The rules for “15-year”1 installment payment of federal estate tax2 require that the value of an “interest in a closely held business” exceeds 35 percent of the adjusted gross estate.3 The statute specifies that an interest in a closely held business means an interest as a proprietor in a trade or business carried on by a proprietorship, an interest as a partner in a partnership carrying on a trade or business or stock in a corporation carrying on a trade or business.4 However, there is no statutory guidance on the circumstances in which ownership of real property is deemed to be a trade or business. This has long been a matter of concern in farm and ranch estate (and business) planning because of the almost dominant role played by real estate in farm and ranch operations.
Harl, Neil E.
"Further Guidance on Where Real Property Interests Constitute an Interest in a Closely-Held Business for Purposes of I.R.C. § 6166,"
Agricultural Law Digest: Vol. 17
, Article 1.
Available at: http://lib.dr.iastate.edu/aglawdigest/vol17/iss15/1