Sec. 12-376b. Optional payment in installments up to ten years when interest in closely held business exceeds thirty-five per cent of gross estate.
Sec. 12-376b. Optional payment in installments up to ten years when interest
in closely held business exceeds thirty-five per cent of gross estate. (a) Whenever
the value of an interest in a closely held business, as defined in subsection (b) of this
section, included in the gross estate of any decedent exceeds an amount determined as
thirty-five per cent of the value of such gross estate, the fiduciary of such estate may
elect to pay all or part of the tax imposed under this chapter in equal annual installments
but not in excess of ten such installments. The maximum amount of tax which may be
paid in such installments shall be an amount which bears the same ratio to the tax imposed
under this chapter with respect to such decedent's estate as the value of such interest in
a closely held business bears to the total value of such gross estate. The amount of tax
paid in such installments shall bear interest in relation to the unpaid portion of such tax
from the expiration of six months after the death of the decedent until such tax is paid
at the rate of one per cent per month or fraction thereof. If the fiduciary of such estate
elects to pay such tax or any portion thereof in accordance with this section, notice of
such election shall be filed in writing with the Commissioner of Revenue Services not
later than six months after the date of death of the decedent. The first such installment
payment, including interest, shall be due not later than sixty days immediately following
determination by said commissioner of the amount of tax applicable to such estate under
this chapter. If such interest in a closely held business is transferred from such estate or
if the fiduciary fails to make the first installment payment, including interest, or if the
fiduciary fails to make any subsequent installment payment, including interest, within
twelve months immediately following such preceding payment, such estate shall cease
to be eligible for the payment procedure allowed in accordance with this section. Whenever the tax imposed under this chapter is paid in installments as provided in this section,
the fiduciary of the estate shall deposit with the Commissioner of Revenue Services a
surety bond, or such other form of security deemed acceptable by said commissioner,
in an amount equivalent to the tax to be paid in such installments.
(b) For purposes of this section "closely held business" means (1) a trade or business
carried on as a sole proprietorship, (2) a trade or business carried on as a partnership,
provided (A) twenty per cent or more of the total capital interest in such partnership is
included in determining the gross estate of the decedent or (B) such partnership had
fifteen or fewer partners at the time of the decedent's death, or (3) a trade or business
carried on as a corporation, provided (A) twenty per cent or more in value of the voting
stock of such corporation is included in determining the gross estate of the decedent or
(B) such corporation had fifteen or fewer shareholders.
(c) The provisions of this section shall be applicable to the estate of any person
whose death occurs on or after July 1, 1985. The estate of any person whose death occurs
prior to July 1, 1985, shall be subject to the provisions of this chapter in effect at the
time of such person's death.
(P.A. 83-289, S. 1, 2; P.A. 85-530, S. 1, 2; P.A. 90-148, S. 18, 34; P.A. 95-26, S. 16, 52.)
History: P.A. 85-530 increased the maximum number of installment payments allowed from three to ten and provided
that such installments shall bear interest at a rate equivalent to that applicable for purposes of underpayment of federal
income tax on the tax due date immediately preceding the date of determination of interest for purposes of installments
payable under this section; P.A. 90-148 amended Subsec. (a) by reducing the period after the death of the decedent following
which installments shall bear interest and during which notice must be filed of election to pay in installments, from nine
to six months in both cases, effective July 1, 1990, and applicable to the estate of any transferor whose death occurs on or
after that date; P.A. 95-26 amended Subsec. (a) to lower interest rate from the established federal rate for underpayment
to 1% per month, effective July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not
those taxes first became due before said date.