Interest is also accrued on the tax deferred under section 6166 (2% on the first $592,000 of deferred tax and 1.35% (45% of 3%) on the balance of deferred tax), but that interest is not payable (with additional interest) until the 1st anniversary date of Nov-17-2017. | |
| Section 6166(b)(6) Example 3 | The facts from Example 2 are brought forward. In August 2017 the estate secures a loan from a third party for estate purposes. Accrued interest of $52,000 is paid on Dec-31-2017. A supplemental estate tax return is filed in 2018 to claim the $52,000 interest payment as a new deduction on Schedule J. The recalcuated non-deferred tax is now $2,800,026.70, meaning the payment on May-17-2017 exceeds the amount now shown to have been due. The excess payment of non-deferred tax is now allocated pro-rata to the 2% and 45% of R% portions of deferred tax pursuant to §6601(j)(4). The interest due on May-17-2017 is now $4,493.58. |
| The interest accrued on this additional payment through May-17-2017 is allowable as a deduction on Schedule J and is included the §6166(b)(6) adjusted gross estate computation. |