What does IRC Section 6166 allow an estate to do?

IRC Section 6166 is specifically designed to benefit estates that include closely held business interests. The section allows a qualified heir to pay estate taxes in installments rather than in a single lump sum payment. This provision is particularly important for estates where the assets are not liquid, meaning that the estate may not have enough cash on hand to cover the estate tax liability without forcing the sale of business assets or other properties.

By enabling installment payments, IRC Section 6166 provides a way for heirs to retain control of the family business or closely held assets without severe financial strain. This is critical for preserving the continuity of the business and allowing time for the estate’s assets to be evaluated and managed effectively without needing to liquidate important assets solely to meet tax obligations.

The other choices do not accurately reflect the purpose of IRC Section 6166, as it does not pertain to lump sum payments, exclusions from the gross estate, or deductions for property transfers.