
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 107-16 Section 571(a)]
[Document affected by Public Law 107-16 Section 572(a)]
[Document affected by Public Law 107-16 Section 573(a)]
[Document affected by Public Law 107-16 Section 571(b)]
[Document affected by Public Law 107-16 Section 572(b)]
[Document affected by Public Law 107-16 Section 573(b)]
[CITE: 26USC6166]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                Subtitle F--Procedure and Administration
 
                CHAPTER 62--TIME AND PLACE FOR PAYING TAX
 
              Subchapter B--Extensions of Time for Payment
 
Sec. 6166. Extension of time for payment of estate tax where 
        estate consists largely of interest in closely held business
        

(a) 5-year deferral; 10-year installment payment

                           (1) In general

        If the value of an interest in a closely held business which is 
    included in determining the gross estate of a decedent who was (at 
    the date of his death) a citizen or resident of the United States 
    exceeds 35 percent of the adjusted gross estate, the executor may 
    elect to pay part or all of the tax imposed by section 2001 in 2 or 
    more (but not exceeding 10) equal installments.

                           (2) Limitation

        The maximum amount of tax which may be paid in installments 
    under this subsection shall be an amount which bears the same ratio 
    to the tax imposed by section 2001 (reduced by the credits against 
    such tax) as--
            (A) the closely held business amount, bears to
            (B) the amount of the adjusted gross estate.

                (3) Date for payment of installments

        If an election is made under paragraph (1), the first 
    installment shall be paid on or before the date selected by the 
    executor which is not more than 5 years after the date prescribed by 
    section 6151(a) for payment of the tax, and each succeeding 
    installment shall be paid on or before the date which is 1 year 
    after the date prescribed by this paragraph for payment of the 
    preceding installment.

(b) Definitions and special rules

                (1) Interest in closely held business

        For purposes of this section, the term ``interest in a closely 
    held business'' means--
            (A) an interest as a proprietor in a trade or business 
        carried on as a proprietorship;
            (B) an interest as a partner in a partnership carrying on a 
        trade or business, if--
                (i) 20 percent or more of the total capital interest in 
            such partnership is included in determining the gross estate 
            of the decedent, or
                (ii) such partnership had 15 or fewer partners; or

            (C) stock in a corporation carrying on a trade or business 
        if--
                (i) 20 percent or more in value of the voting stock of 
            such corporation is included in determining the gross estate 
            of the decedent, or
                (ii) such corporation had 15 or fewer shareholders.

                (2) Rules for applying paragraph (1)

        For purposes of paragraph (1)--

        (A) Time for testing

            Determinations shall be made as of the time immediately 
        before the decedent's death.

        (B) Certain interests held by husband and wife

            Stock or a partnership interest which--
                (i) is community property of a husband and wife (or the 
            income from which is community income) under the applicable 
            community property law of a State, or
                (ii) is held by a husband and wife as joint tenants, 
            tenants by the entirety, or tenants in common,

        shall be treated as owned by one shareholder or one partner, as 
        the case may be.

        (C) Indirect ownership

            Property owned, directly or indirectly, by or for a 
        corporation, partnership, estate, or trust shall be considered 
        as being owned proportionately by or for its shareholders, 
        partners, or beneficiaries. For purposes of the preceding 
        sentence, a person shall be treated as a beneficiary of any 
        trust only if such person has a present interest in the trust.

        (D) Certain interests held by members of decedent's family

            All stock and all partnership interests held by the decedent 
        or by any member of his family (within the meaning of section 
        267(c)(4)) shall be treated as owned by the decedent.

       (3) Farmhouses and certain other structures taken into 
                                   account

        For purposes of the 35-percent requirement of subsection (a)(1), 
    an interest in a closely held business which is the business of 
    farming includes an interest in residential buildings and related 
    improvements on the farm which are occupied on a regular basis by 
    the owner or lessee of the farm or by persons employed by such owner 
    or lessee for purposes of operating or maintaining the farm.

