Estates That Include a Closely-Held Business May Extend Payments for Federal Estate Taxes Over 14 Years
Even with the new for 2014 estate tax exemption of $5.34 million, some estates, and heirs, will still be hit by the federal estate tax. Many of the people likely to be impacted are small business owners. However, as long as certain criteria are met, small business owners may be able to extend federal estate tax payments over 14 years.
Normally, estate taxes must be paid within nine months of the date of death. However, if your estate includes a closely-held business that accounts for more than 35% of the value of your estate, you may be able to extend the time for paying estate taxes from nine months to 14 years.
IRS code section 6166 allows certain closely-held businesses to extend the time frame for paying federal estate taxes. This was done so that small businesses would not need to be broken up and sold just to pay the estate tax. However, certain criteria must be met in order to take advantage of this.
If you or someone you know has a closely-held business, then this is a strategy to consider. To read more about how section 6166 works, click here.
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