Form 4349 - Computation of Estate Tax Due With Return and Annual Installment

Form 4349 is an internal form used by IRS at Cincinnati Campus for calculating the amount of tax deferred under section 6166. This form - or an analogue - is also used by IRS Appeals when settling estate tax cases (the link to Form 4349, above, shows an example using our computer-generated spreadsheet form). 

Appeals IRM Exhibit 8.7.4-1 shows how Form 4349 is to be prepared if one is necessary. Note that in the Exhibit example, the line 2a deferred tax is calculated with reference to "Adjusted gross estate (IRC 6166(b)(8) or IRC 6166(b)(10) - 10 year/ 5 year election)".  Section 6166(b)(7) should also be referenced in this line's text. In our opinion, "section 6166(b)(7)" was omitted merely for purposes of forms design aesthetics - inserting "section 6166(b)(7)" would cause the line 2a text to spill over into 2 lines, which would then cause the height of row 2a to expand out of sync with the height of the other numbered rows on the Form. It is understood within IRS that section 6166(b)(7) is included on line 2a.

Note that Appeals can settle a case with any 6166(a)(2) ratio it desires, even one that is less than the 35% threshold required by section 6166(a)(1). However, if an estate cannot reach a settlement with Appeals when a low qualifying ratio has been proposed, a court would require that the closely held business value exceed 35% of the section 6166(b)(6) adjusted gross estate in order to qualify for a section 6166 election.

Further, see e.g. the following Appeals IRM sections:

IRM (07-30-2019) Closing Estate Tax Cases with an Undisputed 6166 Election;

IRM (07-30-2019) Settlement Computations in Estate Tax Cases; and

IRM (08-18-2014) Settlement Computations with IRC 6166.

Form 4349, Comment 1:  Lines 8a and 8b are captioned "Due with return - " and show either: 

  • the amount of the non-deferred tax plus the first installment of extended tax due 9 months after date of death for a 6166(b)(7), 6166(b)(8), or a 6166 (b)(10) election (line 8a); or -
  • the amount of the non-deferred tax due 9 months after date of death for a regular 14-year section 6166(a) election (line 8b).

The phrase "Due with return" might be misleading when an estate requests an automatic 6-month extension of time to file the return on Form 4768 (section 6081). While the automatic 6-month extension of time to file does indeed extend the time to file the return until 15 months after date of death, the amounts calculated on lines 8a or 8b nevertheless remain payable on the statutory return due date 9 months after date of death (sections 6151(a); 6075(a); 6166(a)(3); 6166(b)(7)(A)(ii); 6166(b)(8)(A)(ii); and 6166(b)(10)(A)(ii)).