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Estate Tax Deferral and Closely Held Business Owners

Leah LaPorte (J.D. 2008, Columbia) has published Note, Keeping the Farm: Estate Tax Deferral and Closely Held Business Owners, 41 Colum. J.L. & Soc. Probs. 177 (2008).  Here is the abstract:

This Note explores estate tax liability deferral through 1) the operation of a rarely-used but quite generous provision of the tax code that allows a qualifying estate to defer a portion of its estate tax liability for up to fifteen years, and 2) a commonly-used one-year deferral available to any estate, granted at the discretion of the IRS. The long-term deferral is available only to estates with small business or farm assets and requires that a large percentage of the total estate be held in these assets. The requirements are rigid and the qualification process arduous; only a relative handful of estates ever make use of the deferral. In contrast, the short-term deferral provision has no requirements or threshold; any estate can apply and the IRS grants the deferral at its discretion. While the process is simple, the result is uncertain; and the benefit is relatively small. This Note suggests a compromise provision for the benefit of estates with small business or other illiquid assets that fail to meet the stringent requirements of the long-term deferral provision, but for which the uncertainty of a short-term discretionary deferral strains business operations.


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