                              (4) Value

        For purposes of this section, value shall be value determined 
    for purposes of chapter 11 (relating to estate tax).

                  (5) Closely held business amount

        For purposes of this section, the term ``closely held business 
    amount'' means the value of the interest in a closely held business 
    which qualifies under subsection (a)(1).

                      (6) Adjusted gross estate

        For purposes of this section, the term, ``adjusted gross 
    estate'' means the value of the gross estate reduced by the sum of 
    the amounts allowable as a deduction under section 2053 or 2054. 
    Such sum shall be determined on the basis of the facts and 
    circumstances in existence on the date (including extensions) for 
    filing the return of tax imposed by section 2001 (or, if earlier, 
    the date on which such return is filed).

      (7) Partnership interests and stock which is not readily 
                                  tradable

        (A) In general

            If the executor elects the benefits of this paragraph (at 
        such time and in such manner as the Secretary shall by 
        regulations prescribe), then--
                (i) for purposes of paragraph (1)(B)(i) or (1)(C)(i) 
            (whichever is appropriate) and for purposes of subsection 
            (c), any capital interest in a partnership and any non-
            readily-tradable stock which (after the application of 
            paragraph (2)) is treated as owned by the decedent shall be 
            treated as included in determining the value of the 
            decedent's gross estate,
                (ii) the executor shall be treated as having selected 
            under subsection (a)(3) the date prescribed by section 
            6151(a), and
                (iii) for purposes of applying section 6601(j), the 2-
            percent portion (as defined in such section) shall be 
            treated as being zero.

        (B) Non-readily-tradable stock defined

            For purposes of this paragraph, the term ``non-readily-
        tradable stock'' means stock for which, at the time of the 
        decedent's death, there was no market on a stock exchange or in 
        an over-the-counter market.

      (8) Stock in holding company treated as business company 
                           stock in certain cases

        (A) In general

            If the executor elects the benefits of this paragraph, 
        then--
            (i) Holding company stock treated as business 
                    company stock

                For purposes of this section, the portion of the stock 
            of any holding company which represents direct ownership (or 
            indirect ownership through 1 or more other holding 
            companies) by such company in a business company shall be 
            deemed to be stock in such business company.
            (ii) 5-year deferral for principal not to apply

                The executor shall be treated as having selected under 
            subsection (a)(3) the date prescribed by section 6151(a).
            (iii) 2-percent interest rate not to apply

                For purposes of applying section 6601(j), the 2-percent 
            portion (as defined in such section) shall be treated as 
            being zero.

        (B) All stock must be non-readily-tradable stock

            No stock shall be taken into account for purposes of 
        applying this paragraph unless it is non-readily-tradable stock 
        (within the meaning of paragraph (7)(B)).

        (C) Application of voting stock requirement of paragraph 
                (1)(C)(i)

            For purposes of clause (i) of paragraph (1)(C), the deemed 
        stock resulting from the application of subparagraph (A) shall 
        be treated as voting stock to the extent that voting stock in 
        the holding company owns directly (or through the voting stock 
        of 1 or more other holding companies) voting stock in the 
        business company.

        (D) Definitions

            For purposes of this paragraph--
            (i) Holding company

                The term ``holding company'' means any corporation 
            holding stock in another corporation.
            (ii) Business company

                The term ``business company'' means any corporation 
            carrying on a trade or business.

            (9) Deferral not available for passive assets

        (A) In general

            For purposes of subsection (a)(1) and determining the 
        closely held business amount (but not for purposes of subsection 
        (g)), the value of any interest in a closely held business shall 
        not include the value of that portion of such interest which is 
        attributable to passive assets held by the business.

