Article on IRC Section 6166 for the Family Business

Jessica Galligan Goldsmith & David Y. Choi recently published an Article entitled, Saving the Store: Lifetime Planning for Business Owners Using IRC Section 6166, Tr. & Est. 14 (Apr. 2017). Provided below is an abstract of the Article:

Internal Revenue Code Section 6166 is one of the most favorable sections for taxpayers who own closely held businesses. Attorneys who represent business owners must understand the technical rules that apply with respect to IRC Section 6166. Many decedents who could qualify for deferral of federal estate tax under Section 6166 (6166 deferral) will miss this opportunity solely due to a lack of lifetime planning. Without Section 6166 planning, a family business may need to be sold to pay estate taxes.

Section 6166 provides a statutory right for an executor of a qualifying estate to make one of four different elections (each a 6166 election) on a timely filed federal estate tax return, including valid extensions thereto. A 6166 election extends the time for paying the federal estate tax on a decedent’s closely held business interests. As long as an estate makes a timely election under Section 6166, the Internal Revenue Service can’t deny the extension of time to pay such federal estate tax that would otherwise be due by the payment date.