Estate of Duane B. Farnam, Deceased, Mark D. Farnam, Personal Representative, and Estate of Lois L. Farnam, Deceased, Mark D. Farnam, Personal Representative - Page 15

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               Respondent responds that estates holding loan interests                
          would not have the same difficulties paying estate taxes as would           
          estates holding only equity interests in family businesses                  
          because loan interests can be sold to unrelated investors to                
          obtain cash without affecting the ownership structure of the                
          family-owned business.                                                      
               The parties refer to section 6166, an estate tax provision             
          somewhat related to section 2057, and petitioners argue that the            
          language thereof illustrates how Congress could have limited                
          section 2057 had it intended to do so.  Section 6166 provides for           
          a deferral of the payment of Federal estate taxes where the                 
          decedent’s interest in a closely held business exceeds 35 percent           
          of the adjusted gross estate.  For purposes of section                      
          6166(b)(1), the statute expressly limits “interest in” a closely            
          held business to an equity or ownership interest by using the               
          terms “interest as a proprietor”, “interest as a partner”, and              
          “stock”.  The relevant language of section 6166(b)(1) provides as           

               SEC. 6166.  EXTENSION OF TIME FOR PAYMENT OF ESTATE TAX                
                         WHERE ESTATE CONSISTS LARGELY OF INTEREST IN                 
                         CLOSELY HELD BUSINESS.                                       
                    (b) Definitions and Special Rules.--                              
                         (1) Interests in closely held business.--For                 
                    purposes of this section, the term “interest in a                 
                    closely held business” means--                                    

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Last modified: March 27, 2008