Original estate tax return computations involve:
- Asset values included in the decedent’s gross estate with differing discount scenarios;
- Deductions allowable in determining the taxable estate;
- Due date(s) for filing the return and any extension requests;
- Preparing the section 6166 election statement;
- Determining the estate tax that will not be deferred under a section 6166 election; and,
- Payments that will be due during the section 6166 deferral period.
Preparation and set up for these computations should begin soon after the date of death. For large, complex estates there will be continuing adjustments to the gross estate and asset valuations as time passes, and the estate tax section 6166 computations will need to be adjusted in response. The computations can be refined so that future cash flow requirements can be more accurately estimated. If an extension of time to file is needed because some appraisals have not yet been received, file Form 4768 on or before the 9-month return due date to request an automatic section 6081 six-month extension of time to file. A section 6161 request for an extension of time to pay should be separately requested on the Form 4768.
- Complete schedule-by-schedule estate tax return computations.
- Section 6166 election statement drafting, with computations.
- Comprehensive 6166 computations showing:
The gross estate;
Schedules J, K, and L computations before and after any interest deductions;
The 6166(b)(6) adjusted gross estate computation;
The 6601(j)(4) 2% and 45% of regular underpayment interest rate (45% of R%) portions of deferred tax;
Non-deferred tax payable on the 9-month return due date;
Deductible interest accrued on any underpayment of non-deferred tax if the return is filed 6 months later;, and,
Cash payout projections over the 4-, 9-, or 14-year 6166 deferral period.
- Tax effects of differing valuation discount scenarios
- Consequences of possible IRS audit adjustments.
- Optional voluntary payoff computations at any point in the future.
- Consequences of a state section 6166 election or a regular state extension of time to pay.