        (B) Passive asset defined

            For purposes of this paragraph--
            (i) In general

                The term ``passive asset'' means any asset other than an 
            asset used in carrying on a trade or business.
            (ii) Stock treated as passive asset

                The term ``passive asset'' includes any stock in another 
            corporation unless--
                    (I) such stock is treated as held by the decedent by 
                reason of an election under paragraph (8), and
                    (II) such stock qualified under subsection (a)(1).
            (iii) Exception for active corporations

                If--
                    (I) a corporation owns 20 percent or more in value 
                of the voting stock of another corporation, or such 
                other corporation has 15 or fewer shareholders, and
                    (II) 80 percent or more of the value of the assets 
                of each such corporation is attributable to assets used 
                in carrying on a trade or business,

          then such corporations shall be treated as 1 corporation for 
            purposes of clause (ii). For purposes of applying subclause 
            (II) to the corporation holding the stock of the other 
            corporation, such stock shall not be taken into account.

(c) Special rule for interest in 2 or more closely held businesses

    For purposes of this section, interest in 2 or more closely held 
businesses, with respect to each of which there is included in 
determining the value of the decedent's gross estate 20 percent or more 
of the total value of each such business, shall be treated as an 
interest in a single closely held business. For purposes of the 20-
percent requirement of the preceding sentence, an interest in a closely 
held business which represents the surviving spouse's interest in 
property held by the decedent and the surviving spouse as community 
property or as joint tenants, tenants by the entirety, or tenants in 
common shall be treated as having been included in determining the value 
of the decedent's gross estate.

(d) Election

    Any election under subsection (a) shall be made not later than the 
time prescribed by section 6075(a) for filing the return of tax imposed 
by section 2001 (including extensions thereof), and shall be made in 
such manner as the Secretary shall by regulations prescribe. If an 
election under subsection (a) is made, the provisions of this subtitle 
shall apply as though the Secretary were extending the time for payment 
of the tax.

(e) Proration of deficiency to installments

    If an election is made under subsection (a) to pay any part of the 
tax imposed by section 2001 in installments and a deficiency has been 
assessed, the deficiency shall (subject to the limitation provided by 
subsection (a)(2)) be prorated to the installments payable under 
subsection (a). The part of the deficiency so prorated to any 
installment the date for payment of which has not arrived shall be 
collected at the same time as, and as a part of, such installment. The 
part of the deficiency so prorated to any installment the date for 
payment of which has arrived shall be paid upon notice and demand from 
the Secretary. This subsection shall not apply if the deficiency is due 
to negligence, to intentional disregard of rules and regulations, or to 
fraud with intent to evade tax.

(f) Time for payment of interest

    If the time for payment of any amount of tax has been extended under 
this section--

                   (1) Interest for first 5 years

        Interest payable under section 6601 of any unpaid portion of 
    such amount attributable to the first 5 years after the date 
    prescribed by section 6151(a) for payment of the tax shall be paid 
    annually.

            (2) Interest for periods after first 5 years

        Interest payable under section 6601 on any unpaid portion of 
    such amount attributable to any period after the 5-year period 
    referred to in paragraph (1) shall be paid annually at the same time 
    as, and as a part of, each installment payment of the tax.

          (3) Interest in the case of certain deficiencies

        In the case of a deficiency to which subsection (e) applies 
    which is assessed after the close of the 5-year period referred to 
    in paragraph (1), interest attributable to such 5-year period, and 
    interest assigned under paragraph (2) to any installment the date 
    for payment of which has arrived on or before the date of the 
    assessment of the deficiency, shall be paid upon notice and demand 
    from the Secretary.

                   (4) Selection of shorter period

        If the executor has selected a period shorter than 5 years under 
    subsection (a)(3), such shorter period shall be substituted for 5 
    years in paragraphs (1), (2), and (3) of this subsection.

