26 U.S.C. § 6166 — Extension of time for payment of estate

Page 3506 TITLE 26—INTERNAL REVENUE CODE § 6165 (f) Termination The Secretary is not required to make any ex- amination of the statement, but he may make such examination thereof as he deems necessary and practicable. The Secretary shall terminate the extension as to any part of the amount to which it relates which he deems should be ter- minated because, upon such examination, he be- lieves that, as of the time such examination is made, all or any part of the statement clearly is in a material respect erroneous or unreasonable. (g) Payments on termination If an extension of time is terminated under subsection (e) or (f) with respect to any amount, then— (1) no further extension of time shall be made under this section with respect to such amount, and (2) the time for payment of such amount shall be considered to be the date on which payment would have been required if there had been no extension with respect to such amount. (h) Jeopardy If the Secretary believes that collection of the amount to which an extension under this section relates is in jeopardy, he shall immediately ter- minate such extension, and notice and demand shall be made by him for payment of such amount. (i) Consolidated returns If the corporation seeking an extension of time under this section made or was required to make a consolidated return, either for the tax- able year within which the net operating loss arises or for the preceding taxable year affected by such loss, the provisions of such section shall apply only to such extent and subject to such conditions, limitations, and exceptions as the Secretary may by regulations prescribe. (Aug. 16, 1954, ch. 736, 68A Stat. 764; Pub. L. 85–866, title I, § 89(b), Sept. 2, 1958, 72 Stat. 1665; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–248, title II, § 234(b)(2)(C), Sept. 3, 1982, 96 Stat. 503.) Editorial Notes AMENDMENTS 1982—Subsec. (c). Pub. L. 97–248, § 234(b)(2)(C)(i), sub- stituted ‘‘shall be the date on which payment would have been required if such remainder had been the tax’’ for ‘‘shall be considered to be the dates on which pay- ments would have been required if such remainder had been the tax and the taxpayer had elected to pay the tax in installments as provided in section 6152’’ in last sentence. Subsec. (g)(2). Pub. L. 97–248, § 234(b)(2)(C)(ii), sub- stituted ‘‘date on which payment would have been re- quired if there had been no extension with respect to such amount’’ for ‘‘dates on which payments would have been required if there had been no extension with respect to such amount and the taxpayer had elected to pay the tax in installments as provided in section 6152’’. 1976—Subsecs. (a), (b), (d), (f), (h), (i). Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ wher- ever appearing. 1958—Subsec. (d)(2). Pub. L. 85–866 inserted ‘‘certified mail or’’ before ‘‘registered mail’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1982 AMENDMENT Amendment by Pub. L. 97–248 applicable to taxable years beginning after Dec. 31, 1982, see section 234(e) of Pub. L. 97–248, set out as a note under section 6655 of this title. EFFECTIVE DATE OF 1958 AMENDMENT Amendment by Pub. L. 85–866 applicable only if mail- ing occurs after Sept. 2, 1958, see section 89(d) of Pub. L. 85–866, set out as a note under section 7502 of this title. § 6165. Bonds where time to pay tax or deficiency has been extended In the event the Secretary grants any exten- sion of time within which to pay any tax or any deficiency therein, the Secretary may require the taxpayer to furnish a bond in such amount (not exceeding double the amount with respect to which the extension is granted) conditioned upon the payment of the amount extended in ac- cordance with the terms of such extension. (Aug. 16, 1954, ch. 736, 68A Stat. 766; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) Editorial Notes AMENDMENTS 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ wherever appearing. § 6166. Extension of time for payment of estate tax where estate consists largely of interest in closely held business (a) 5-year deferral; 10-year installment payment (1) In general If the value of an interest in a closely held business which is included in determining the gross estate of a decedent who was (at the date of his death) a citizen or resident of the United States exceeds 35 percent of the adjusted gross estate, the executor may elect to pay part or all of the tax imposed by section 2001 in 2 or more (but not exceeding 10) equal install- ments. (2) Limitation The maximum amount of tax which may be paid in installments under this subsection shall be an amount which bears the same ratio to the tax imposed by section 2001 (reduced by the credits against such tax) as— (A) the closely held business amount, bears to (B) the amount of the adjusted gross es- tate. (3) Date for payment of installments If an election is made under paragraph (1), the first installment shall be paid on or before the date selected by the executor which is not more than 5 years after the date prescribed by section 6151(a) for payment of the tax, and each succeeding installment shall be paid on or before the date which is 1 year after the date prescribed by this paragraph for payment of the preceding installment. Page 3507 TITLE 26—INTERNAL REVENUE CODE § 6166 (b) Definitions and special rules (1) Interest in closely held business For purposes of this section, the term ‘‘in- terest in a closely held business’’ means— (A) an