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(B) In the case of a distribution in redemption of stock to which section 303 (or so much of section 304 as relates to section 303) applies

(i) the redemption of such stock, and the withdrawal of money and other property distributed in such redemption, shall not be treated as a distribution or withdrawal for purposes of subparagraph (A), and

(ii) for purposes of subparagraph (A), the value of the interest in the closely held business shall be considered to be such value reduced by the value of the stock redeemed.

This subparagraph shall apply only if, on or before the date prescribed by subsection (a)(3) for the payment of the first installment which becomes due after the date of the distribution (or, if earlier, on or before the day which is 1 year after the date of the distribution), there is paid an amount of the tax imposed by section 2001 not less than the amount of money and other property distributed.

(C) Subparagraph (A)(i) does not apply to an exchange of stock pursuant to a plan of reorganization described in subparagraph (D), (E), or (F) of section 368(a)(1) nor to an exchange to which section 355 (or so much of section 356 as relates to section 355) applies; but any stock received in such an exchange shall be treated for purposes of subparagraph (A)(i) as an interest qualifying under subsection (a)(1).

(D) Subparagraph (A)(i) does not apply to a transfer of property of the decedent to a person entitled by reason of the decedent's death to receive such property under the decedent's will, the applicable law of descent and distribution, or a trust created by the decedent. A similar rule shall apply in the case of a series of subsequent transfers of the property by reason of death so long as each transfer is to a member of the family (within the meaning of section 267(c)(4)) of the transferor in such transfer. (2) Undistributed income of estate

(A) If an election is made under this section and the estate has undistributed net income for any taxable year ending on or after the due date for the first installment, the executor shall, on or before the date prescribed by law for filing the income tax return for such taxable year (including extensions thereof), pay an amount equal to such undistributed net income in liquidation of the unpaid portion of the tax payable in installments.

(B) For purposes of subparagraph (A), the undistributed net income of the estate for any taxable year is the amount by which the distributable net income of the estate for such taxable year (as defined in section 643) exceeds the sum of—

(i) the amounts for such taxable year specified in paragraphs (1) and (2) of section 661(a) (relating to deductions for distributions, etc.);

(ii) the amount of tax imposed for the taxable year on the estate under chapter 1; and

(iii) the amount of the tax imposed by section 2001 (including interest) paid by the executor during the taxable year (other than any amount paid pursuant to this paragraph).

(3) Failure to make payment of principal or interest

(A) In general

Except as provided in subparagraph (B), if any payment of principal or interest under this section is not paid on or before the date fixed for its payment by this section (including any extension of time), the unpaid portion of the tax payable in installments shall be paid upon notice and demand from the Secretary.

(B) Payment within 6 months

If any payment of principal or interest under this section is not paid on or before the date determined under subparagraph (A) but is paid within 6 months of such date

(i) the provisions of subparagraph (A) shall not apply with respect to such payment,

(ii) the provisions of section 6601(j) shall not apply with respect to the determination of interest on such payment, and

(iii) there is imposed a penalty in an amount equal to the product of—

(I) 5 percent of the amount of such payment, multiplied by

(II) the number of months (or fractions thereof) after such date and before payment is made.

The penalty imposed under clause (iii) shall be treated in the same manner as a penalty imposed under subchapter B of chapter 68. (h) Election in case of certain deficiencies (1) In general

If

(A) a deficiency in the tax imposed by section 2001 is assessed,

(B) the estate qualifies under subsection (a)(1), and

(C) the executor has not made an election under subsection (a),

the executor may elect to pay the deficiency in installments. This subsection shall not apply if the deficiency is due to negligence, to intentional disregard of rules and regulations, or to fraud with intent to evade tax. (2) Time of election

An election under this subsection shall be made not later than 60 days after issuance of notice and demand by the Secretary for the payment of the deficiency, and shall be made in such manner as the Secretary shall by regulations prescribe.

(3) Effect of election on payment

If an election is made under this subsection, the deficiency shall (subject to the limitation provided by subsection (a)(2)) be prorated to the installments which would have been due if an election had been timely made under subsection (a) at the time the estate tax return was filed. The part of the deficiency so prorated to any installment the date for payment of which would have arrived shall be paid at the time of the making of the election under this subsection. The portion of the deficiency so prorated to installments the date for payment of which would not have so arrived shall be paid at the time such installments would have been due if such an election had been made.

(i) Regulations

The Secretary shall prescribe such regulations as may be necessary to the application of this section.

(j) Cross references

(1) Security

For authority of the Secretary to require security in the case of an extension under this section, see section 6165.