(g) Acceleration of payment

       (1) Disposition of interest; withdrawal of funds from 
                                  business

            (A) If--
                (i)(I) any portion of an interest in a closely held 
            business which qualifies under subsection (a)(1) is 
            distributed, sold, exchanged, or otherwise disposed of, or
                (II) money and other property attributable to such an 
            interest is withdrawn from such trade or business, and
                (ii) the aggregate of such distributions, sales, 
            exchanges, or other dispositions and withdrawals equals or 
            exceeds 50 percent of the value of such interest,

        then the extension of time for payment of tax provided in 
        subsection (a) shall cease to apply, and the unpaid portion of 
        the tax payable in installments shall be paid upon notice and 
        demand from the Secretary.
            (B) In the case of a distribution in redemption of stock to 
        which section 303 (or so much of section 304 as relates to 
        section 303) applies--
                (i) the redemption of such stock, and the withdrawal of 
            money and other property distributed in such redemption, 
            shall not be treated as a distribution or withdrawal for 
            purposes of subparagraph (A), and
                (ii) for purposes of subparagraph (A), the value of the 
            interest in the closely held business shall be considered to 
            be such value reduced by the value of the stock redeemed.

        This subparagraph shall apply only if, on or before the date 
        prescribed by subsection (a)(3) for the payment of the first 
        installment which becomes due after the date of the distribution 
        (or, if earlier, on or before the day which is 1 year after the 
        date of the distribution), there is paid an amount of the tax 
        imposed by section 2001 not less than the amount of money and 
        other property distributed.
            (C) Subparagraph (A)(i) does not apply to an exchange of 
        stock pursuant to a plan of reorganization described in 
        subparagraph (D), (E), or (F) of section 368(a)(1) nor to an 
        exchange to which section 355 (or so much of section 356 as 
        relates to section 355) applies; but any stock received in such 
        an exchange shall be treated for purposes of subparagraph (A)(i) 
        as an interest qualifying under subsection (a)(1).
            (D) Subparagraph (A)(i) does not apply to a transfer of 
        property of the decedent to a person entitled by reason of the 
        decedent's death to receive such property under the decedent's 
        will, the applicable law of descent and distribution, or a trust 
        created by the decedent. A similar rule shall apply in the case 
        of a series of subsequent transfers of the property by reason of 
        death so long as each transfer is to a member of the family 
        (within the meaning of section 267(c)(4)) of the transferor in 
        such transfer.

        (E) Changes in interest in holding company

            If any stock in a holding company is treated as stock in a 
        business company by reason of subsection (b)(8)(A)--
                (i) any disposition of any interest in such stock in 
            such holding company which was included in determining the 
            gross estate of the decedent, or
                (ii) any withdrawal of any money or other property from 
            such holding company attributable to any interest included 
            in determining the gross estate of the decedent,

        shall be treated for purposes of subparagraph (A) as a 
        disposition of (or a withdrawal with respect to) the stock 
        qualifying under subsection (a)(1).

        (F) Changes in interest in business company

            If any stock in a holding company is treated as stock in a 
        business company by reason of subsection (b)(8)(A)--
                (i) any disposition of any interest in such stock in the 
            business company by such holding company, or
                (ii) any withdrawal of any money or other property from 
            such business company attributable to such stock by such 
            holding company owning such stock,

        shall be treated for purposes of subparagraph (A) as a 
        disposition of (or a withdrawal with respect to) the stock 
        qualifying under subsection (a)(1).

                 (2) Undistributed income of estate

            (A) If an election is made under this section and the estate 
        has undistributed net income for any taxable year ending on or 
        after the due date for the first installment, the executor 
        shall, on or before the date prescribed by law for filing the 
        income tax return for such taxable year (including extensions 
        thereof), pay an amount equal to such undistributed net income 
        in liquidation of the unpaid portion of the tax payable in 
        installments.
            (B) For purposes of subparagraph (A), the undistributed net 
        income of the estate for any taxable year is the amount by which 
        the distributable net income of the estate for such taxable year 
        (as defined in section 643) exceeds the sum of--
                (i) the amounts for such taxable year specified in 
            paragraphs (1) and (2) of section 661(a) (relating to 
            deductions for distributions, etc.);
                (ii) the amount of tax imposed for the taxable year on 
            the estate under chapter 1; and
                (iii) the amount of the tax imposed by section 2001 
            (including interest) paid by the executor during the taxable 
            year (other than any amount paid pursuant to this 
            paragraph).

