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Member
Group: Forum Members
Last Login: 11/9/2006 1:59:09 PM
Posts: 6,
Visits: 15
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Just looked at the qualifications of making a 6166 election for my client with 4
rentals. Didn't see any case law on it in RIA, only letter rulings and Rev Rul 75-367 that is on point, but unfavorable. IRS instructions say the same thing - Rentals need to be a business not an investment.
It does not look good. My client was an owner who added general supervision
of finding renters and supervising repairs.
Any tips to qualify for this election for someone with only 4 rentals who only
spent a few hours a month on them in the last few years? They probably spent 8
hours a month about 5 years ago.If we take the aggressive approach and ask for it, what is the downside? Failure to pay penalty? Estate is 95% rental real estate. Not enough cash to pay tax. Client is willing to go to the bank to pay, but of course, the 2% 6166 rate is better. Any ideas? Thanks, Glenn Hammill
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| I have never once been questioned when taking a 6166 election for rental properties (assuming they make up the required portion of the gross estate). In each and every case the decedent was actively involved in the management of the property until they became incapacitated from their final illness, and someone else managed the property. In matter of fact I had a decedent die while the funds were being held by an accomodator for a 1031 exchange, and the IRS granted me a 6166 election on those funds held with the accomodator.
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Power Member
Group: Forum Members
Last Login: 3/12/2011 12:58:57 PM
Posts: 147,
Visits: 823
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| I've also had success with a 6166 election with actively managed real estate. IRS audit has focussed on valuation not the nature of the *business.* However, I think it's a bad way to finance payment of the tax because it ties the properties up for so long and the rate isn't that favorable once you're over the limit qualifying for low interest.
Mary Kay Foss
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