# Section 6601(j) Example 1

 Section 6601(j) Example 1 Worksheet - Date of Death May-10-2016 1 Gross estate 30,000,000.00 2 Sections 2053 and 2054 deductions 2,750,000.00 3 Section 2056 or 2056A marital deduction 0.00 4 Section 2055 charitable deduction 3,000,000.00 5 Total deductions 5,750,000.00 6 Tentative taxable estate 24,250,000.00 7 State death tax deduction 3,344,000.00 8 Tentative taxable estate less state death tax deduction 20,906,000.00 9 Adjusted taxable gifts 0.00 10 Taxable estate 20,906,000.00 11 Tentative estate tax 8,308,200.00 12 Gift tax paid or payable 0.00 13 Gross estate tax 8,308,200.00 14 Applicable credit amount 2,125,800.00 15 Net estate tax 6,182,400.00 Determining the §6166(a)(2) Ratio 16 Gross estate 30,000,000.00 17 Sections 2053 and 2054 deductions 2,750,000.00 18 Section 6166(b)(6) adjusted gross estate 27,250,000.00 19 Closely held business value 20,000,000.00 20 Section 6166(a)(2) ratio for the maximum amount of tax which may be paid in installments 0.733945 Determining the Maximum Amount of Tax Which May be Paid in Installments 21 Net estate tax 6,182,400.00 22 Section 6166(a)(2) ratio for the maximum amount of tax which may be paid in installments 0.733945 23 Maximum amount of tax which may be paid in installments 4,537,541.57 24 Tax not deferred and payable on the return due date 1,644,858.43

 Section 6601(j) Example 1, Comment 1:   The line 23 amount is the maximum amount of tax which may be paid in installments. However, we cannot say what the annual installment is until we determine under which specific subsection in the election statement the tax is being deferred - §6166(a), §6166(b)(7), §6166(b)(8)(A), §6166(b)(8)(B)(ii), or §6166(b)(10).

 Section 6601(j) Example 1 Determining the §6601(j)(2) 2% and §6601(j)(1)(B) 45% of R% Portions of Deferred Tax §6166(a) §6166(b)(7) §6166(b)(8)(A) §6166(b)(8)(B)(ii) §6166(b)(10) §6601(j)(2) 2% portion of deferred tax 592,000.00 0.00 0.00 0.00 592,000.00 §6601(j)(1)(B) 45% of R% portion of deferred tax 3,945,541.57 4,537,541.57 4,537,541.57 4,537,541.57 3,945,541.57 Total deferred tax amount 4,537,541.57 4,537,541.57 4,537,541.57 4,537,541.57 4,537,541.57 Maximum number of annual installments 10 10 10 5 5 Annual installment 453,754.16 453,754.16 453,754.16 907,508.31 907,508.31

 Section 6601(j) Example 1, Comment 2:   The interplay among sections 6601(j) and 6166(a), 6166(b)(7), 6166(b)(8)(A), 6166(b)(8)(B)(ii), and 6166(b)(10) results in the table example shown above.

 Section 6601(j) Example 1 Determining the §6601(j) Interest Payable on the 1st Anniversary Date of Feb-10-2018 §6166(a) §6166(b)(7) §6166(b)(8)(A) §6166(b)(8)(B)(ii) §6166(b)(10) Total deferred tax 4,537,541.57 4,537,541.57 4,537,541.57 4,537,541.57 4,537,541.57 First installment due on the return due date of Feb-10-2017 0.00 453,754.16 453,754.16 907,508.31 907,508.31 Balance on which §6601(j) interest is computed to the 1st anniversary date of Feb-10-2018 4,537,541.57 4,083,787.41 4,083,787.41 3,630,033.26 3,630,033.26 §6601(j)(2) portion at 2% rate 592,000.00 0.00 0.00 0.00 473,600.00 §6601(j)(1)(B) portion at 45% of R% rate 3,945,541.57 4,083,787.41 4,083,787.41 3,630,033.26 3,156,433.26 §6601(j)(2) 2% interest due 11,958.86 0.00 0.00 0.00 9,567.09 §6601(j)(1)(B) 45% of R% interest due 71,660.99 74,171.89 74,171.89 65,930.57 57,328.79 Total interest due Feb-10-2018 83,619.85 74,171.89 74,171.89 65,930.57 66,895.88 2nd installment due 0.00 453,754.16 453,754.16 907,508.31 907,508.31 Total amount due Feb-10-2018 83,619.85 527,926.05 527,926.05 973,438.88 974,404.19

 Section 6601(j) Example 1, Comment 3:   If the first installment due on the return due date was not paid then, but was paid with the return filed on an extended filing due date 6 months later, interest due on that first installment (from the return due date through the payment date 6 months later) would be calculated pursuant to section 6621, not section 6601(j). See Rev. Rul. 89-32, 1989-1 C.B. 307.