            (C) For purposes of this paragraph, if any stock in a 
        corporation is treated as stock in another corporation by reason 
        of subsection (b)(8)(A), any dividends paid by such other 
        corporation to the corporation shall be treated as paid to the 
        estate of the decedent to the extent attributable to the stock 
        qualifying under subsection (a)(1).

        (3) Failure to make payment of principal or interest

        (A) In general

            Except as provided in subparagraph (B), if any payment of 
        principal or interest under this section is not paid on or 
        before the date fixed for its payment by this section (including 
        any extension of time), the unpaid portion of the tax payable in 
        installments shall be paid upon notice and demand from the 
        Secretary.

        (B) Payment within 6 months

            If any payment of principal or interest under this section 
        is not paid on or before the date determined under subparagraph 
        (A) but is paid within 6 months of such date--
                (i) the provisions of subparagraph (A) shall not apply 
            with respect to such payment,
                (ii) the provisions of section 6601(j) shall not apply 
            with respect to the determination of interest on such 
            payment, and
                (iii) there is imposed a penalty in an amount equal to 
            the product of--
                    (I) 5 percent of the amount of such payment, 
                multiplied by
                    (II) the number of months (or fractions thereof) 
                after such date and before payment is made.

        The penalty imposed under clause (iii) shall be treated in the 
        same manner as a penalty imposed under subchapter B of chapter 
        68.

(h) Election in case of certain deficiencies

                           (1) In general

        If--
            (A) a deficiency in the tax imposed by section 2001 is 
        assessed,
            (B) the estate qualifies under subsection (a)(1), and
            (C) the executor has not made an election under subsection 
        (a),

    the executor may elect to pay the deficiency in installments. This 
    subsection shall not apply if the deficiency is due to negligence, 
    to intentional disregard of rules and regulations, or to fraud with 
    intent to evade tax.

                        (2) Time of election

        An election under this subsection shall be made not later than 
    60 days after issuance of notice and demand by the Secretary for the 
    payment of the deficiency, and shall be made in such manner as the 
    Secretary shall by regulations prescribe.

                  (3) Effect of election on payment

        If an election is made under this subsection, the deficiency 
    shall (subject to the limitation provided by subsection (a)(2)) be 
    prorated to the installments which would have been due if an 
    election had been timely made under subsection (a) at the time the 
    estate tax return was filed. The part of the deficiency so prorated 
    to any installment the date for payment of which would have arrived 
    shall be paid at the time of the making of the election under this 
    subsection. The portion of the deficiency so prorated to 
    installments the date for payment of which would not have so arrived 
    shall be paid at the time such installments would have been due if 
    such an election had been made.

(i) Special rule for certain direct skips

    To the extent that an interest in a closely held business is the 
subject of a direct skip (within the meaning of section 2612(c)) 
occurring at the same time as and as a result of the decedent's death, 
then for purposes of this section any tax imposed by section 2601 on the 
transfer of such interest shall be treated as if it were additional tax 
imposed by section 2001.

(j) Regulations

    The Secretary shall prescribe such regulations as may be necessary 
to the application of this section.

(k) Cross references

                            (1) Security

                For authority of the Secretary to require security in 
            the case of an extension under this section, see section 
            6165.

                              (2) Lien

                For special lien (in lieu of bond) in the case of an 
            extension under this section, see section 6324A.

                      (3) Period of limitation

                For extension of the period of limitation in the case of 
            an extension under this section, see section 6503(d).

