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Example 6
This computation is a simple Sec. 6166 Interest computation The data for this computation is simple:
Step 1Click on the File menu and select the New option. The New dialog box has a list box showing that it can create either a Case File or an Interest Table. If Case File is not selected, select it by clicking on it with your mouse. When Case File is selected, click on the OK button and a new case file will be created. Step 2If you cannot see all the information displayed in the document view window, you should maximize the window by clicking on the Maximize button. It is one of the buttons on the right of the title bar. If you can see the full width of the information displayed, you do not need to maximize this window. Step 3Enter some basic information. Click on the General button on the Case Bar to the left of the DeskTop. This will bring up the General Tab Sheet with the General Tab Page selected. Enter the date of death as "1/15/87". Then hit Tab to move to the Decedent's Name edit box and enter "Joe Blow". Hit Tab to move the the memorandum edit box and enter "Sixth sample computation". Hit Tab to move to the gross estate edit box and enter "3,500,000". Hit Tab to move to the JK+L before interrelated items edit box and enter "275,000". At this point hit Enter to leave this dialog box and return to the main output screen. Change to the Standard view. There are two ways to do this. The fastest is to click on the Standard View button on the Tool Bar. The other way is to go to the View menu and select Standard Case View. The output screen now has more data on it. Some of the lines show zero amounts. You will probably have to scroll up and down to see all of the output data. Step 4The next thing to to is to name and save this file. You can get to the Save As Dialog box three different ways. Click the Save Button on the Tool Bar, From the File menu select Save, or from the File menu select Save As. Save the file under the name "Sample6" by entering that name in the File name edit box and hitting return. Notice that the name on the title bar has changed to "Sample6" showing that the new name was accepted. Step 5Next we will tell Inter-Est to compute the federal interest and use it as a Schedule J deduction in the computation. Click on the Fed Int button on the Case Bar to the left of the DeskTop. This will place us in the Federal Interest Input dialog box. Select "Compute Interest" and "Use all accrued interest". Next we need to tell Inter-Est that we wish to make a Sec. 6166 Election. Click on the Sec. 6166 Election button. In the Sec. 6166 Election data dialog box, Select the election, hit Tab and enter the closely held business amount in the correct edit box. The amount is 2,000,000. All other information in this dialog box will remain at the default settings. Hit Enter to accept this entry. We will now enter the payment with the return and a computation date. Click on the Period Data button. This will bring you to the Interest Period Data dialog box. Double Click on the 10/15/87 period line in the list box. This will bring you to the Interest Period Data dialog box for the due date. Hit Tab once to move to the Tax Payment edit box and enter "375,000". Hit Enter to accept this entry and return to the Interest Period Data dialog box. You will notice that Inter-Est placed an entry for all anniversary dates between the due date and the current date into the data structure. We will need to remove the excess entries. Select the entry for 10/15/89. With this entry selected select the Delete Period button and delete this period. Continue hitting the Delete Period button until all entries with a date after 10/15/88 are removed. When this has been done, Click on the Close button to return to the Federal Interest Input dialog box. Click on OK to accept the changes made to this point. Step 6We have finished this computation. It is time to save the final version. Click the Save Button on the Tool Bar or from the File menu select Save. As you gave the file a name in step 6 you do not need to do that again. We have completed a simple Sec. 6166 interest computation that computes and deducts interest accrued during the first year. See if your output matched the program output below.
Program OutputEstate of: Sam Spade, DD: 1 15 1987
Memorandum: Sixth sample computation.
File Name: D:\TEST\EST3\Sample6.ET3, (Standard Output)
Inter-Est Version 3.00, Release 00
Date and time of run: Tuesday, December 26, 1995, 11:19 AM
MAIN PRINTOUT SECTION
Gross Estate 3,500,000.00
Sch. JK&L (before interrelated) 275,000.00
Int, Federal 56,687.77
Debts & Expenses 331,687.77
Marital Deduction 0.00
Charitable Deduction 0.00
Total Deductions 331,687.77
Taxable Estate 3,168,312.23
Adjusted Taxable Gifts 0.00
Total Amount Drawing Tax 3,168,312.23
Tentative Tax 1,383,371.73
Aggregate Gift Tax Paid 0.00
Tax before Unified Credit 1,383,371.73
Unified Credit from Table 192,800.00
Adjustment to Unified Credit 0.00
Net Unified Credit 192,800.00
Tax before SDTC 1,190,571.73
State Death Tax Credit 197,357.97
Net Tax after State Death Tax Credit 993,213.76
Gift Tax Credit 0.00
Foreign Death Tax Credit (Statutory) 0.00
Prior Transfer Credit 0.00
Foreign Death Tax Credit (Treaty) 0.00
Total Credits 0.00
Estate Tax 993,213.76
Generation Skipping Transfer Tax 0.00
Increased Estate Tax 0.00
Total Federal Tax 993,213.76
FEDERAL INTEREST OPTION SELECTED
Interest Table File: D:\TEST\EST3\Federal.IT4
Interest Table Description: Federal (RProc 95-17)(6/95)
Special Interest Rate Used: 4.0000000 %
INTEREST FACTORS USED
Regular Special Refund
Pd # 1 c 10.8424135 % 4.0832493 % 9.7391743 %
Sec. 6166 Installment Option Elected
Closely Held Business Amount 2,000,000.00
Fed. Gross Estate 3,500,000.00
JK&L before Int. <275,000.00>
Adjusted Gross Estate (6166) 3,225,000.00
Qualifying Percentage 62.0155039 %
Number of Regular Tax Payments 10 Years Installment Tax Payments Delayed 5
Total Qualified Tax 615,946.52
Tax Qualified for Special Rate 153,000.00
Other Qualified Tax 462,946.52
Tax Not Qualified 377,267.24
Qualified Tax which was Extended 615,946.52
PART 1
Date Tax Pmt. Int. Pmt.
Due Date 10 15 1987 375,000.00 0.00 Da P
Pd # 1 10 15 1988 -------------- -------------- Ba
Sec. 6166 Flags
First Flag, Principal Allocation:
A = Deficiency or Interim Payment with Normal Allocation
B = Installment Date with Only Interest Payment Due
C = Installment Date with Tax Payment and Interest Payment Due
D = Payment on or Before Date Return was Filed
E = All tax moved to Non-Qualified (Election Terminated)
Second Flag, Interest Allocation:
a = Balance moved to Non-Qualified (Installment Date or Termination)
b = Allocate to All Interest Equally (Deficiency Pmt, Extra Pmt)
c = Allocate to Non-Qualified then Qualified (Special Direction)
d = Allocate to Non-Qua. then, Reg. Qua. then 4% Qua. (Special Dir.)
e = Allocate to Amounts drawing Regular Rate First (Special Direction)
SA = Special Allocation: Non-Qua. Tax, then Interest, then Qual. Tax
All = All tax and interest draws the regular interest rate
P = Period entry for Interest on Penalty Computation
PART 2 Starting Tax Interest Applied
Balance Paid Balance To Balance
Due Date 993,213.76 375,000.00 0.00 375,000.00
Pd # 1 618,213.76 0.00 56,687.77 0.00
PART 3
Interest Total Amount Interest
Drawing Int. Drawing Int. Factor Interest
Period # 1
Qua. (4%) 0.00 153,000.00 4.0832493 % 6,247.37
Oth. Qua 0.00 462,946.52 10.8424135 % 50,194.58
Non-Qua. 0.00 2,267.24 10.8424135 % 245.82
Total Interest Deduction 56,687.77
LAST LINE OF PRINTOUT Previous Example Home Page Top of Page Next Example
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