Last Updated: 26 March 2014
§ 6166. Extension of time for payment of estate tax where estate consists
largely of interest in closely held business
. . .
(b) Definitions and special rules
. . .
(8) Stock in holding company treated as business company stock in certain cases
(A) In general
If the executor elects the benefits of this paragraph, then—
(i) Holding company stock treated as business company stock
For purposes of this section, the portion of the stock of any holding company which
represents direct ownership (or indirect ownership through 1 or more other holding
companies) by such company in a business company shall be deemed to be stock in such
(ii) 5-year deferral for principal not to apply
The executor shall be treated as having selected under subsection (a)(3) the date
prescribed by section 6151(a).
(iii) 2-percent interest rate not to apply
For purposes of applying section 6601(j), the 2-percent portion (as defined in such
section) shall be treated as being zero.
(B) All stock must be non-readily-tradable stock
(i) In general
No stock shall be taken into account for purposes of applying this paragraph unless it
is non-readily-tradable stock (within the meaning of paragraph (7)(B)).
(ii) Special application where only holding company stock is non-readily-tradable
If the requirements of clause (i) are not met, but all of the stock of each holding
company taken into account is non-readily- tradable, then this paragraph shall apply, but
subsection (a)(1) shall be applied by substituting ‘‘5’’ for ‘‘10’’.
(C) Application of voting stock requirement of paragraph (1)(C)(i)
For purposes of clause (i) of paragraph (1)(C), the deemed stock resulting from the
application of subparagraph (A) shall be treated as voting stock to the extent that voting
stock in the holding company owns directly (or through the voting stock of 1 or more
other holding companies) voting stock in the business company.
For purposes of this paragraph—
(i) Holding company
The term ‘‘holding company’’ means any corporation holding stock in another
(ii) Business company
The term ‘‘business company’’ means any corporation carrying on a trade or business.