                            (4) Interest

                For provisions relating to interest on tax payable in 
            installments under this section, see subsection (j) of 
            section 6601.

                (5) Transfers within 3 years of death

                For special rule for qualifying an estate under this 
            section where property has been transferred within 3 years 
            of decedent's death, see section 2035(c)(2).

(Added Pub. L. 94-455, title XX, Sec. 2004(a), Oct. 4, 1976, 90 Stat. 
1862; amended Pub. L. 95-600, title V, Sec. 512(a), (b), Nov. 6, 1978, 
92 Stat. 2882, 2883; Pub. L. 97-34, title IV, Sec. 422(a), (c), 
(e)(5)(A), (B), Aug. 13, 1981, 95 Stat. 314-316; Pub. L. 97-448, title 
I, Sec. 104(c), (d)(1)(B), Jan. 12, 1983, 96 Stat. 2382, 2383; Pub. L. 
98-369, div. A, title V, Sec. 544(b)(4), title X, Sec. 1021(a)-(d), July 
18, 1984, 98 Stat. 894, 1024-1026; Pub. L. 99-514, title XIV, 
Sec. 1432(e), Oct. 22, 1986, 100 Stat. 2730; Pub. L. 104-188, title I, 
Sec. 1704(t)(15), Aug. 20, 1996, 110 Stat. 1888; Pub. L. 105-34, title 
V, Sec. 503(c)(1), Aug. 5, 1997, 111 Stat. 853; Pub. L. 105-206, title 
VI, Sec. 6007(c), July 22, 1998, 112 Stat. 809; Pub. L. 106-554, 
Sec. 1(a)(7) [title III, Sec. 319(18)], Dec. 21, 2000, 114 Stat. 2763, 
2763A-647.)


                            Prior Provisions

    A prior section 6166 was renumbered section 6166A of this title and 
later repealed by Pub. L. 97-34, title IV, Sec. 422(d), Aug. 13, 1981, 
95 Stat. 315.


