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Postmortem Estate Planning Techniques - Deferral Of Estate Tax

Deferral Of Estate Tax
For closely held businesses and farms, a special estate tax deferral election is available if more than 35% of the estate is comprised of the business or farm. If the estate qualifies, the estate tax can be deferred for up to five years, and can then be paid off over a 10-year period. Interest will be charged on the deferral amount at 2%.

Qualifications:

  1. Sole proprietors qualify,
  2. Partners with 20% partnership capital and less than 45 partners qualify,
  3. The 35% Test- business interests must be more than 35% of the adjusted gross estate.
Note – Late payments on the tax due or interest payments can result in loss of the deferral benefits. Deferral benefits can also be lost if the business interest is disposed of outside of the family.

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