IRS offers new guidance on extension to pay estate taxes

BVWireIssue #46-2
July 19, 2006

Taxes on a decedent’s estate are usually due in full nine months after the date of death. To prevent a “fire sale” of the assets, IRC §6166(a)(1) allows closely-held business interests to pay on an installment plan, if their assets are “active.” The question has often come up whether real estate assets, especially holding companies, qualify. A new IRS revenue ruling suggests that if the decedent (or the partnership, LLC, or company) uses an unrelated property management company to perform most of the activities associated with the real estate, then the interest is probably passive. To view the June 22, 2006 ruling, go to, also available in the Internal Revenue Bulletin at

More questions for the Service? Sign up for Ask the IRS telephone conference from BVR on July 27, 2006, featuring Michael Gregory, ASA, an IRS Engineering Territory Manager; and Roger Wilde CPA, ABV (Anacapa Valuations). Register at

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