                               Amendments

    2000--Subsec. (k)(5). Pub. L. 106-554 substituted ``2035(c)(2)'' for 
``2035(d)(4)''.
    1998--Subsec. (b)(7)(A)(iii). Pub. L. 105-206, Sec. 6007(c)(1), 
amended cl. (iii) generally. Prior to amendment, cl. (iii) read as 
follows: ``section 6601(j) (relating to 2-percent rate of interest) 
shall not apply.''
    Subsec. (b)(8)(A)(iii). Pub. L. 105-206, Sec. 6007(c)(2), reenacted 
heading without change and amended text of cl. (iii) generally. Prior to 
amendment, text read as follows: ``Section 6601(j) (relating to 2-
percent rate of interest) shall not apply.''
    1997--Subsec. (b)(7)(A)(iii). Pub. L. 105-34 substituted ``2-
percent'' for ``4-percent''.
    Subsec. (b)(8)(A)(iii). Pub. L. 105-34 substituted ``2-percent'' for 
``4-percent'' in heading and text.
    1996--Subsec. (k)(6). Pub. L. 104-188 struck out par. (6) which 
provided cross reference to former section 2210(c) of this title 
authorizing payment of certain portion of estate tax in installments 
under provisions of this section.
    1986--Subsecs. (i) to (k). Pub. L. 99-514 added subsec. (i) and 
redesignated former subsecs. (i) and (j) as (j) and (k), respectively.
    1984--Subsec. (b)(8). Pub. L. 98-369, Sec. 1021(a), added par. (8).
    Subsec. (b)(9). Pub. L. 98-369, Sec. 1021(b), added par. (9).
    Subsec. (g)(1)(E), (F). Pub. L. 98-369, Sec. 1021(c), added subpars. 
(E) and (F).
    Subsec. (g)(2)(C). Pub. L. 98-369, Sec. 1021(d), added subpar. (C).
    Subsec. (j)(6). Pub. L. 98-369, Sec. 544(b)(4), added par. (6).
    1983--Subsec. (b)(3). Pub. L. 97-448, Sec. 104(c)(1), substituted 
``35-percent requirement'' for ``65-percent requirement''.
    Subsec. (g)(1)(B)(i). Pub. L. 97-448, Sec. 104(c)(2), substituted 
``the redemption of such stock, and the withdrawal of money or other 
property distributed in such redemption, shall not be treated as a 
distribution or withdrawal for purposes of subparagraph (A), and'' for 
``subparagraph (A)(i) does not apply with respect to the stock redeemed; 
and for purposes of such subparagraph the interest in the closely held 
business shall be considered to be such interest reduced by the value of 
the stock redeemed, and''.
    Subsec. (g)(1)(B)(ii). Pub. L. 97-448, Sec. 104(c)(2), substituted 
``for purposes of subparagraph (A), the value of the interest in the 
closely held business shall be considered to be such value reduced by 
the value of the stock redeemed'' for ``subparagraph (A)(ii) does not 
apply with respect to withdrawals of money and other property 
distributed; and for purposes of such subparagraph the value of the 
trade or business shall be considered to be such value reduced by the 
amount of money and other property distributed''.
    Subsec. (j)(5). Pub. L. 97-448, Sec. 104(d)(1)(B), added par. (5).
    1981--Pub. L. 97-34, Sec. 422(e)(5)(B), substituted ``Extension of 
time'' for ``Alternate extension of time'' in section catchline.
    Subsec. (a). Pub. L. 97-34, Sec. 422(a)(1), (e)(5)(A), substituted 
in par. (1) ``35 percent'' for ``65 percent'' and struck out par. (4) 
which provided that no election be made under this section by the 
executor of the estate of any decedent if an election under section 
6166A applies with respect to the estate of such decedent.
    Subsec. (c). Pub. L. 97-34, Sec. 422(a)(2), substituted ``20 percent 
or more'' for ``more than 20 percent''.
    Subsec. (g)(1)(A). Pub. L. 97-34, Sec. 422(c)(1), redesignated cl. 
(i) as cl. (i)(I), substituted ``any portion'' for ``one-third or more 
in value'', added cl. (i)(II), substituted in cl. (ii) ``the aggregate 
of such distributions, sales, exchanges, or other dispositions and 
withdrawals equals or exceeds 50 percent of the value of such interest'' 
for ``aggregate withdrawals of money and other property from the trade 
or business, an interest in which qualifies under subsection (a)(1), 
made with respect to such interest, equal or exceed one-third of the 
value of such trade or business'' and in provision following cl. (ii) 
substituted ``the unpaid portion'' for ``any unpaid portion''.
    Subsec. (g)(1)(D). Pub. L. 97-34, Sec. 422(c)(3), inserted provision 
for application of a similar rule in the case of a series of subsequent 
transfers of the property by reason of death so long as each transfer is 
to a member of the family of the transferor in such transfer.
    Subsec. (g)(3). Pub. L. 97-34, Sec. 422(c)(2), substituted as 
heading ``Failure to make payment of principal or interest'' for 
``Failure to pay installment'', designated existing provisions as 
subpar. (A), and in subpar. (A) as so designated, substituted ``Except 
as provided in subparagraph (B), if any payment of principal or 
interest'' for ``If any installment'' and ``extension of time'' for 
``extension of time for the payment of such installment'', and added 
subpar. (B).
    1978--Subsec. (b)(2)(D). Pub. L. 95-600, Sec. 512(a), added subpar. 
(D).
    Subsec. (b)(7). Pub. L. 95-600, Sec. 512(b), added par. (7).


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-206 effective, except as otherwise 
provided, as if included in the provisions of the Taxpayer Relief Act of 
1997, Pub. L. 105-34, to which such amendment relates, see section 6024 
of Pub. L. 105-206, set out as a note under section 1 of this title.


