INTERNAL REVENUE CODE SECTION 6166: COMMENTS TO TAX COUNSEL FOR THE SENATE FINANCE COMMITTEE

PREFACE

Internal Revenue Code section 6166 allows an estate holding a qualified interest in a closely held business to defer the payment of estate tax so that the estate need not hold a "fire sale" to pay estate taxes on the business interest. When the American Jobs Creation Act of 2004' expanded

the number of shareholders permitted for S corporations, Elizabeth Crewson Paris, a tax counsel for the Senate Finance Committee, mentioned that she was considering amendments to section 6166 to conform to the increased number of shareholders. When the chair of the Business Planning Group of the Probate and Trust Division of the Real Property, Probate and Trust Law section of the American Bar Association ("RPPT") mentioned concerns with the way the Internal Revenue Service was administering this provision, Ms. Paris invited comments from the Bar on how useful section 6166 is and how it might be changed to make it more useful, consistent with its original purpose.

Consistent with this request, Steven B. Gorin of St. Louis, Missouri, and Stephen Ernest Martin prepared a survey that RPPT publicized to its members. A link to this survey was also emailed to a number of fellows of the American College of Trust and Estate Counsel. Made available to the public at http://www.abanet.Org/rppt/cmtes/pt/c-group/6166survey.html, the survey accumulated the comments of 157 people.