(2) Lien

For special lien (in lieu of bond) in the case of an extension under this section, see section 6324A. (3) Period of limitation

For extension of the period of limitation in the case of an extension under this section, see section 6503(d). (4) Interest

For provisions relating to interest on tax payable in installments under this section, see subsection (j) of section 6601.

(5) Transfers within 3 years of death

For special rule for qualifying an estate under this section where property has been transferred within 3 years of decedent's death, see section 2035(d)(4).

(Added Pub. L. 94-455, title XX, § 2004(a), Oct. 4, 1976, 90 Stat. 1862, and amended Pub. L. 95-600, title V, § 512(a), (b), Nov. 6, 1978, 92 Stat. 2882, 2883; Pub. L. 97-34, title IV, § 422(a), (c), (e)(5)(A), (B), Aug. 13, 1981, 95 Stat. 314-316; Pub. L. 97-448, title I, § 104(c), (d)(1)(B), Jan. 12, 1983, 96 Stat. 2382, 2383.)

PRIOR PROVISIONS

A prior section 6166 was renumbered 6166A, and repealed by Pub. L. 97-34, title IV, § 422(d), Aug. 13, 1981, 95 Stat. 315.

AMENDMENTS

1983-Subsec. (b)(3). Pub. L. 97-448, § 104(c)(1), substituted "35-percent requirement" for "65-percent requirement".

Subsec. (g)(1)(B)(i). Pub. L. 97-448, § 104(c)(2), substituted the redemption of such stock, and the withdrawal of money or other property distributed in such redemption, shall not be treated as a distribution or withdrawal for purposes of subparagraph (A), and" for "subparagraph (A)(i) does not apply with respect to the stock redeemed; and for purposes of such subparagraph the interest in the closely held business shall be considered to be such interest reduced by the value of the stock redeemed, and”.

Subsec. (g)(1)(B)(ii). Pub. L. 97-448, § 104(c)(2), substituted for purposes of subparagraph (A), the value of

the interest in the closely held business shall be considered to be such value reduced by the value of the stock redeemed" for "subparagraph (A)(ii) does not apply with respect to withdrawals of money and other property distributed; and for purposes of such subparagraph the value of the trade or business shall be considered to be such value reduced by the amount of money and other property distributed".

Subsec. (j)(5). Pub. L. 97-448, § 104(d)(1)(B), added par. (5).

1981-Pub. L. 97-34, § 422(e)(5)(B), substituted "Extension of time" for "Alternate extension of time" in section heading.

Subsec. (a). Pub. L. 97-34, § 422(a)(1), (e)(5)(A), substituted in par. (1) “35 percent" for "65 percent" and struck out par. (4), which provided that no election be made under this section by the executor of the estate of any decedent if an election under section 6166A applies with respect to the estate of such decedent. Subsec. (c). Pub. L. 97-34, § 422(a)(2), substituted "20 percent or more" for "more than 20 percent".

Subsec. (g)(1)(A). Pub. L. 97-34, § 422(c)(1), redesignated cl. (i) as cl. (i)(I), and in cl. (i)(I) as so redesignated, substituted "any portion" for "one-third or more in value", added cl. (i)(II), substituted in cl. (ii) "the aggregate of such distributions, sales, exchanges, or other dispositions and withdrawals equals or exceeds 50 percent of the value of such interest" for "aggregate withdrawals of money and other property from the trade or business, an interest in which qualifies under subsection (a)(1), made with respect to such interest, equal or exceed one-third of the value of such trade or business" and in provision following cl. (ii) substituted "the unpaid portion" for "any unpaid portion".

Subsec. (g)(1)(D). Pub. L. 97-34, § 422(c)(3), added provision for application of a similar rule in the case of a series of subsequent transfers of the property by reason of death so long as each transfer is to a member of the family of the transferor in such transfer.

Subsec. (g)(3). Pub. L. 97-34, § 422(c)(2), substituted as heading "Failure to make payment of principal or interest" for "Failure to pay installment", designated existing provisions as subpar. (A), and in subpar. (A) as so designated, substituted "Except as provided in subparagraph (B), if any payment of principal or interest" for "If any installment" and "extension of time" for "extension of time for the payment of such installment", and added subpar. (B).

1978-Subsec. (b)(2)(D). Pub. L. 95-600, § 512(a), added subpar. (D).

Subsec. (b)(7). Pub. L. 95-600, § 512(b), added par.

(7).

