Section 6166(b)(2)(C) - Example 2 (Based on PLR 200339043) |
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| This example is based on PLR 200339043. Decedent's revocable grantor trust owned 100% of each of two S Corporations - Corporation 1 and Corporation 2. Corporation 1 owned 100% of each of 5 parcels of commercial real estate (Parcels B, C, D, E, and F), and Corporation 2 owned 100% of Parcel A, a commercial shopping center and office building complex. Decedent's gross estate consisted of his interest in the revocable grantor trust and other assets not relevant to the ruling request. The figures in this example are hypothetical and are based on a 2016 date of death. |
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Section 6166(b)(2)(C) - Example 2 (Based on PLR 200339043)
Closely Held Business Assets Owned by the Grantor Trust on Date of Death
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| Corporation 1 | ||||
| Description | Value Included in the Gross Estate | Value Qualified as an Interest in a Closely Held Business | ||
| Property B - two-story office building and industrial complex maintained by Corporation 1 | 11,000,000.00 | 11,000,000.00 | ||
| Property C - three buildings used for research and development projects maintained by Corporation 1 | 6,250,000.00 | 6,250,000.00 | ||
| Property D - two-story office building maintained by Corporation 1 | 4,000,000.00 | 4,000,000.00 | ||
| Property E - two-story office building maintained by Corporation 1 | 5,000,000.00 | 5,000,000.00 | ||
| Property F - mountain-top radio site maintained by the 3rd party lessee | 6,000,000.00 | 0.00 | ||
| Corporation 1 values | 32,250,000.00 | 26,250,000.00 | ||
| Corporation 2 | ||||
| Property A - commercial shopping center and office building complex maintained by Corporation 2 | 35,000,000.00 | 35,000,000.00 | ||
| Total estate tax value owned by the Grantor Trust included in the gross estate | 67,250,000.00 | |||
| Total closely held business value owned by the Grantor Trust under §6166(c) | 61,250,000.00 | |||
| Property F was determined to be a passive asset pursuant to §6166(b)(9)(B)(i) | ||||
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Section 6166(b)(2)(C) - Example 2 (Based on PLR 200339043)
Closely Held Business Assets Indirectly Owned by Decedent on Date of Death
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| Corporation 1 value | 26,250,000.00 | |||
| Corporation 2 value | 35,000,000.00 | |||
| Total closely held business value included in Decedent's gross estate | 61,250,000.00 | |||
| §6166(b)(6) Adjusted Gross Estate Computation | ||||
| Gross estate | 80,000,000.00 | |||
| Allowable §2053 and §2054 deductions | 7,180,000.00 | |||
| Section 6166(b)(6) adjusted gross estate | 72,820,000.00 | |||
| §6166(a)(2) Ratio Computation | ||||
| Section 6166 business value | 61,250,000.00 | |||
| Section 6166(b)(6) adjusted gross estate | 72,820,000.00 | |||
| Section 6166(a)(2) ratio - maximum amount of tax which may be paid in installments | 0.841115 | |||
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Section 6166(b)(2)(C) - Example 2 (Based on PLR 200339043)
Hypothetical Estate Tax Computation
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| 1 | Gross estate | 80,000,000.00 | ||||
| Schedules J, K, and L deductions | 7,180,000.00 | |||||
| Marital deduction | 0.00 | |||||
| Charitable deduction | 2,500,000.00 | |||||
| 2 | Total allowable deductions | 9,680,000.00 | ||||
| 3a | Tentative taxable estate | 70,320,000.00 | ||||
| 3b | State death tax deduction | 10,718,000.00 | ||||
| 3c | Taxable estate | 59,602,000.00 | ||||
| 4 | Adjusted taxable gifts | 0.00 | ||||
| 5 | Add lines 3c and 4 | 59,602,000.00 | ||||
| 6 | Tentative tax on the line 5 amount | 23,786,600.00 | ||||
| 7 | Total gift tax paid or payable | 0.00 | ||||
| 8 | Gross estate tax | 23,786,600.00 | ||||
| 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 | 21,660,800.00 | ||||
| 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 | 21,660,800.00 | ||||
| 17 | Generation-Skipping taxes payable | 0.00 | ||||
| 18 | Total transfer taxes | 21,660,800.00 | ||||
| Maximum Amount of Tax Which May be Paid in Installments | ||||||
| Net estate tax | 21,660,800.00 | |||||
| Section 6166(a)(2) ratio - maximum amount of tax which may be paid in installments | 0.841115 | |||||
| Maximum amount of tax which may be paid in installments | 18,219,223.79 | |||||
| Tax which may not be paid in installments and is due on the return due date | 3,441,576.21 | |||||