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-34 applicable to estates of decedents dying 
after Dec. 31, 1997, with special rule in case of estate of any decedent 
dying before Jan. 1, 1998, with respect to which there is an election 
under section 6166 of this title, see section 503(d) of Pub. L. 105-34, 
set out as a note under section 163 of this title.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 applicable to generation-skipping 
transfers (within the meaning of section 2611 of this title) made after 
Oct. 22, 1986, except as otherwise provided, see section 1433 of Pub. L. 
99-514, set out as an Effective Date note under section 2601 of this 
title.


                    Effective Date of 1984 Amendment

    Amendment by section 544(b)(4) of Pub. L. 98-369 applicable to 
estates of decedents which are required to file returns on a date 
(including any extensions) after July 18, 1984, see section 544(d) of 
Pub. L. 98-369, set out as a note under section 2002 of this title.
    Section 1021(e) of Pub. L. 98-369, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) In general.--The amendments made by this section [amending 
this section] shall apply with respect to estates of decedents dying 
after the date of the enactment of this Act [July 18, 1984].
    ``(2) Special rule.--
        ``(A) In general.--At the election of the executor, if--
            ``(i) a corporation has 15 or fewer shareholders on June 22, 
        1984, and at all times thereafter before the date of the 
        decedent's death, and
            ``(ii) stock of such corporation is included in the gross 
        estate of the decedent,
    then all other corporations all of the stock of which is owned 
    directly or indirectly by the corporation described in clauses (i) 
    and (ii) shall be treated as one corporation for purposes of section 
    6166 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954].
        ``(B) Effect of election.--Any executor who elects the 
    application of this paragraph shall be treated as having made the 
    election under paragraph (8) of section 6166(b) of such Code.''


                    Effective Date of 1983 Amendment

    Amendment by Pub. L. 97-448 effective, except as otherwise provided, 
as if it had been included in the provision of the Economic Recovery Tax 
Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 
109 of Pub. L. 97-448, set out as a note under section 1 of this title.


                    Effective Date of 1981 Amendment

    Section 422(f) of Pub. L. 97-34 provided that:
    ``(1) In general.--Except as provided in paragraph (2), the 
amendments made by this section [amending this section and sections 303, 
2011, 2204, 2621, 6161, 6324A, 6503, and 7403 of this title and 
repealing section 6166A of this title] shall apply to the estates of 
decedents dying after December 31, 1981.
    ``(2) Acceleration by reason of subsequent death.--The amendment 
made by subsection (c)(3) [amending this section] shall apply to 
transfers after December 31, 1981.''


                    Effective Date of 1978 Amendment

    Section 512(c) of Pub. L. 95-600 provided that: ``The amendments 
made by this section [amending this section] shall apply with respect to 
the estates of decedents dying after the date of the enactment of this 
Act [Nov. 6, 1978].''


                             Effective Date

    Section 2004(g) of Pub. L. 94-455 provided that: ``The amendments 
made by this section [enacting this section and section 6324A of this 
title and amending sections 303, 2011, 2204, 6136, 6161, 6503, 6601, and 
7403 of this title] shall apply to the estates of decedents dying after 
December 31, 1976.''


            Land Diverted Under 1983 Payment-in-Kind Program

    Land diverted from production of agricultural commodities under a 
1983 payment-in-kind program to be treated, for purposes of this 
section, as used during the 1983 crop year by qualified taxpayers in the 
active conduct of the trade or business of farming, with qualified 
taxpayers who materially participate in the diversion and devotion to 
conservation uses under a 1983 payment-in-kind program to be treated as 
materially participating in the operation of such land during the 1983 
crop year, see section 3 of Pub. L. 98-4, set out as a note under 
section 61 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 163, 303, 2011, 2032A, 2035, 
2053, 2056A, 2057, 6324A, 6503, 6601, 7403, 7422, 7479, 7481 of this 
title.
