| Section 6166(b)(1)(C) - Example 2 |
| Decedent owned 19% of the voting stock of Corporation A. There are more than 45 shareholders. The gross value of Decedent's 19% interest is discounted 28% to arrive at its §6166(b)(4) estate tax value, which is more than 35% of the adjusted gross estate. This is the only business interest for which a §6166 election is contemplated. None of the other shareholders are family members described in §267(c)(4). |
| Result: The discounted estate tax value of Decedent's 19% portion of the voting stock does not qualify for a §6166 election. It does not meet the 20% test of §6166(b)(1)(C)(i). |
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Section 6166(b)(1)(C) - Example 2
Corporation A - More Than 45 Shareholders
None of the Other Shareholders are §267(c)(4) Family Members
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| Full value of Corporation A | 50,000,000.00 | |||
| Outstanding shares of voting common stock | 10,000 | |||
| Per-share value of voting common stock | 5,000.00 | |||
| Corporation Value Included in Decedent's Gross Estate | ||||
| Per-share value of voting common stock | 5,000.00 | |||
| Valuation discounts | 28% | |||
| Discounted estate tax value per share | 3,600.00 | |||
| Shares of voting common owned by Decedent at date of death - 19% of the total | 1,900 | |||
| §6166(b)(4) estate tax value of Decedent's interest in Corporation A | 6,840,000.00 | |||
| §6166(b)(6) Adjusted Gross Estate Computation | ||||
| Gross estate | 20,840,000.00 | |||
| Sections J, K, and L deductions - §2053 and §2054 | 5,250,000.00 | |||
| §6166(b)(6) adjusted gross estate | 15,590,000.00 | |||
| §6166(a)(2) Ratio Computation | ||||
| Section 6166 closely held business amount | 6,840,000.00 | |||
| Section 6166(b)(6) adjusted gross estate | 15,590,000.00 | |||
| Section 6166(a)(2) ratio - maximum amount of tax which may be paid in installments - Does Not Qualify for a §6166 Extension even though the ratio is greater than 0.350000 - the 20% requirement of §6166(b)(1)(C)(i) is not satisfied. | 0.438743 | |||
| 6166(b)(1)(C) Example 2, Comment 1: There are more than 45 shareholders in Corporation A and the estate tax value of Decedent's interest in Corporation A exceeds 35% of the adjusted gross estate. None of the other shareholders are family members described in §267(c)(4). Less than 20% in value of the voting stock in Corporation A is included in Decedent's gross estate. The Decedent's interest in Corporation A does not qualify for a §6166 extension. When there are more than 45 shareholders, §6166(b)(1)(C)(i) requires that Decedent's gross estate must include 20% or more in value of the voting stock in Corporation A. In this case that requirement has not been met. The fact that the estate tax value of Decedent's interest in the Corporation exceeds 35% of the adjusted gross estate is not dispositive. |