Notice 2020-23 Computation Example 4, Comment 1:  The section 6166(b)(6) adjusted gross estate is unchanged from that computed on the original section 6166 account, even though the total Schedules J, K, and L deductions are increased by the interrelated interest deduction for the section 6621 interest the estate paid on Jul-15-2020.

This result occurs because the section 6621 interest was paid for an event and computation period occurring after the original estate tax return was filed, and was not incurred as part of a normal examination adjstment of the figures reported on the return. Expenses for post-filing events solely related to a supplemental estate tax return are not included in the section 6166(b)(6) adjusted gross estate computation. They are included, however, in the estate tax computation for such supplemental return.

This is a situation where the percentage of tax extended under a section 6166 election remains constant while the tax itself changes. This process also prevents an estate that might be mathematically ineligible for a section 6166 extension based on the original return figures from "boot-strapping" itself into qualifying by exceeding the 35% threshold requirement of section 6166(a)(2) simply by increasing the interest deduction alone.

Notice 2020-23 Computation Example 4, Comment 2:  The supplemental return reduced the estate tax and the tax extended under section 6166. The annual installment was therefore reduced, as was the interest due on each anniversary date up through Jul-15-2020. This creates a series of interest overpayments and, from 2017 forward, tax overpayments. The section 6601(j)(4) allocation ratios apply to each overpayment of interest and tax to reduce the portions of extended tax for each subsequent interest computation period through Jul-15-2020, as summarized in the table below.

Notice 2020-23 Computation Example 4, Comment 3:  Section 6166(f)(2) provides that interest payable under section 6601 on any installments of tax due under a section 6166 election 

"shall be paid annually at the same time as, and as a part of, each installment payment of the tax."

Section 6161(a)(2)(B) provides that a request for an extension of time to pay may be for -

(B) any part of any installment under section 6166 (including any part of a deficiency prorated to any installment under such section).

for a reasonable period not in excess of 10 years from the date prescribed by section 6151(a) for payment of the tax (or, in the case of an amount referred to in subparagraph (B), if later, not beyond the date which is 12 months after the due date for the last installment).

An "installment of tax" therefore includes the interest due on such installment.

Notice 2020-23 Computation Example 4, Comment 4:  The section 6621 interest due May-25-2020 and paid Jul-15-2020 is reduced from the amount paid to the interrelated amount due after it is allowed as a deduction on Schedule J. This interest cannot be deducted on Form 1041. See CCA 200836027.

The resulting overpayment of $1,420.43 is allocated pro rata (pursuant to section 6601(j)(4)) to the unpaid portions of tax extended under the section 6166 election (as are the other overpayments shown above).