Last Updated: 22 February 2014

Computation Examples

Some basic 6166(c) computation scenarios illustrate how section 6166(c) generally functions. In each of the examples there is a mix of two types of 6166 business interests; e.g., a regular section 6166(a) business is being aggregated with a 6166(b)(8) holding company. Regardless of the value of either type of interest, the entire amount of tax is subject to the most restrictive terms applicable to the business interests in the aggregation because section 6166(c) provides that the aggregate business value "shall be treated as an interest in a single closely held business." By definition, this is accomplished with a single section 6166 election.

For that reason the tax attributable to the section 6166(c) aggregation cannot be bifurcated between two types of business interests within the aggregation, because bifurcating the total tax deferred under section 6166 requires two separate, independent, stand-alone 6166 elections.