Estate Tax Installment Payments refer to a method of paying federal estate taxes over time rather than in a single lump sum.
Under the Internal Revenue Code, an estate can elect to pay estate taxes in installments if certain conditions are met, such as the size of the estate and the nature of the assets. This option is typically available for estates that include closely held businesses or real property, allowing the executor to avoid immediate liquidation of assets to cover tax liabilities.
The payments can be made over a period of up to 15 years, with the first payment due within nine months after the date of the decedent’s death. Interest may apply to the unpaid tax balance. For example, if an estate owes $1 million in federal estate taxes, the executor may opt to pay it in installments rather than selling off assets, thus preserving the estate’s value and allowing for the business or property to continue operating.
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