interest as a proprietor in a trade or business carried on as a proprietorship; (B) an interest as a partner in a partner- ship carrying on a trade or business, if— (i) 20 percent or more of the total capital interest in such partnership is included in determining the gross estate of the dece- dent, or (ii) such partnership had 45 or fewer partners; or (C) stock in a corporation carrying on a trade or business if— (i) 20 percent or more in value of the vot- ing stock of such corporation is included in determining the gross estate of the de- cedent, or (ii) such corporation had 45 or fewer shareholders. (2) Rules for applying paragraph (1) For purposes of paragraph (1)— (A) Time for testing Determinations shall be made as of the time immediately before the decedent’s death. (B) Certain interests held by husband and wife Stock or a partnership interest which— (i) is community property of a husband and wife (or the income from which is community income) under the applicable community property law of a State, or (ii) is held by a husband and wife as joint tenants, tenants by the entirety, or ten- ants in common, shall be treated as owned by one shareholder or one partner, as the case may be. (C) Indirect ownership Property owned, directly or indirectly, by or for a corporation, partnership, estate, or trust shall be considered as being owned pro- portionately by or for its shareholders, part- ners, or beneficiaries. For purposes of the preceding sentence, a person shall be treated as a beneficiary of any trust only if such per- son has a present interest in the trust. (D) Certain interests held by members of de- cedent’s family All stock and all partnership interests held by the decedent or by any member of his family (within the meaning of section 267(c)(4)) shall be treated as owned by the de- cedent. (3) Farmhouses and certain other structures taken into account For purposes of the 35-percent requirement of subsection (a)(1), an interest in a closely held business which is the business of farming includes an interest in residential buildings and related improvements on the farm which are occupied on a regular basis by the owner or lessee of the farm or by persons employed by such owner or lessee for purposes of oper- ating or maintaining the farm. (4) Value For purposes of this section, value shall be value determined for purposes of chapter 11 (relating to estate tax). (5) Closely held business amount For purposes of this section, the term ‘‘closely held business amount’’ means the value of the interest in a closely held business which qualifies under subsection (a)(1). (6) Adjusted gross estate For purposes of this section, the term, ‘‘ad- justed gross estate’’ means the value of the gross estate reduced by the sum of the amounts allowable as a deduction under sec- tion 2053 or 2054. Such sum shall be determined on the basis of the facts and circumstances in existence on the date (including extensions) for filing the return of tax imposed by section 2001 (or, if earlier, the date on which such re- turn is filed). (7) Partnership interests and stock which is not readily tradable (A) In general If the executor elects the benefits of this paragraph (at such time and in such manner as the Secretary shall by regulations pre- scribe), then— (i) for purposes of paragraph (1)(B)(i) or (1)(C)(i) (whichever is appropriate) and for purposes of subsection (c), any capital in- terest in a partnership and any non-read- ily-tradable stock which (after the applica- tion of paragraph (2)) is treated as owned by the decedent shall be treated as in- cluded in determining the value of the de- cedent’s gross estate, (ii) the executor shall be treated as hav- ing selected under subsection (a)(3) the date prescribed by section 6151(a), and (iii) for purposes of applying section 6601(j), the 2-percent portion (as defined in such section) shall be treated as being zero. (B) Non-readily-tradable stock defined For purposes of this paragraph, the term ‘‘non-readily-tradable stock’’ means stock for which, at the time of the decedent’s death, there was no market on a stock ex- change or in an over-the-counter market. (8) Stock in holding company treated as busi- ness company stock in certain cases (A) In general If the executor elects the benefits of this paragraph, then— (i) Holding company stock treated as busi- ness company stock For purposes of this section, the portion of the stock of any holding company which represents direct ownership (or indirect ownership through 1 or more other holding companies) by such company in a business company shall be deemed to be stock in such business company. Page 3508 TITLE 26—INTERNAL REVENUE CODE § 6166 (ii) 5-year deferral for principal not to apply The executor shall be treated as having selected under subsection (a)(3) the date prescribed by section 6151(a). (iii) 2-percent interest rate not to apply For purposes of applying section 6601(j), the 2-percent portion (as defined in such section) shall be treated as being zero. (B) All stock must be non-readily-tradable stock (i) In general No stock shall be taken into account for purposes of applying this paragraph unless it is non-readily-tradable stock (within the meaning of paragraph (7)(B)). (ii) Special application where only holding company stock is non-readily-tradable stock If the requirements of clause (i) are not met, but all of the stock of each holding company taken into account is non-read- ily-tradable, then this paragraph shall apply, but subsection (a)(1) shall be