| Section 6166(c) - Example 2 |
| Decedent died in 2016 owning an interest in 2 closely held businesses. The Decedent's estate wishes to make a §6166 election for the combined value of the two businesses. |
| Business 1: Full value is $40,000,000. Decedent owned 20% of the business. There are fewer than 45 partners or shareholders. After valuation discounts of 35%, the estate tax value of the decedent's interest is 13.00% of the full value of the closely held business, which means it is not eligible for aggregation under §6166(c). However, the estate tax value of this business alone is 43.0820% of the adjusted gross estate, which means that a §6166 election could be made for this business alone. |
| Business 2: Full value is $12,500,000. Decedent owned 30% of the business. There are fewer than 45 partners or shareholders. After valuation discounts of 30%, the estate tax value is 22.75% of the total business value, which means it is eligible for aggregation under §6166(c). However, the estate tax value of this business alone is 23.5605% of the adjusted gross estate, which means that a §6166 election cannot be made for this business alone. |
| Total Value of Closely Held Business |
Percentage Owned by Decedent |
Gross Value of Decedent's Interest Before Discounts |
Total Valuation Discounts |
Value Included in Decedent's Gross Estate |
Estate Tax Value as a Percentage of Total Value |
| 40,000,000.00 |
20.00% |
8,000,000.00 |
35% |
5,200,000.00 |
13.00% |
| 12,500,000.00 |
32.50% |
4,062,500.00 |
30% |
2,843,750.00 |
22.75% |
| Gross estate |
14,750,000.00 |
| Allowable §2053 and §2054 deductions |
2,680,000.00 |
| §6166(b)(6) adjusted gross estate |
12,070,000.00 |
| Business 1 - Section 6166(c) is Not Available, But Section 6166(a) is Available |
| Closely held Business 1 with 13.00% of full value included in the gross estate |
5,200,000.00 |
| §6166(a)(2) ratio for the maximum amount of tax which may be paid in installments for Business 1 alone |
.430820 |
| Business 2 - Section 6166(c) is Available, But Section 6166(a) is Not Available |
| Closely held Business 2 with 22.75% of full value included in the gross estate |
2,843,750.00 |
| §6166(a)(2) ratio for the maximum amount of tax which may be paid in installments for Business 2 alone |
.235605 |
| Conclusion: Section 6166(c) Aggregation is Not Available |
| Taxable estate (which in this case happens to be the same as the adjusted gross estate) |
12,070,000.00 |
| Net estate tax |
2,648,000.00 |
| §6166(a)(2) ratio for the maximum amount of tax which may be paid in installments for Business 1 alone |
.430820 |
| Maximum amount of tax which may be paid in installments |
1,140,811.36 |
| Estate tax not deferred under §6166 and due on the return due date (determined without regard to any extensions of time to file) |
1,507,188.64 |