Section 6166(b)(2)(B) Computation Examples

Section 6166(b)(2)(B) Computation Examples
6166(b)(2)(B) Example 1Decedent and his wife each owned a 25% interest in Closely Held Business A. The estate tax value of Decedent's 25% interest is less than 35% of the §6166(b)(6) adjusted gross estate. While the wife's 25% interest is automatically attributed to Decedent by §6166(b)(2)(B) for purposes of determining the number of shareholders or partners, as the case may be, the wife's 25% interest cannot be added to Decedent's interest for purposes of satisfying the 35% threshold requirement of §6166(a)(1), and the estate tax value of Decedent's interest in A does not qualify for a §6166 extension.
6166(b)(2)(B) Example 2Facts in Example 1 are brought forward. At date of Death, Decedent also owned a 50% interest in Closely Held Business B. The combined value of both business interests exceeds 35% of the adjusted gross estate. However, §6166(c) requires that Decedent must have owned 20% or more of the total value of each business before their values can be combined to be treated as an interest in a single closely held business for purposes of §6166. Section 6166(b)(2)(B) does not address this problem (it is limited to determining the number of shareholders or partners).
 However, §6166(c) provides: "For purposes of this section, interest in 2 or more closely held businesses, with respect to each of which there is included in determining the value of the decedent's gross estate 20 percent or more of the total value of each such business, shall be treated as an interest in a single closely held business. For purposes of the 20-percent requirement of the preceding sentence, an interest in a closely held business which represents the surviving spouse's interest in property held by the decedent and the surviving spouse as community property or as joint tenants, tenants by the entirety, or tenants in common shall be treated as having been included in determining the value of the decedent's gross estate." The surviving spouse's percentage ownership interest in Business A is automatically attributed to Decedent for purposes of satisfying this 20% test. The combined business value qualifies under §6166(c) for a §6166 extension without the requirment of making a §6166(b)(7) election.