applied by substituting ‘‘5’’ for ‘‘10’’. (C) Application of voting stock requirement of paragraph (1)(C)(i) For purposes of clause (i) of paragraph (1)(C), the deemed stock resulting from the application of subparagraph (A) shall be treated as voting stock to the extent that voting stock in the holding company owns directly (or through the voting stock of 1 or more other holding companies) voting stock in the business company. (D) Definitions For purposes of this paragraph— (i) Holding company The term ‘‘holding company’’ means any corporation holding stock in another cor- poration. (ii) Business company The term ‘‘business company’’ means any corporation carrying on a trade or business. (9) Deferral not available for passive assets (A) In general For purposes of subsection (a)(1) and deter- mining the closely held business amount (but not for purposes of subsection (g)), the value of any interest in a closely held busi- ness shall not include the value of that por- tion of such interest which is attributable to passive assets held by the business. (B) Passive asset defined For purposes of this paragraph— (i) In general The term ‘‘passive asset’’ means any asset other than an asset used in carrying on a trade or business. (ii) Stock treated as passive asset The term ‘‘passive asset’’ includes any stock in another corporation unless— (I) such stock is treated as held by the decedent by reason of an election under paragraph (8), and (II) such stock qualified under sub- section (a)(1). (iii) Exception for active corporations If— (I) a corporation owns 20 percent or more in value of the voting stock of an- other corporation, or such other corpora- tion has 45 or fewer shareholders, and (II) 80 percent or more of the value of the assets of each such corporation is at- tributable to assets used in carrying on a trade or business, then such corporations shall be treated as 1 corporation for purposes of clause (ii). For purposes of applying subclause (II) to the corporation holding the stock of the other corporation, such stock shall not be taken into account. (10) Stock in qualifying lending and finance business treated as stock in an active trade or business company (A) In general If the executor elects the benefits of this paragraph, then— (i) Stock in qualifying lending and finance business treated as stock in an active trade or business company For purposes of this section, any asset used in a qualifying lending and finance business shall be treated as an asset which is used in carrying on a trade or business. (ii) 5-year deferral for principal not to apply The executor shall be treated as having selected under subsection (a)(3) the date prescribed by section 6151(a). (iii) 5 equal installments allowed For purposes of applying subsection (a)(1), ‘‘5’’ shall be substituted for ‘‘10’’. (B) Definitions For purposes of this paragraph— (i) Qualifying lending and finance business The term ‘‘qualifying lending and fi- nance business’’ means a lending and fi- nance business, if— (I) based on all the facts and cir- cumstances immediately before the date of the decedent’s death, there was sub- stantial activity with respect to the lending and finance business, or (II) during at least 3 of the 5 taxable years ending before the date of the dece- dent’s death, such business had at least 1 full-time employee substantially all of whose services were the active manage- ment of such business, 10 full-time, non- owner employees substantially all of whose services were directly related to such business, and $5,000,000 in gross re- ceipts from activities described in clause (ii). (ii) Lending and finance business The term ‘‘lending and finance business’’ means a trade or business of— Page 3509 TITLE 26—INTERNAL REVENUE CODE § 6166 (I) making loans, (II) purchasing or discounting accounts receivable, notes, or installment obliga- tions, (III) engaging in rental and leasing of real and tangible personal property, in- cluding entering into leases and pur- chasing, servicing, and disposing of leases and leased assets, (IV) rendering services or making fa- cilities available in the ordinary course of a lending or finance business, and (V) rendering services or making facili- ties available in connection with activi- ties described in subclauses (I) through (IV) carried on by the corporation ren- dering services or making facilities available, or another corporation which is a member of the same affiliated group (as defined in section 1504 without regard to section 1504(b)(3)). (iii) Limitation The term ‘‘qualifying lending and fi- nance business’’ shall not include any in- terest in an entity, if the stock or debt of such entity or a controlled group (as de- fined in section 267(f)(1)) of which such en- tity was a member was readily tradable on an established securities market or sec- ondary market (as defined by the Sec- retary) at any time within 3 years before the date of the decedent’s death. (c) Special rule for interest in 2 or more closely held businesses For purposes of this section, interest in 2 or more closely held businesses, with respect to each of which there is included in determining the value of the decedent’s gross estate 20 per- cent or more of the total value of each such business, shall be treated as an interest in a sin- gle closely held business. For purposes of the 20- percent requirement of the preceding sentence, an interest in a closely held business which rep- resents the surviving spouse’s interest in prop- erty held by the decedent and the