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Decedent owns 30% of the voting stock in Corporation C and 40% of the voting stock in Corporation D. Both corporations have more than 45 shareholders. More than 20% in value of the voting stock in each corporation is included in the Decedent's gross estate, satisfying the requirements of §6166(b)(1)(C)(i). The estate tax value of the Corporation C stock is less than 35% of the §6166(b)(6) adjusted gross estate, while the estate tax value of the Corporation D stock exceeds 35% of the adjusted gross estate.
The estate wishes to combine the estate tax values of each closely held business to be treated as an interest in a single closely held business under §6166(c). Section 6166(c) requires that 20% or more of the total values of Corporation C and Corporation D must be included in Decedent's gross estate.
However, Corporation C has 3 classes of stock, only one of which is voting stock. The estate tax value of Decedent's interest in Corporation C is less than 20% of the total value of Corporation C.
Result: The estate tax values of Decedent's interests in Corporations C and D cannot be combined to be treated as an interest in a single closely held business under §6166(c) for purposes of §6166 even though the requirements of §6166(b)(1)(C)(i) are satisfied. Only the tax attributable to Corporation D may be extended under §6166.
