Section 6166 does not reopen a missed installment election for prior estate tax

Plain-English summary

Chief Counsel advice addressed an estate that paid its reported estate tax in full and did not make a section 6166 election when it filed its return. The advice concluded that a later deficiency attributable to a closely held business may qualify for installment treatment under section 6166(h), but the election does not apply to tax originally reported as due. The advice also states that section 9100 relief is unavailable for the missed election on these facts.

Ruling snapshot

• Question: Can a later section 6166(h) election make originally reported estate tax eligible for installment payments after the estate paid the tax and missed the original election?
• Outcome: Advice given
• Key authorities: IRC §§ 6166 and 9100; Treas. Reg. §§ 20.6166-1(a), (c), and (d)

Full text (IRS public release)

ID: CCA_2012110810151526 Number: 201302037
Release Date: 1/11/2013
Office: -------------
UILC: 6166.01-00

From: ------------------
Sent: Thursday, November 08, 2012 10:15:16 AM
To: -----------------
Cc:
Subject: 6166 Election

I agree that the amount that could have been deferred under IRC § 6166 when the estate tax return was
filed can't be made subject to IRC § 6166 when a deficiency that’s not attributable to the closely-held
business is later determined. The estate full-paid the tax shown on the return and it’s now too late to
make the IRC 6166(a) election and there’s no 9100 relief available for the election even if an argument
could be made for relief. And as the tax was full-paid, the estate didn’t try to make a protective election
with the estate tax return under Treas. Reg. § 20.6166-1(d) as that election only defers payment of any
portion of tax remaining unpaid. Where no election is made when the return is filed and, later, a
deficiency is determined, the IRC § 6166(h) election for certain deficiencies only allows that portion of the
deficiency attributable to a closely-held business to be paid in installments under section 6166. Treas.
Reg. § 20.6166-1(c)(1). The IRC § 6166(h) election doesn’t apply to any tax originally determined to be
due. Treas. Reg. § 20.6166-1(a). Treas. Reg. § 20.6166-1(c)(3) doesn't allow any tax originally
determined to be due to be subject to the IRC § 6166(h) election; that provision only sets a cap on the
amount of the deficiency attributable to the closely-held business. The cap is determined by seeing
what's left after using the adjusted figures to set the maximum amount that could be paid in installments
and reducing it by any amount already elected. Please give me a call if you want to discuss.