surviving spouse as community property or as joint ten- ants, tenants by the entirety, or tenants in com- mon shall be treated as having been included in determining the value of the decedent’s gross es- tate. (d) Election Any election under subsection (a) shall be made not later than the time prescribed by sec- tion 6075(a) for filing the return of tax imposed by section 2001 (including extensions thereof), and shall be made in such manner as the Sec- retary shall by regulations prescribe. If an elec- tion under subsection (a) is made, the provisions of this subtitle shall apply as though the Sec- retary were extending the time for payment of the tax. (e) Proration of deficiency to installments If an election is made under subsection (a) to pay any part of the tax imposed by section 2001 in installments and a deficiency has been as- sessed, the deficiency shall (subject to the limi- tation provided by subsection (a)(2)) be prorated to the installments payable under subsection (a). The part of the deficiency so prorated to any installment the date for payment of which has not arrived shall be collected at the same time as, and as a part of, such installment. The part of the deficiency so prorated to any installment the date for payment of which has arrived shall be paid upon notice and demand from the Sec- retary. This subsection shall not apply if the de- ficiency is due to negligence, to intentional dis- regard of rules and regulations, or to fraud with intent to evade tax. (f) Time for payment of interest If the time for payment of any amount of tax has been extended under this section— (1) Interest for first 5 years Interest payable under section 6601 of any unpaid portion of such amount attributable to the first 5 years after the date prescribed by section 6151(a) for payment of the tax shall be paid annually. (2) Interest for periods after first 5 years Interest payable under section 6601 on any unpaid portion of such amount attributable to any period after the 5-year period referred to in paragraph (1) shall be paid annually at the same time as, and as a part of, each install- ment payment of the tax. (3) Interest in the case of certain deficiencies In the case of a deficiency to which sub- section (e) applies which is assessed after the close of the 5-year period referred to in para- graph (1), interest attributable to such 5-year period, and interest assigned under paragraph (2) to any installment the date for payment of which has arrived on or before the date of the assessment of the deficiency, shall be paid upon notice and demand from the Secretary. (4) Selection of shorter period If the executor has selected a period shorter than 5 years under subsection (a)(3), such shorter period shall be substituted for 5 years in paragraphs (1), (2), and (3) of this sub- section. (g) Acceleration of payment (1) Disposition of interest; withdrawal of funds from business (A) If— (i)(I) any portion of an interest in a closely held business which qualifies under subsection (a)(1) is distributed, sold, ex- changed, or otherwise disposed of, or (II) money and other property attrib- utable to such an interest is withdrawn from such trade or business, and (ii) the aggregate of such distributions, sales, exchanges, or other dispositions and withdrawals equals or exceeds 50 percent of the value of such interest, then the extension of time for payment of tax provided in subsection (a) shall cease to apply, and the unpaid portion of the tax pay- able in installments shall be paid upon no- tice and demand from the Secretary. (B) In the case of a distribution in redemp- tion of stock to which section 303 (or so much of section 304 as relates to section 303) applies— Page 3510 TITLE 26—INTERNAL REVENUE CODE § 6166 (i) the redemption of such stock, and the withdrawal of money and other property distributed in such redemption, shall not be treated as a distribution or withdrawal for purposes of subparagraph (A), and (ii) for purposes of subparagraph (A), the value of the interest in the closely held business shall be considered to be such value reduced by the value of the stock re- deemed. This subparagraph shall apply only if, on or before the date prescribed by subsection (a)(3) for the payment of the first install- ment which becomes due after the date of the distribution (or, if earlier, on or before the day which is 1 year after the date of the distribution), there is paid an amount of the tax imposed by section 2001 not less than the amount of money and other property distrib- uted. (C) Subparagraph (A)(i) does not apply to an exchange of stock pursuant to a plan of reorganization described in subparagraph (D), (E), or (F) of section 368(a)(1) nor to an exchange to which section 355 (or so much of section 356 as relates to section 355) applies; but any stock received in such an exchange shall be treated for purposes of subparagraph (A)(i) as an interest qualifying under sub- section (a)(1). (D) Subparagraph (A)(i) does not apply to a transfer of property of the decedent to a per- son entitled by reason of the decedent’s death to receive such property under the de- cedent’s will, the applicable law of descent and distribution, or a trust created by the decedent. A similar rule shall apply in the case of a series of subsequent transfers of the property by reason of death so long as each transfer is to a member of the family (within the meaning of section 267(c)(4)) of the trans- feror in such transfer. (E) Changes in interest in holding company If any stock