Annual Installment Example 1

Annual Installment Example 1
Feb-17-2016	Date of death
Nov-17-2016	Estate tax return due date. The return is filed with a regular section 6166(a) 14-year election. Non-deferred tax of $2,805,379.17 is paid with the return filing.
	There is a charitable bequest of $2,000,000.

Annual Installment Computation - Example 1 §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
	Total Schedule J				3,105,590.00
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					4,126,675.00
Allowable amount of deductions					4,126,675.00
Schedule L - Net Losses					0.00
Schedule L - Expenses on property not subject to claims					0.00
Total Schedules J, K, and L debts and expenses					4,126,675.00	4,126,675.00
Section 6166(b)(6) adjusted gross estate						45,873,325.00

Annual Installment Computation - Example 1 §6166(a)(2) Ratio Computation
Section 6166 business value, divided by				37,500,000.00
Section 6166(b)(6) adjusted gross estate, yields				45,873,325.00
Section 6166(a)(2) ratio for the maximum amount of tax which may be paid in installments				0.817469

Annual Installment Computation - Example 1 Estate Tax Computation
1	Gross estate			50,000,000.00
		Schedules J, K, and L deductions	4,126,675.00
		Marital deduction	0.00
		Charitable deduction	2,000,000.00
2	Total allowable deductions			6,126,675.00
3a	Tentative taxable estate			43,873,325.00
3b	State death tax deduction			0.00
3c	Taxable estate			43,873,325.00
4	Adjusted taxable gifts			0.00
5	Add lines 3c and 4			43,873,325.00
6	Tentative tax on the line 5 amount			17,495,130.00
7	Total gift tax paid or payable			0.00
8	Gross estate tax			17,495,130.00
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			15,369,330.00
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			15,369,330.00
17	Generation-Skipping taxes payable			0.00
18	Total transfer taxes			15,369,330.00

Annual Installment Computation - Example 1 §6166(a) Annual Installment
Net estate tax (equal to total transfer taxes in this example)	15,369,330.00
Section 6166(a)(2) ratio expressed as a percentage	81.7469%
Maximum amount of tax which may be paid in installments under §6166	12,563,950.83
Number of installments selected	10
The annual installment, the first of which is due Nov-17-2021	1,256,395.08

Section 6166