Estate Tax Break for Business Interests

by: Bonfiglio & Asterita, LLC.
Bonfiglio and Asterita, LLC NY Attorneys at Law
Bonfiglio and Asterita, LLC NJ Attorneys at Law

The general rule is that estate tax must be paid within nine months of the decedent’s death. However, a tax-savvy executor can spread out payments for more than a decade if the estate qualifies for a special tax break.

Here’s the story: If an estate includes a closely-held business or farm that comprises at least 35 percent of the estate’s overall value, the executor can elect to spread out estate tax over a ten-year period following a five-year deferral period. The amount of tax that is deferred must be attributable to the business interest. By combining the installment plan with the five-year deferral, an executor can take as long as 15 years to pay the full estate tax bill.

Estate Tax Break for Business Interests

However, there is a price to pay for this estate tax break: A two percent interest rate applies to the portion of the estate tax deferred on the first $1,450,000 of taxable value of the closely held business. This applies to the estate of a decedent dying in 2014.

Ask your estate planning adviser for more information about this tax break.

 

 

 

 

 

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