Form Et-415 - Application For Deferred Payment Of Estate Tax (Page 2 of 3) in pdf

Page 2 of 3 ET-415 (4/14)

Instructions

(continued)

If the decedent had interests in two or more qualifying closely held

closely held business (see Exceptions below). For dates of death

businesses, they will be treated as an interest in one business for

on or after January 1, 1998, the reduced rate of interest is 2%.

calculation purposes.

The deferred tax that exceeds $54,000 is not eligible for a reduced

Along with Form ET-415, the estate must submit a statement

rate of interest, and the prevailing rate of interest is charged.

identifying which properties reported on the estate tax return

Exceptions to the amount eligible for a deferral, due date for

constitute the closely held business, and stating all facts forming

payment of tax, and reduced rate of interest:

the basis that the estate qualifies for the deferred payment of the

1. In the case of a deficiency, only the amount of tax attributable to

estate tax.

the closely held business is eligible for deferral.

Attach the completed Form ET-415 and supporting documents to:

2. If the executor makes the election provided in IRC

Form ET-706. If you fail to attach Form ET-415, mail it, together

section 6166(b)(8) to treat holding company stock owned

with any supporting documents, to the mailing address shown in

by the decedent as business company stock to meet the

Form ET-706-I.

35% requirement, the 5-year deferral for payment of the tax, and

the 2% interest rate, both mentioned above, will not apply. In this

Election to defer payment of the estate tax attributable

case, the first installment payment of tax would be due on the

to a closely held business – The executor may elect to pay

date that is nine months after the date of death.

that portion of the New York State estate tax attributable to the

decedent’s interest in a closely held business in annual installments

of not less than two, and not more than ten, equal payments.

Line instructions

Line 1 – Enter the market value or special use value of the

The estate is required to promptly pay the non-deferred portion of

decedent’s interest in the closely held business. If the estate

the New York State estate tax and applicable accrued penalty and

elected to use the alternate valuation date, use the appropriate

interest, unless it has been granted an extension of time to pay that

value as of that date.

portion of the tax. The deferred payment plan will be cancelled if the

non-deferred portion and any applicable penalty and interest are

Line 2 – Federal adjusted gross estate – The federal adjusted

not paid on time.

gross estate is the amount reported on page 2, Schedule A,

Qualifications – All of the following conditions must be met:

line 8 or Schedule B, line 18, of Form ET-706 used for dates of

death on or after April 1, 2014, reduced by the deductions allowable

1. The decedent’s interest in a closely held business must be more

under IRC sections 2053 or 2054 (the total of the amounts reported

than 35% of the federal adjusted gross estate (see instructions

on federal Form 706 Part 5, lines 18, 19, and 20).

for line 2, below).

Line 3 – Percentage ratio – Test 1 – Divide line 1 by line 2. If the

2. The 35% requirement must also be met by computing the

result is greater than 35%, enter the result on line 3 and round the

percentage ratio by adding the value of any gifts made

result to the fourth decimal place. Continue with Test 2, below. If the

by the decedent within three years of death to the federal

result is 35% or less, the estate fails to qualify and should not file

adjusted gross estate based on Internal Revenue Code (IRC)

this form.

section 2035(c)(2).

3. If the estate is required to file a federal estate tax return, the

Test 2 – If the decedent made any gifts within three years prior

estate must make the election for the federal estate tax.

to death, add to the amount on line 2, the value of those gifts. If

any of those gifts were interests in the closely held business, add

Time limit for making the election – The election must be made

to the amount on line 1 the value of those gifts. Divide line 1 by

within nine months after the date of death, or fifteen months after

line 2. If the result is greater than 35%, the estate qualifies. Use the

the date of death when the estate has been granted an extension

percentage shown on line 3 from Test 1. If the result is 35% or less,

of time to file the estate tax return. (See Form ET-133, Application

the estate does not qualify and should not file this form.

for Extension of Time to File and/or Pay Estate Tax.)

Line 5 – Maximum amount that could be deferred – This

For a deficiency, the election to pay the amount of tax attributable

represents the portion of the net estate tax attributable to the value

to the closely held business in installments must be made within

of the closely held business.

60 days after the issuance of a notice and demand for payment.

Line 6 – Amount elected for installment payments – Enter

Due dates for payment of tax and payment of interest – Unless

that part of the amount on line 5 that the estate elects to pay in

an earlier date is elected, the first installment of tax is due on the

installments.

date that is five years and nine months after the date of death.

Accrued interest on the deferred tax is paid annually, with the first

For a deficiency – If the estate previously elected to defer the tax

payment due on the date that is one year and nine months after the

attributable to a closely held business, the amount of tax eligible for

date of death (see Exceptions, below).

deferral is limited to the maximum amount of tax the estate could

have deferred based on a return reflecting the adjustments that

Acceleration of payments – If the estate fails to make payments

resulted in the deficiency and reduced by the amount previously

of tax or interest within 6 months of the due date, the Tax

elected to be paid in installments. This amount is prorated to the

Department may terminate the right to make installment payments

installments previously elected. The part of the deficiency prorated

and force an acceleration of payment of the tax upon notice and

to future installments is paid with that installment. The part of the

demand.

deficiency prorated to an installment already paid or currently due is

paid with this application.

Generally, if any portion of the interest in the closely held business

which qualifies for installment payments is distributed, sold,

If the executor did not elect to pay the tax on the closely held

exchanged, or otherwise disposed of, or money and other property

business in installments, he or she has 60 days after the issuance

attributable to such an interest is withdrawn, and the aggregate of

of a notice and demand to make an election to pay the deficiency in

these events equals or exceeds 50% of the value of the interest,

installments. If a federal estate tax return is required, the executor

then the right to make installment payments will be terminated, and

must also elect to pay the federal deficiency in installments.

the unpaid portion of the tax will be due upon notice and demand.

Line 7 – Amount of annual installment of tax – Divide the

Interest rates on the deferred tax – Interest accrues on the

amount on line 6 by the number of annual installments elected (that

deferred tax from the date that is nine months after the date of

is, two or more equal annual installments, not to exceed 10).

death. However, a reduced rate of interest is imposed on the lesser

of $54,000, or the tax attributable to the decedent’s interest in a

Form Et-415 - Application For Deferred Payment Of Estate Tax Page 2

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