in a holding company is treat- ed as stock in a business company by reason of subsection (b)(8)(A)— (i) any disposition of any interest in such stock in such holding company which was included in determining the gross estate of the decedent, or (ii) any withdrawal of any money or other property from such holding company attributable to any interest included in de- termining the gross estate of the decedent, shall be treated for purposes of subparagraph (A) as a disposition of (or a withdrawal with respect to) the stock qualifying under sub- section (a)(1). (F) Changes in interest in business company If any stock in a holding company is treat- ed as stock in a business company by reason of subsection (b)(8)(A)— (i) any disposition of any interest in such stock in the business company by such holding company, or (ii) any withdrawal of any money or other property from such business com- pany attributable to such stock by such holding company owning such stock, shall be treated for purposes of subparagraph (A) as a disposition of (or a withdrawal with respect to) the stock qualifying under sub- section (a)(1). (2) Undistributed income of estate (A) If an election is made under this sec- tion and the estate has undistributed net in- come for any taxable year ending on or after the due date for the first installment, the executor shall, on or before the date pre- scribed by law for filing the income tax re- turn for such taxable year (including exten- sions thereof), pay an amount equal to such undistributed net income in liquidation of the unpaid portion of the tax payable in in- stallments. (B) For purposes of subparagraph (A), the undistributed net income of the estate for any taxable year is the amount by which the distributable net income of the estate for such taxable year (as defined in section 643) exceeds the sum of— (i) the amounts for such taxable year specified in paragraphs (1) and (2) of sec- tion 661(a) (relating to deductions for dis- tributions, etc.); (ii) the amount of tax imposed for the taxable year on the estate under chapter 1; and (iii) the amount of the tax imposed by section 2001 (including interest) paid by the executor during the taxable year (other than any amount paid pursuant to this paragraph). (C) For purposes of this paragraph, if any stock in a corporation is treated as stock in another corporation by reason of subsection (b)(8)(A), any dividends paid by such other corporation to the corporation shall be treated as paid to the estate of the decedent to the extent attributable to the stock qualifying under subsection (a)(1). (3) Failure to make payment of principal or in- terest (A) In general Except as provided in subparagraph (B), if any payment of principal or interest under this section is not paid on or before the date fixed for its payment by this section (includ- ing any extension of time), the unpaid por- tion of the tax payable in installments shall be paid upon notice and demand from the Secretary. (B) Payment within 6 months If any payment of principal or interest under this section is not paid on or before the date determined under subparagraph (A) but is paid within 6 months of such date— (i) the provisions of subparagraph (A) shall not apply with respect to such pay- ment, (ii) the provisions of section 6601(j) shall not apply with respect to the determina- tion of interest on such payment, and (iii) there is imposed a penalty in an amount equal to the product of— (I) 5 percent of the amount of such pay- ment, multiplied by Page 3511 TITLE 26—INTERNAL REVENUE CODE § 6166 (II) the number of months (or fractions thereof) after such date and before pay- ment is made. The penalty imposed under clause (iii) shall be treated in the same manner as a penalty imposed under subchapter B of chapter 68. (h) Election in case of certain deficiencies (1) In general If— (A) a deficiency in the tax imposed by sec- tion 2001 is assessed, (B) the estate qualifies under subsection (a)(1), and (C) the executor has not made an election under subsection (a), the executor may elect to pay the deficiency in installments. This subsection shall not apply if the deficiency is due to negligence, to intentional disregard of rules and regulations, or to fraud with intent to evade tax. (2) Time of election An election under this subsection shall be made not later than 60 days after issuance of notice and demand by the Secretary for the payment of the deficiency, and shall be made in such manner as the Secretary shall by regu- lations prescribe. (3) Effect of election on payment If an election is made under this subsection, the deficiency shall (subject to the limitation provided by subsection (a)(2)) be prorated to the installments which would have been due if an election had been timely made under sub- section (a) at the time the estate tax return was filed. The part of the deficiency so pro- rated to any installment the date for payment of which would have arrived shall be paid at the time of the making of the election under this subsection. The portion of the deficiency so prorated to installments the date for pay- ment of which would not have so arrived shall be paid at the time such installments would have been due if such an election had been made. (i) Special rule for certain direct skips To the extent that an interest in a closely held business is the subject of a direct skip (within the meaning of section 2612(c)) occurring at the same time as and as a result of the decedent’s death, then for purposes of this section any tax