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Understanding Physician Estate Planning
By Lawrence E. Howes; CFP™
By Joel B. Javer; CFP™
A benefit the IRS allows on the death of a doctor or qualifying small business owner is Internal Revenue Code § 6166. This provides for the extension of the payment of estate taxes over a period of 14 years.
Levels of Qualification
Recent legislation has made it more difficult to qualify; there are now three levels of qualification:
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The first is the same as for § 303.
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The second adds a strict definition of a closely held business.
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The third requires that the business must have been actually engaged in carrying on a trade, medical practice, or business at the time of death.
The first four annual payments are interest only and then the next 10 annual payments are principal and interest. The interest rate on the first $484,000 – or currently indexed amount – of tax due is at 2 percent.
Assessment
Calculating the tax that qualifies for the extension requires applying the percentage of the adjusted gross estate attributed to the small business, multiplied by the total federal estate tax.
Conclusion
Please opine and comment if you have ever considered or used this strategy; and what was the result?
Book info: http://www.jbpub.com/catalog/0763745790/
Linguistics: www.HealthDictionarySeries.com
Related Opinion: Why IRC Section 6166 Is Outmoded By Joseph E. Godfrey III, CLU and Steven M. Schanker Esq. http://www.nysscpa.org/cpajournal/2003/0403/nv/nv3a.htm
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