The regular §6166(b)(6) adjusted gross estate computation from Example 1 is brought forward and modified. Form 4768 is filed on the return due date of Nov-17-2016 to request an automatic 6-month extension of time to file. Estimated non-deferred tax of $2,500,000 is paid with Form 4768. A protective section 6161 extension of time to pay is also made. The return is filed on the 6-month extended due date of May-17-2017. The §6166 Notice of Election shows that the correct non-deferred tax is $2,803,802.19. The balance of non-deferred tax of $303,802.19 plus interest of $4,550.13 accrued thereon is paid with the return. The interest of $4,550.13 is interrelated with the Federal estate tax and is allowed as a deduction on Schedule J, and is included in the §6166(b)(6) adjusted gross estate computation because it was accrued on the date the return was filed.
The interest of $4,550.13 is calculated at regular underpayment interest rates of R% on the unpaid non-deferred tax and is immediately due and payable. Interest is also accrued on the tax deferred under section 6166 (2% on the first $592,000 of deferred tax and 45% of R% on the balance of deferred tax), but that interest is not payable (plus additional interest) until the 1st anniversary date of Nov-17-2017.
Section 6166(b)(6) Adjusted Gross Estate Computation - Example 2 | |
| Form 4768 is filed on the return due date of Nov-17-2016 to request an automatic 6-month extension of time to file. Estimated non-deferred tax of $2,500,000 is paid with Form 4768. A protective section 6161 extension of time to pay is also made. The return is filed on the 6-month extended due date of May-17-2017. The §6166 Notice of Election shows that the correct non-deferred tax is $2,803,802.19. The balance of non-deferred tax of $303,802.19 plus interest of $4,550.13 accrued thereon is paid with the return. The interest of $4,550.13 is interrelated with the Federal estate tax and is allowed as a deduction on Schedule J, and is included in the §6166(b)(6) adjusted gross estate computation. | |
| Feb-17-2016 | Date of death |
| Nov-17-2016 | Estate tax return due date. Form 4768 is filed to request an automatic 6-month extension of time to file. Estimated tax not eligible for deferral under section 6166 of $2,500,000 is paid with the Form 4768. |
| May-17-2017 | Estate tax return filing date. The section 6166 election statement shows the amount of tax not eligible for deferral is $2,803,802.19. The balance of non-deferred tax of $303,802.19 plus interest of $4,550.13 accrued thereon is paid with the return. |
| Section 6166(b)(6) Adjusted Gross Estate Computation - Example 2 | ||||||
|---|---|---|---|---|---|---|
| Gross estate | 50,000,000.00 | |||||
| Schedule J - | ||||||
| A. | Funeral expenses | 25,000.00 | ||||
| B. | 1. | Executors' commissions | 1,000,000.00 | |||
| 2. | Attorney fees | 1,400,000.00 | ||||
| 3. | Accountant fees | 415,000.00 | ||||
| 4. | Miscellaneous | |||||
| a. | Appraisals | 250,000.00 | ||||
| b. | Utilities | 14,375.00 | ||||
| c. | Other | 1,215.00 | ||||
| d. | Interest on balance of non-deferred tax | 4,550.13 | ||||
| Total Schedule J | 3,110,140.13 | |||||
| Schedule K - Debts | ||||||
| Debts of decedent | 144,535.00 | |||||
| Schedule K - Mortgages and Liens | ||||||
| Mortgages | 876,550.00 | |||||
| Total Schedule K | 1,021,085.00 | |||||
| Total Schedules J and K debts and expenses | 4,131,225.13 | |||||
| Allowable amount of deductions | 4,131,225.13 | |||||
| Schedule L - Net Losses | 0 | |||||
| Schedule L - Expenses on property not subject to claims | 0 | |||||
| Total Schedules J, K, and L debts and expenses | 4,131,225.13 | 4,131,225.13 | ||||
| Section 6166(b)(6) adjusted gross estate | 45,868,774.87 | |||||
| The $4,550.13 of interest accrued on the unpaid non-deferred tax is includible in the §6166(b)(6) adjusted gross estate computation because it is the amount that was accrued on the date the return was filed. This figure could change in response to a deficiency assessment or a change in the §6166(a)(2) ratio - it moves in tandem with whatever amount of unpaid non-deferred tax is finally determined to have been outstanding on the date the return was filed. | ||||||
Section 6166(b)(6) Adjusted Gross Estate Computation - Example 2 §6166(a)(2) Ratio Computation | ||
| Section 6166 business value, divided by | 37,500,000.00 | |
| Section 6166(b)(6) adjusted gross estate, yields | 45,868,774.87 | |
| Section 6166(a)(2) ratio for the maximum amount of tax which may be paid in installments | 0.817550 | |
Section 6166(b)(6) Adjusted Gross Estate Computation - Example 2 Estate Tax Computation | ||||
|---|---|---|---|---|
| 1 | Gross estate | 50,000,000.00 | ||
| Schedules J, K, and L deductions | 4,131,225.13 | |||
| Marital deduction | 0.00 | |||
| Charitable deduction | 2,000,000.00 | |||
| 2 | Total allowable deductions | 6,131,225.13 | ||
| 3a | Tentative taxable estate | 43,868,774.87 | ||
| 3b | State death tax deduction | 0.00 | ||
| 3c | Taxable estate | 43,868,774.87 | ||
| 4 | Adjusted taxable gifts | 0.00 | ||
| 5 | Add lines 3c and 4 | 43,868,774.87 | ||
| 6 | Tentative tax on the line 5 amount | 17,493,309.95 | ||
| 7 | Total gift tax paid or payable | 0.00 | ||
| 8 | Gross estate tax | 17,493,309.95 | ||
| 9a | Basic exclusion amount | 5,450,000.00 | ||
| 9b | DSUE amount | 0.00 | ||
| 9c | Applicable exclusion amount | 5,450,000.00 | ||
| 9d | Applicable credit amount | 2,125,800.00 | ||
| 10 | Adjustment to applicable credit amount | 0.00 | ||
| 11 | Allowable applicable credit amount | 2,125,800.00 | ||
| 12 | Subtract line 11 from line 8 | 15,367,509.95 | ||
| 13 | Credit for foreign death taxes | 0.00 | ||
| 14 | Credit for tax on prior transfers | 0.00 | ||
| 15 | Total credits | 0.00 | ||
| 16 | Net estate tax | 15,367,509.95 | ||
| 17 | Generation-Skipping taxes payable | 0.00 | ||
| 18 | Total transfer taxes | 15,367,509.95 | ||