imposed by section 2601 on the transfer of such interest shall be treated as if it were additional tax imposed by section 2001. (j) Regulations The Secretary shall prescribe such regulations as may be necessary to the application of this section. (k) Cross references (1) Security For authority of the Secretary to require secu- rity in the case of an extension under this section, see section 6165. (2) Lien For special lien (in lieu of bond) in the case of an extension under this section, see section 6324A. (3) Period of limitation For extension of the period of limitation in the case of an extension under this section, see sec- tion 6503(d). (4) Interest For provisions relating to interest on tax pay- able in installments under this section, see sub- section (j) of section 6601. (5) Transfers within 3 years of death For special rule for qualifying an estate under this section where property has been transferred within 3 years of decedent’s death, see section 2035(c)(2). (Added Pub. L. 94–455, title XX, § 2004(a), Oct. 4, 1976, 90 Stat. 1862; amended Pub. L. 95–600, title V, § 512(a), (b), Nov. 6, 1978, 92 Stat. 2882, 2883; Pub. L. 97–34, title IV, § 422(a), (c), (e)(5)(A), (B), Aug. 13, 1981, 95 Stat. 314–316; Pub. L. 97–448, title I, § 104(c), (d)(1)(B), Jan. 12, 1983, 96 Stat. 2382, 2383; Pub. L. 98–369, div. A, title V, § 544(b)(4), title X, § 1021(a)–(d), July 18, 1984, 98 Stat. 894, 1024–1026; Pub. L. 99–514, title XIV, § 1432(e), Oct. 22, 1986, 100 Stat. 2730; Pub. L. 104–188, title I, § 1704(t)(15), Aug. 20, 1996, 110 Stat. 1888; Pub. L. 105–34, title V, § 503(c)(1), Aug. 5, 1997, 111 Stat. 853; Pub. L. 105–206, title VI, § 6007(c), July 22, 1998, 112 Stat. 809; Pub. L. 106–554, § 1(a)(7) [title III, § 319(18)], Dec. 21, 2000, 114 Stat. 2763, 2763A–647; Pub. L. 107–16, title V, §§ 571(a), 572(a), 573(a), June 7, 2001, 115 Stat. 92, 93.) Editorial Notes PRIOR PROVISIONS A prior section 6166 was renumbered section 6166A of this title and later repealed by Pub. L. 97–34, title IV, § 422(d), Aug. 13, 1981, 95 Stat. 315. AMENDMENTS 2001—Subsec. (b)(1)(B)(ii), (C)(ii). Pub. L. 107–16, § 571(a), substituted ‘‘45’’ for ‘‘15’’. Subsec. (b)(8)(B). Pub. L. 107–16, § 573(a), reenacted heading without change and amended text of subpar. (B) generally. Prior to amendment, text read as fol- lows: ‘‘No stock shall be taken into account for pur- poses of applying this paragraph unless it is non-read- ily-tradable stock (within the meaning of paragraph (7)(B)).’’ Subsec. (b)(9)(B)(iii)(I). Pub. L. 107–16, § 571(a), sub- stituted ‘‘45’’ for ‘‘15’’. Subsec. (b)(10). Pub. L. 107–16, § 572(a), added par. (10). 2000—Subsec. (k)(5). Pub. L. 106–554 substituted ‘‘2035(c)(2)’’ for ‘‘2035(d)(4)’’. 1998—Subsec. (b)(7)(A)(iii). Pub. L. 105–206, § 6007(c)(1), amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: ‘‘section 6601(j) (relating to 2-per- cent rate of interest) shall not apply.’’ Subsec. (b)(8)(A)(iii). Pub. L. 105–206, § 6007(c)(2), reen- acted heading without change and amended text of cl. (iii) generally. Prior to amendment, text read as fol- lows: ‘‘Section 6601(j) (relating to 2-percent rate of in- terest) shall not apply.’’ 1997—Subsec. (b)(7)(A)(iii). Pub. L. 105–34 substituted ‘‘2-percent’’ for ‘‘4-percent’’. Subsec. (b)(8)(A)(iii). Pub. L. 105–34 substituted ‘‘2- percent’’ for ‘‘4-percent’’ in heading and text. 1996—Subsec. (k)(6). Pub. L. 104–188 struck out par. (6) which provided cross reference to former section 2210(c) of this title authorizing payment of certain portion of estate tax in installments under provisions of this sec- tion. 1986—Subsecs. (i) to (k). Pub. L. 99–514 added subsec. (i) and redesignated former subsecs. (i) and (j) as (j) and (k), respectively. Page 3512 TITLE 26—INTERNAL REVENUE CODE § 6166 1984—Subsec. (b)(8). Pub. L. 98–369, § 1021(a), added par. (8). Subsec. (b)(9). Pub. L. 98–369, § 1021(b), added par. (9). Subsec. (g)(1)(E), (F). Pub. L. 98–369, § 1021(c), added subpars. (E) and (F). Subsec. (g)(2)(C). Pub. L. 98–369, § 1021(d), added sub- par. (C). Subsec. (j)(6). Pub. L. 98–369, § 544(b)(4), added par. (6). 1983—Subsec. (b)(3). Pub. L. 97–448, § 104(c)(1), sub- stituted ‘‘35-percent requirement’’ for ‘‘65-percent re- quirement’’. Subsec. (g)(1)(B)(i). Pub. L. 97–448, § 104(c)(2), sub- stituted ‘‘the redemption of such stock, and the with- drawal of money or other property distributed in such redemption, shall not be treated as a distribution or withdrawal for purposes of subparagraph (A), and’’ for ‘‘subparagraph (A)(i) does not apply with respect to the stock redeemed; and for purposes of such subparagraph the interest in the closely held business shall be consid- ered to be such interest reduced by the value of the stock redeemed, and’’. Subsec. (g)(1)(B)(ii). Pub. L. 97–448, § 104(c)(2), sub- stituted ‘‘for purposes of subparagraph (A), the value of the interest in the closely held business shall be consid- ered to be such value reduced by the value of the stock redeemed’’ for ‘‘subparagraph (A)(ii) does not apply with respect to withdrawals of money and other prop- erty distributed; and for purposes of such subparagraph the value of the trade or business shall be considered to be such value reduced by the amount of money and other property distributed’’. Subsec. (j)(5). Pub. L. 97–448, § 104(d)(1)(B), added par. (5). 