Estate of Duane B. Farnam, Deceased, Mark D. Farnam, Personal Representative, and Estate of Lois L. Farnam, Deceased, Mark D. Farnam, Personal Representative - Page 9

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                         (2) Maximum deduction.--The deduction allowed                
                    by this section shall not exceed $675,000.                        

               Generally, under section 2057(b)(1)(C), for an estate to               
          qualify for a QFOBI deduction, the value of the QFOBIs owned by a           
          decedent at the time of death must exceed 50 percent of the total           
          value of the decedent’s adjusted gross estate--the so-called 50-            
          percent liquidity test.  Section 2057(b)(1)(C) provides as                  

               SEC. 2057.  FAMILY-OWNED BUSINESS INTERESTS.                           
                    (b) Estates to Which Section Applies.--                           
                         (1) In general.--This section shall apply to                 
                    an estate if--                                                    
                        *     *     *     *     *     *     *                         
                              (C) the sum of--                                        
                                   (i) the adjusted value of the                      
                              qualified family-owned business                         
                              interests described in paragraph (2),                   
                                   (ii) the amount of the gifts of                    
                              such interests determined under                         
                              paragraph (3),                                          
                         exceeds 50 percent of the adjusted gross                     
                         estate * * *                                                 

               Under section 2057(e)(1), definitional provisions are                  
          provided, and it is expressly stated in subparagraph (A) that a             
          QFOBI with regard to a sole proprietorship means only an equity             

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Last modified: March 27, 2008