Our estate planning computations can project tax and interest payments for the potential estate of a client with a closely held business interest. The Federal estate tax is usually not interrelated with interest unless a state 6166 election (or a state extension of time to pay with periodic payments of state tax and interest) is also contemplated, in which case the section 2058 state death tax deduction at any given point would depend upon the projected amount(s) of state death tax that will have been paid. 

Hypothetical IRS field examination deficiency adjustments can also be considered, resulting in a "catch-up" payment due IRS (and also due a state, if a concurrent state section 6166 election is involved) on some date within the 3-year period after the estate tax return is filed.

Once the basic computation has been set up, variations can be run to show:

• Differing date of death asset values with estimated future exemption equivalent amounts;
• Differing valuation discount scenarios;
• Differing marital or charitable deduction scenarios with a concurrent 6166 election;
• Gift-giving scenarios;
• Cash payout projections with or without future interest rate increases over the 14-year 6166 deferral period; and,
• Cash payout projections with or without voluntary additional tax payments during the extension period.

The computation results can be presented in a single page “What If” chart to show the differences among the various scenarios at each point during a 14-year section 6166 deferral. This information is useful when estimating the present value of tax and interest payments of varying amounts on the same future dates.

Computations can also be run to gauge the benefits of taking out a loan to pay off part of the Federal tax, or part or all of the state estate tax, at some point after a section 6166 election is in place. This could include Graegin loan scenarios.