Section 6166(b)(2)(C) Computation Examples
| 6166(b)(2)(C) Example 1 | (Based on PLR 200006034) Decedent owned 100% of land with a building that was leased to a Corporation in the automotive supply business, of which he also owned 100%. Both the land with building and all the stock in the Corporation were transferred to a revocable grantor trust. The trust owned 100% of the land with building and 100% of the corporation at the date of death. Under the indirect ownership rules of § 6166(b)(2)(C), the Decedent owned a 100% interest in the land with building as a sole proprietor under § 6166(b)(1)(A) and 100% of the Corporation under § 6166(b)(1)(C). Because the land and building were such an integral and essential part of the automotive supply business, the Decedent's ownership of the land with building was considered an asset used in an active trade or business as a sole proprietor for purposes of § 6166. The Decedent's interest in the Corporation qualified as an interest in a closely held business pursuant to § 6166(b)(1)(C), and the aggregate value of both businesses was treated as an interest in a single closely held business. |
| 6166(b)(2)(C) Example 2 | (Based on PLR 200339043) Decedent's revocable grantor trust owned 100% of each of two S Corporations - Corporation 1 and Corporation 2. Corporation 1 owned 100% of each of 5 parcels of commercial real estate (Parcels B, C, D, E, and F), and Corporation 2 owned 100% of Parcel A, a commercial shopping center and office building complex. Decedent's gross estate consisted of his interest in the revocable grantor trust and other assets not relevant to the ruling request. The figures in this computation example are hypothetical and are based on a 2016 date of death. |
| 6166(b)(2)(C) Example 3 | (Based on PLR 8428088) Decedent died in 1982 owning 18.03% of voting stock in a corporation. Section 267(c)(4) family members owned another 24.86% of voting stock either outright or in trust. There were more than 15 shareholders after applying the attribution rules of §6166(b)(2). A significant gift was made within 3 years of the date of death. The estate made a §6166(b)(7) election to attribute the family members' ownership interests to the decedent for purposes of the 20% test of §6166(b)(1)(C)(i), and could elect to pay the tax attributable to the closely held business in installments after satisfying the secondary §6166(a)(2) ratio computation under §6166(k)(5) and §2035(c)(2). (This example uses the PLR fact pattern for a decedent dying in 2016, and Code references are to the current version of the Code.) |