Complete Tax Computation Packages

Complete Tax Computation Packages are usually requested after a complex estate tax return with a section 6166 election has been adjusted a number of times by the IRS in response to supplemental returns filed by the estate, billing problems have occurred along the way, adjustments have not been properly incorporated in certain IRS adjustments, or a corrected computation is needed for the estate to:

  • Pay off the account before the end of the 6166 deferral period because of a termination under section 6166(g)(1), 6166(g)(2), or 6166(g)(3), or to voluntarily pay off the account by using an up-front interest deduction computation;
  • File a new or final supplemental return;
  • Settle litigation in the U.S. Tax Court or U.S. District Court; or,
  • Clear up computation errors and billing problems that have occurred in prior years.

Complete Tax Computation Packages consist of three parts.

1. A Statement of Account

This is a summary of all IRS assessments, payments, and abatements (or decreases) from the first payment or assessment to the current date. (A payment (TC 670) will precede the original tax assessment (TC 150) when the payment accompanies a Form 4768 requesting an automatic 6-month extension of time to file.) Another summary page shows how the account balances will appear after the IRS inputs the new prospective assessments and payments reflecting the current computations. The allocation of all payments between deferred and non-deferred tax and interest is shown, as is the computation of credits and payments against both portions of deferred tax, the non-deferred tax, interest, and any penalties or fees. Finally, a statement shows the adjusted amounts of tax and interest payable on the projected payment date, while a separate sheet shows the computer input numbers and posting codes the IRS terminal input operator should use to bring the IRS account in line with the computation results. Every assessment on the IRS transcript is reconciled with the line item tax computations in the Spreadsheet Computation portion. Transcript entries are explained.

2. Complete Spreadsheet Computations

This is a complete tax computation spreadsheet that brings each estate tax return line item number forward through all adjustments to the current date. It complements the Statement of Account. The figures on the return as filed and as assessed are the starting point for all subsequent adjustments. (There can be differences between the figures on the return and the figures actually assessed, which are often attributable to Cincinnati Campus math error corrections.)

Separate pages show the composition of the 6166 business interest value, the 6166(b)(6) adjusted gross estate calculation, Schedules J, K, and L deductions with and without deductible interest, summaries of all return schedules, and the corrected schedules for the current date.

A computer-generated Form 4349 is included.

This part of the package is informational in nature - it is not part of the field examination report prepared by IRS Estate Tax Attorneys and is not part of their workpapers. It is our presentation of background information and computations in relation to the IRS assessments on the estate tax account. In the past, this part of the package and the Statement of Account occasionally picked up errors in an IRS Estate Tax Attorney's proposed tax report, or a Cincinnati Campus proposed adjustment, and they adjusted their proposals accordingly.

Note that Cincinnati Campus will follow an IRS Estate Tax Attorney's field examination report unless an error is clearly identified.

3. A Separate Notebook-Style Tax Computation

These pages are presented in the same format as used by IRS Estate Tax Attorneys in their estate tax field examination reports. The tax is separately calculated in this portion of the package. It will show in examination report format the last-assessed figures on the estate account and the new figures to be assessed. Forms 1273, 6180, 886-A, and the waiver, Form 890, are included. They replicate but do not replace the Notebook computation forms that will be presented by the IRS Estate Tax Attorney.

The entire computation package of all 3 parts can run 30 pages or more, depending upon the complexity of the situation.