Annual Installment Example 2 | |
| Feb-17-2016 | Date of death |
| Nov-17-2016 | Estate tax return due date. Form 4768 is filed to request an automatic 6-month extension of time to file with a separate request to extend the time to pay. The estimated amount of tax that will not be deferred under §6166 is $2,500,000, which designated sum is paid with the Form 4768 filing. |
| May-17-2017 | Estate tax return filing date. The estate makes a regular section 6166(a) 14-year election. The first installment will be due on Nov-17-2021. |
| There is a $2,000,000 charitable deduction. | |
The payments due with the return are:
| |
| The actual amount of non-deferred tax is $2,803,802.19. The unpaid balance of non-deferred tax is $303,802.19. Regular rate interest on the balance of non-deferred tax calculated through the return filing date of May-17-2017 is $4,550.13, for a total payment of $308,352.32. | |
Annual Installment Computation - Example 2 §6166(b)(6) Adjusted Gross Estate Computation | ||||||
|---|---|---|---|---|---|---|
| Gross estate | 50,000,000.00 | |||||
| Schedule J - | ||||||
| A. | Funeral expenses | 25,000.00 | ||||
| B. | 1. | Executors' commissions | 1,000,000.00 | |||
| 2. | Attorney fees | 1,400,000.00 | ||||
| 3. | Accountant fees | 415,000.00 | ||||
| 4. | Miscellaneous | |||||
| a. | Appraisals | 250,000.00 | ||||
| b. | Utilities | 14,375.00 | ||||
| c. | Other | 1,215.00 | ||||
| d. | Interest accrued and paid on unpaid non-deferred tax calculated through the return filing date | 4,550.13 | ||||
| Total Schedule J | 3,110,140.13 | |||||
| Schedule K - Debts | ||||||
| Debts of decedent | 144,535.00 | |||||
| Schedule K - Mortgages and Liens | ||||||
| Mortgages | 876,550.00 | |||||
| Total Schedule K | 1,021,085.00 | |||||
| Total Schedules J and K debts and expenses | 4,131,225.13 | |||||
| Allowable amount of deductions | 4,131,225.13 | |||||
| Schedule L - Net Losses | 0 | |||||
| Schedule L - Expenses on property not subject to claims | 0 | |||||
| Total Schedules J, K, and L debts and expenses | 4,131,225.13 | 4,131,225.13 | ||||
| Section 6166(b)(6) adjusted gross estate | 45,868,774.87 | |||||
Annual Installment Computation - Example 2 §6166(a)(2) Ratio Computation | ||||
| Section 6166 business value, divided by | 37,500,000.00 | |||
| Section 6166(b)(6) adjusted gross estate, yields | 45,868,774.87 | |||
| Section 6166(a)(2) ratio for the maximum amount of tax which may be paid in installments | 0.817550 | |||
Annual Installment Computation - Example 2 Estate Tax Computation | ||||||
|---|---|---|---|---|---|---|
| 1 | Gross estate | 50,000,000.00 | ||||
| Schedules J, K, and L deductions | 4,131,225.13 | |||||
| Marital deduction | 0.00 | |||||
| Charitable deduction | 2,000,000.00 | |||||
| 2 | Total allowable deductions | 6,131,225.13 | ||||
| 3a | Tentative taxable estate | 43,868,774.87 | ||||
| 3b | State death tax deduction | 0.00 | ||||
| 3c | Taxable estate | 43,868,774.87 | ||||
| 4 | Adjusted taxable gifts | 0.00 | ||||
| 5 | Add lines 3c and 4 | 43,868,774.87 | ||||
| 6 | Tentative tax on the line 5 amount | 17,493,309.95 | ||||
| 7 | Total gift tax paid or payable | 0.00 | ||||
| 8 | Gross estate tax | 17,493,309.95 | ||||
| 9a | Basic exclusion amount | 5,450,000.00 | ||||
| 9b | DSUE amount | 0.00 | ||||
| 9c | Applicable exclusion amount | 5,450,000.00 | ||||
| 9d | Applicable credit amount | 2,125,800.00 | ||||
| 10 | Adjustment to applicable credit amount | 0.00 | ||||
| 11 | Allowable applicable credit amount | 2,125,800.00 | ||||
| 12 | Subtract line 11 from line 8 | 15,367,509.95 | ||||
| 13 | Credit for foreign death taxes | 0.00 | ||||
| 14 | Credit for tax on prior transfers | 0.00 | ||||
| 15 | Total credits | 0.00 | ||||
| 16 | Net estate tax | 15,367,509.95 | ||||
| 17 | Generation-Skipping taxes payable | 0.00 | ||||
| 18 | Total transfer taxes | 15,367,509.95 | ||||
Annual Installment Computation - Example 2 §6166(a) Catch-Up Payment Due May-17-2017 | |
| Net estate tax (equal to total transfer taxes in this example) | 15,367,509.95 |
| Section 6166(a)(2) ratio expressed as a percentage | 81.7550% |
| Maximum amount of tax which may be paid in installments under §6166 | 12,563,707.76 |
| Tax not deferred and due on the return due date of Nov-17-2016 | 2,803,802.19 |
| Non-deferred tax paid on the return due date | 2,500,000.00 |
| Balance of non-deferred tax due | 303,802.19 |
| The Annual Installment | |
| Maximum amount of tax eligible for the section 6166(b)(7) election | 12,563,707.76 |
| Number of installments selected | 10 |
| The annual installment, the first of which will be due Nov-17-2021 | 1,256,370.78 |
| The Catch-Up Payment Due May-17-2017 | |
| Balance of non-deferred tax due | 303,802.19 |
| Interest at regular underpayment interest rates on this sum due May-17-2017 | 4,550.13 |
| Total catch-up payment due May-17-2017 | 308,352.32 |