Section 6166(b)(2)(B) Example 1

Section 6166(b)(2)(B) - Example 1 Closely Held Business Ownership
Full value of Closely Held Business A				50,000,000.00
50% owned by Decedent's brother				25,000,000.00
25% owned by Decedent				12,500,000.00
25% owned by Decedent's wife				12,500,000.00
Closely Held Business Value Included in Decedent's Gross Estate
25% interest owned by Decedent at the proportionate full value				12,500,000.00
Total valuation discount				25%
Estate tax value of Decedent's interest in Closely Held Business A				9,375,000.00
§6166(a)(2) Ratio Computation
Section 6166 business value				9,375,000.00
Section 6166(b)(6) adjusted gross estate				27,250,000.00
Section 6166(a)(2) ratio - maximum amount of tax which may be paid in installments - Does Not Qualify for §6166 Extension - ratio is less than 0.350000				0.344037

6166(b)(2)(B) Example 1, Comment 1: Section 6166(b)(2)(B) automatically attributes the wife's 25% ownership interest to the Decedent for purposes of paragraph (1), which defines an interest in a closely held business, so that the stock or partnership interests they hold shall be treated as owned by one shareholder or one partner, as the case may be. The wife's 25% interest is attributed to Decedent solely for purposes of determining the total number of partners or shareholders.

6166(b)(2)(B) Example 1, Comment 2: Consequently, the value of the wife's 25% interest cannot be added to the value of Decedent's interest for purposes of computing the estate tax. Section 6166(a)(1) provides that only the value of a closely held business interest that is included in a decedent's gross estate can be included in the amount qualifying for a §6166 extension. Section 2033 provides that "[t]he value of the gross estate shall include the value of all property to the extent of the interest therein of the decedent at the time of his death." The estate tax value of Decedent's interest in the closely held business does not exceed 35% of the adjusted gross estate as required by §6166(a)(1), and therefore does not qualify for a §6166 extension even though his wife owns an equivalent interest in the same business.