| Section 6166(b)(1)(C) - Example 1 |
| Decedent owned 19% of the voting stock of Corporation A. There are 45 or fewer 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. |
| Result: The discounted estate tax value of Decedent's 19% portion of the voting stock qualifies for a 14-year §6166 election under §6166(b)(1)(C)(ii). |
Section 6166(b)(1)(C) - Example 1 Corporation A - 45 or Fewer Shareholders | |
| 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 | 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 - Qualifies for a §6166(a) 14-year Extension - ratio is greater than 0.350000 | 0.438743 |
There are 45 or fewer shareholders in Corporation A and the estate tax value of Decedent's interest in Corporation A exceeds 35% of the adjusted gross estate. The Decedent's interest in Corporation A qualifies for a §6166 extension. When there are 45 or fewer shareholders, §6166(b)(1)(C)(ii) provides an exception to the requirement that Decedent's gross estate must include 20% or more in value of the voting stock in Corporation A.
The Decedent's interest in Closely Held Corporation A is the only Corporation interest for which a §6166 extension is sought. Section 6166(c) is therefore not relevant, and it does not matter whether the estate tax value of Decedent's interest in Corporation A is 20% or more of the total value of Corporation A (it is not).