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Member
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Last Login: 3/10/2009 3:39:12 PM
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| We have a 706 that was filed timely in 2004 and resulted in tax liability due to a business owned by the decedent. The valuation on the return for the business was 4.7 million, but the best offer they had when attempting to sell the business was 3.5 million. The business was related to the construction industry and has shrunk in value as has most of the market. The heirs have been making interest payments on the tax liability and are now faced with a principal payment due in Jan 2009. We need to amend the return to deduct the interest that has been paid, and I would like to include a copy of the offer for 3.5 million and attempt to reduce the overall liability. I have done this successfully several years ago (LA IRS Office), but I'm not sure if it would fly now. Is the statute for 706, 3 years as with other returns? Have any of you had any success in reducing an estate valuation?
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Member
Group: Forum Members
Last Login: 12/1/2009 12:47:02 PM
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my off-the-top-of-my-head-answer: you could have a 2 or 3 year statute on that amendment- in either case your client is likely out of luck. double check the mitigation provisions (dont think they apply here, but worth checking). if you think that there is any question that the statute is open (mitigation provisions, or otherwise) you can include this in your supplemental return for the interest deduction. worst case is that you get denied for the reduction based on the statute of limitations (warn your client if you go this route).
another consideration would be an offer in compromise- based on doubt as to liability... and possibly on doubt as to collectibililty. more research for you!!
we have filed several amended, or supplemental, estate tax returns- including for changed facts... but all within the statute of limitations.
a strange suggestion: call i.r.s. estate & gift and explain the situation (you do not have to tell them which client). the estate attorneys are generally helpful. worst case is you will know their position (this would not necessarily keep you from pursuing a course of action that you intend to take if you have support but they disagree).
Tracy B (11/21/2008)
We have a 706 that was filed timely in 2004 and resulted in tax liability due to a business owned by the decedent. The valuation on the return for the business was 4.7 million, but the best offer they had when attempting to sell the business was 3.5 million. The business was related to the construction industry and has shrunk in value as has most of the market. The heirs have been making interest payments on the tax liability and are now faced with a principal payment due in Jan 2009.
We need to amend the return to deduct the interest that has been paid, and I would like to include a copy of the offer for 3.5 million and attempt to reduce the overall liability.I have done this successfully several years ago (LA IRS Office), but I'm not sure if it would fly now. Is the statute for 706, 3 years as with other returns? Have any of you had any success in reducing an estate valuation?
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein. |
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Power Member
Group: Forum Members
Last Login: Today @ 2:34:43 PM
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| The statute of limitations is 3 years from filing or 2 years from payment whichever is later. If you're using the 2 year rule, you can only recover the amount of tax paid. Since the first tax payment will be made in January 2009 it makes you wonder if the tax should be paid before the return is amended to deduct the interest and a reduction in value. I've never had this situation. If you're using Sec. 6166, I wonder how long the statute remains open.
Mary Kay Foss
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