1981—Pub. L. 97–34, § 422(e)(5)(B), substituted ‘‘Exten- sion of time’’ for ‘‘Alternate extension of time’’ in sec- tion catchline. Subsec. (a). Pub. L. 97–34, § 422(a)(1), (e)(5)(A), sub- stituted in par. (1) ‘‘35 percent’’ for ‘‘65 percent’’ and struck out par. (4) which provided that no election be made under this section by the executor of the estate of any decedent if an election under section 6166A ap- plies with respect to the estate of such decedent. Subsec. (c). Pub. L. 97–34, § 422(a)(2), substituted ‘‘20 percent or more’’ for ‘‘more than 20 percent’’. Subsec. (g)(1)(A). Pub. L. 97–34, § 422(c)(1), redesig- nated cl. (i) as cl. (i)(I), substituted ‘‘any portion’’ for ‘‘one-third or more in value’’, added cl. (i)(II), sub- stituted in cl. (ii) ‘‘the aggregate of such distributions, sales, exchanges, or other dispositions and withdrawals equals or exceeds 50 percent of the value of such inter- est’’ for ‘‘aggregate withdrawals of money and other property from the trade or business, an interest in which qualifies under subsection (a)(1), made with re- spect to such interest, equal or exceed one-third of the value of such trade or business’’ and in provision fol- lowing cl. (ii) substituted ‘‘the unpaid portion’’ for ‘‘any unpaid portion’’. Subsec. (g)(1)(D). Pub. L. 97–34, § 422(c)(3), inserted provision for application of a similar rule in the case of a series of subsequent transfers of the property by rea- son of death so long as each transfer is to a member of the family of the transferor in such transfer. Subsec. (g)(3). Pub. L. 97–34, § 422(c)(2), substituted as heading ‘‘Failure to make payment of principal or in- terest’’ for ‘‘Failure to pay installment’’, designated existing provisions as subpar. (A), and in subpar. (A) as so designated, substituted ‘‘Except as provided in sub- paragraph (B), if any payment of principal or interest’’ for ‘‘If any installment’’ and ‘‘extension of time’’ for ‘‘extension of time for the payment of such install- ment’’, and added subpar. (B). 1978—Subsec. (b)(2)(D). Pub. L. 95–600, § 512(a), added subpar. (D). Subsec. (b)(7). Pub. L. 95–600, § 512(b), added par. (7). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2001 AMENDMENT Pub. L. 107–16, title V, § 571(b), June 7, 2001, 115 Stat. 92, provided that: ‘‘The amendments made by this sec- tion [amending this section] shall apply to estates of decedents dying after December 31, 2001.’’ Pub. L. 107–16, title V, § 572(b), June 7, 2001, 115 Stat. 93, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to estates of decedents dying after December 31, 2001.’’ Pub. L. 107–16, title V, § 573(b), June 7, 2001, 115 Stat. 93, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to estates of decedents dying after December 31, 2001.’’ EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1997 AMENDMENT Amendment by Pub. L. 105–34 applicable to estates of decedents dying after Dec. 31, 1997, with special rule in case of estate of any decedent dying before Jan. 1, 1998, with respect to which there is an election under section 6166 of this title, see section 503(d) of Pub. L. 105–34, set out as a note under section 163 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–514 applicable to genera- tion-skipping transfers (within the meaning of section 2611 of this title) made after Oct. 22, 1986, except as oth- erwise provided, see section 1433 of Pub. L. 99–514, set out as an Effective Date note under section 2601 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by section 544(b)(4) of Pub. L. 98–369 ap- plicable to estates of decedents which are required to file returns on a date (including any extensions) after July 18, 1984, see section 544(d) of Pub. L. 98–369, set out as a note under section 2002 of this title. Pub. L. 98–369, div. A, title X, § 1021(e), July 18, 1984, 98 Stat. 1026, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section] shall apply with respect to estates of decedents dying after the date of the enact- ment of this Act [July 18, 1984]. ‘‘(2) SPECIAL RULE.— ‘‘(A) IN GENERAL.—At the election of the executor, if— ‘‘(i) a corporation has 15 or fewer shareholders on June 22, 1984, and at all times thereafter before the date of the decedent’s death, and ‘‘(ii) stock of such corporation is included in the gross estate of the decedent, then all other corporations all of the stock of which is owned directly or indirectly by the corporation de- scribed in clauses (i) and (ii) shall be treated as one corporation for purposes of section 6166 of the Inter- nal Revenue Code of 1986 [formerly I.R.C. 1954]. ‘‘(B) EFFECT OF ELECTION.—Any executor who elects the application of this paragraph shall be treated as having made the election under paragraph (8) of sec- tion 6166(b) of such Code.’’ EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 97–448 effective, except as oth- erwise provided, as if it had been included in the provi- sion of the Economic Recovery Tax Act of 1981, Pub. L. 97–34, to which such amendment relates, see section 109 of Pub. L. 97–448, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1981 AMENDMENT Pub. L. 97–34, title IV, § 422(f), Aug. 13, 1981, 95 Stat. 316, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section [amending this Page 3513 TITLE 26—INTERNAL REVENUE CODE § 6167 section and sections 303, 2011, 2204, 2621, 6161, 6324A, 6503, and 7403 of this title and repealing section 6166A of this title] shall apply to the estates of decedents dying after December 31, 1981. ‘‘(2) ACCELERATION BY REASON OF SUBSEQUENT DEATH.—The amendment made by subsection (c)(3) [amending this section] shall apply to transfers after December 31, 1981.’’ EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95–600, title V, § 512(c), Nov. 6, 1978, 92 Stat. 2883, provided that: ‘‘The amendments made by this section [amending this section] shall apply with re- spect to the estates of decedents dying after the date of the enactment of this Act [Nov. 6, 1978].’’ EFFECTIVE DATE Pub. L. 94–455, title XX, § 2004(g), Oct. 4, 1976, 90 Stat. 1872, provided that: ‘‘The amendments made by this section [enacting this section and section 6324A of this title and amending sections 303, 2011, 2204, 6136, 6161, 6503, 6601, and 7403 of this title] shall apply to the es- tates of decedents dying after December 31, 1976.’’ LAND DIVERTED UNDER 1983 PAYMENT-IN-KIND PROGRAM Land diverted from production of agricultural com- modities under a 1983 payment-in-kind program to be treated, for purposes of this section, as used during the 1983 crop year by qualified taxpayers in the active con- duct of the trade or business of farming, with qualified taxpayers who materially participate in the diversion and devotion to conservation uses under a 1983 pay- ment-in-kind program to be treated as materially par- ticipating in the operation of such land during the 1983 crop year, see section 3 of Pub. L. 98–4, set out as a note under section 61 of this title. [§ 6166A. Repealed. Pub. L. 97–34, title IV, § 422(d), Aug. 13, 1981, 95 Stat. 315] Section, added Pub. L. 85–866, title II, § 206(a), Sept. 2, 1958, 72 Stat. 1681, § 6166; amended Pub. L. 93–625, § 7(d)(2), (3), Jan. 3, 1975, 88 Stat. 2115; renumbered § 6166A and amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), title XX, § 2004(a), Oct. 4, 1976, 90 Stat. 1834, 1862, provided for an extension of time for pay- ment of estate tax where estate consists largely of in- terest in closely held business. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to estates of decedents dying after Dec. 31, 1981, see section 422(f)(1) of Pub. L. 97–34, set out as an Effective Date of 1981 Amendment note under section 6166 of this title. § 6167. Extension of time for payment of tax at- tributable to recovery of foreign expropria- tion losses (a) Extension allowed by election If— (1) a corporation has a recovery of a foreign expropriation loss to which section 1351 ap- plies, and (2) the portion of the recovery received in money is less than 25 percent of the amount of such recovery (as defined in section 1351(c)) and is not greater than the tax attributable to such recovery, the tax attributable to such recovery shall, at the election of the taxpayer, be payable in 10 equal installments on the 15th day of the fourth month of each of the taxable years following the taxable year of the recovery. Such election shall be made at such time and in such manner as the Secretary may prescribe by regulations. If an election is made under this subsection, the pro- visions of this subtitle shall apply as though the Secretary were extending the time for payment of such tax. (b) Extension permitted by Secretary If a corporation has a recovery of a foreign ex- propriation loss to which section 1351 applies and if an election is not made under subsection (a), the Secretary may, upon finding that the payment of the tax attributable to such recov- ery at the time otherwise provided in this sub- title would result in undue hardship, extend the time for payment of such tax for a reasonable period or periods not in excess of 9 years from the date on which such tax is otherwise payable. (c) Acceleration of payments If— (1) an election is made under subsection (a), (2) during any taxable year before the tax at- tributable to such recovery is paid in full— (A) any property (other than money) re- ceived on such recovery is sold or exchanged, or (B) any property (other than money) re- ceived on any sale or exchange described in subparagraph (A) is sold or exchanged, and (3) the amount of money received on such sale or exchange (reduced by the amount of the tax imposed under chapter 1 with respect to such sale or exchange), when added to the amount of money— (A) received on such recovery, and (B) received on previous sales or exchanges described in subparagraphs (A) and (B) of paragraph (2) (as so reduced), exceeds the amount of money which may be received under subsection (a)(2), an amount of the tax attributable to such recov- ery equal to such excess shall be payable on the 15th day of the fourth month of the taxable year following the taxable year in which such sale or exchange occurs. The amount of such tax so paid shall be treated, for purposes of this section, as a payment of the first unpaid installment or in- stallments (or portion thereof) which become payable under subsection (a) following such tax- able year. (d) Proration of deficiency to installments If an election is made under subsection (a), and a deficiency attributable to the recovery of a foreign expropriation loss has been assessed, the deficiency shall be prorated to such install- ments. The part of the deficiency so prorated to any installment the date for payment of which has not arrived shall be collected at the same time as, and as part of, such installment. The part of the deficiency so prorated to any install- ment the date for payment of which has arrived shall be paid upon notice and demand from the Secretary. This subsection shall not apply if the deficiency is due to negligence, to intentional disregard of rules and regulations, or to fraud with intent to evade tax. (e) Time for payment of interest If the time for payment for any amount of tax has been extended under this section, interest