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owners, lessees, and employees date, the IRS may terminate the right to Making the election. If you check operating the farm. make installment payments and force this line to make a final election, you an acceleration of payment of the tax must attach the notice of election Holding company stock. The upon notice and demand. described in Regulations section executor may elect to treat as business 20.6166-1(b). If you check this line to company stock the portion of any Generally, if any portion of the make a protective election, you must holding company stock that represents interest in the closely held business attach a notice of protective election as direct ownership (or indirect ownership which qualifies for installment payments described in Regulations section through one or more other holding is distributed, sold, exchanged, or 20.6166-1(d). Regulations section companies) in a business company. A otherwise disposed of, or money and 20.6166-1(b) requires that the notice of holding company is a corporation other property attributable to such an election is made by attaching to a holding stock in another corporation. A interest is withdrawn, and the timely filed estate tax return the business company is a corporation aggregate of those events equals or following information: carrying on a trade or business. exceeds 50% of the value of the • The decedent’s name and taxpayer interest, then the right to make In general, this election applies only identification number as they appear on installment payments will be to stock that is not readily tradable. the estate tax return; terminated, and the unpaid portion of However, the election can be made if • The amount of tax that is to be paid the tax will be due upon notice and the business company stock is readily in installments; demand. See section 6166(g). tradable, as long as all of the stock of • The date selected for payment of the each holding company is not readily Interest computation. A special first installment; tradable. interest rate applies to installment • The number of annual installments, For purposes of the 20% voting payments. For decedents dying in including first installment, in which the stock requirement, stock is treated as 2011, the interest rate is 2% on the tax is to be paid; voting stock to the extent the holding lesser of: • The properties shown on the estate company owns voting stock in the • $476,000 or tax return that are the closely held business company. • The amount of the estate tax that is business interest (identified by attributable to the closely held business schedule and item number); and If the executor makes this election, and that is payable in installments. • The facts that formed the basis for the first installment payment is due the executor’s conclusion that the when the estate tax return is filed. The 2% portion. The 2% portion is an estate qualifies for payment of the 5-year deferral for payment of the tax, amount equal to the amount of the estate tax in installments. as discussed below under Time for tentative estate tax (on $1,000,000 plus payment, does not apply. In addition, You may also elect to pay certain the applicable exclusion amount in the 2% interest rate, discussed below GST taxes in installments. See section effect) minus the applicable credit under Interest computation, will not 6166(i). amount in effect. However, if the apply. Also, if the business company amount of estate tax extended under Line 4. Reversionary or stock is readily tradable, as explained section 6166 is less than the amount above, the tax must be paid in five Remainder Interests figured above, the 2% portion is the installments. lesser amount. For details of this election, see section Determine how much of the estate 6163 and the related regulations. Inflation adjustment. The tax may be paid in installments $1,000,000 amount used to calculate under section 6166. To determine the 2% portion is indexed for inflation whether the election may be made, you Part 4—General for the estates of decedents dying in a must calculate the adjusted gross calendar year after 1998. For an estate Information estate. (See Line 3 Worksheet— of a decedent dying in calendar year Adjusted Gross Estate below.) To 2011, the dollar amount used to determine the value of the adjusted Authorization determine the “2% portion” of the estate gross estate, subtract the deductions Completing the authorization will tax payable in installments under (Schedules J, K, and L) from the value authorize one attorney, accountant, or section 6166 is $1,360,000. of the gross estate. enrolled agent to represent the estate Computation. Interest on the and receive confidential tax information, To determine over how many portion of the tax in excess of the 2% but will not authorize the representative installments the estate tax may be paid, portion is figured at 45% of the annual to enter into closing agreements for the please refer to sections 6166(a), (b)(7), rate of interest on underpayments. This estate. (b)(8), and (b)(10). rate is based on the federal short-term Note. If you wish to represent the Time for payment. Under the rate and is announced quarterly by the estate, you must complete and sign the installment method, the executor may IRS in the Internal Revenue Bulletin. authorization. elect to defer payment of the qualified If you elect installment payments estate tax, but not interest, for up to 5 If you wish to authorize persons and the estate tax due is more than the years from the original payment due other than attorneys, accountants, and maximum amount to which the 2% date. After the first installment of tax is enrolled agents, or if you wish to interest rate applies, each installment paid, you must pay the remaining authorize more than one person to payment is deemed to comprise both installments annually by the date 1 year receive confidential information or tax subject to the 2% interest rate and after the due date of the preceding represent the estate, you must tax subject to 45% of the regular installment. There can be no more than complete and attach Form 2848. You underpayment rate. The amount of 10 installment payments. must also complete and attach Form each installment that is subject to the Interest on the unpaid portion of the 2848 if you wish to authorize someone 2% rate is the same as the percentage tax is not deferred and must be paid to enter into closing agreements for the of total tax payable in installments that annually. Interest must be paid at the estate. Filing a completed Form 2848 is subject to the 2% rate. same time as and as a part of each with this return may expedite installment payment of the tax. processing of the Form 706. The interest paid on installment Acceleration of payments. If the payments is not deductible as If you wish only to authorize estate fails to make payments of tax or an administrative expense of the someone to inspect and/or receive CAUTION ! interest within 6 months of the due estate. confidential tax information (but not to -12- Part Instructions