EFFECTIVE DATE OF 1983 Amendment

Amendment by Pub. L. 97-448 effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 109 of Pub. L. 97-448, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1981 Amendment

Section 422(f) of Pub. L. 97-34 provided that:

"(1) IN GENERAL.-Except as provided in paragraph (2), the amendments made by this section (amending sections 303, 2011, 2204, 2621, 6161, 6166, 6324A, 6503, and 7403 of this title and repealing section 6166A of this title] shall apply to the estates of decedents dying after December 31, 1981.

"(2) ACCELERATION BY REason of subSEQUENT DEATH.— The amendment made by subsection (c)(3) [amending subsec. (g)(1)(D) of this section] shall apply to transfers after December 31, 1981."

EFFECTIVE DATE OF 1978 AmendmenT Section 512(c) of Pub. L. 95-600 provided that: "The amendments made by this section [adding subsec. (b)(2)(D) and (7) of this section] shall apply with respect to the estates of decedents dying after the date of the enactment of this Act [Nov. 6, 1978]."

EFFECTIVE DATE

Section 2004(g) of Pub. L. 94-455 provided that: "The amendments made by this section [enacting sections 2204(c), 6166, 6324A and 6601(j) of this title, and amending sections 303(b)(1), (2), (3), (4), (c), 2011(c)(2), 2204(a), (b), 6136(b), 6161(a)(2), (b), 6503(d) and 7403(a) of this title] shall apply to the estates of decedents dying after December 31, 1976."

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 303, 2011, 2032A, 2035, 2621, 6324A, 6503, 6601, 7403 of this title. [§ 6166A. Repealed. Pub. L. 97-34, title IV, § 422(d), Aug. 13, 1981, 95 Stat. 315]

Section, added Pub. L. 85-866, title II, § 206(a), Sept. 2, 1958, 72 Stat. 1681, § 6166, and amended Pub. L. 93-625, § 7(d)(2), (3), Jan. 3, 1975, 88 Stat. 2115, renumbered 6166A, and amended Pub. L. 94-455, title XIX, § 1906(b)(13)(A), title XX, § 2004(a), Oct. 4, 1976, 90 Stat. 1834, 1862, provided for an extension of time for payment of estate tax where estate consists largely of interest in closely held business.

EFFECTIVE DATE OF REPEAL

Repeal of section applicable to the estates of decedents dying after Dec. 31, 1981, see section 422(f)(1) of Pub. L. 97-34, set out as an Effective Date of 1981 Amendment note under section 6166 of this title.

§ 6167. Extension of time for payment of tax attributable to recovery of foreign expropriation losses (a) Extension allowed by election

If

(1) a corporation has a recovery of a foreign expropriation loss to which section 1351 applies, and

(2) the portion of the recovery received in money is less than 25 percent of the amount of such recovery (as defined in section 1351(c)) and is not greater than the tax attributable to such recovery,

the tax attributable to such recovery shall, at the election of the taxpayer, be payable in 10 equal installments on the 15th day of the third month of each of the taxable years following the taxable year of the recovery. Such election shall be made at such time and in such manner as the Secretary may prescribe by regulations. If an election is made under this subsection, the provisions of this subtitle shall apply as though the Secretary were extending the time for payment of such tax.

(b) Extension permitted by Secretary

If a corporation has a recovery of a foreign expropriation loss to which section 1351 applies and if an election is not made under subsection (a), the Secretary may, upon finding that the payment of the tax attributable to such recovery at the time otherwise provided in this subtitle would result in undue hardship, extend the time for payment of such tax for a reasonable period or periods not in excess of 9 years from the date on which such tax is otherwise payable.

(c) Acceleration of payments

If

(1) an election is made under subsection (a), (2) during any taxable year before the tax attributable to such recovery is paid in full

(A) any property (other than money) received on such recovery is sold or exchanged, or

(B) any property (other than money) received on any sale or exchange described in subparagraph (A) is sold or exchanged, and (3) the amount of money received on such sale or exchange (reduced by the amount of the tax imposed under chapter 1 with respect to such sale or exchange), when added to the amount of money

ex

(A) received on such recovery, and (B) received on previous sales or changes described in subparagraphs (A) and (B) of paragraph (2) (as so reduced), exceeds the amount of money which may be received under subsection (a)(2),

an amount of the tax attributable to such recovery equal to such excess shall be payable on the 15th day of the third month of the taxable year following the taxable year in which such sale or exchange occurs. The amount of such tax so paid shall be treated, for purposes of this section, as a payment of the first unpaid installment or installments (or portion thereof) which become payable under subsection (a) following such taxable year.

(d) Proration of deficiency to installments

If an election is made under subsection (a), and a deficiency attributable to the recovery of a foreign expropriation loss has been assessed, the deficiency shall be prorated to such installments. The part of the deficiency so prorated to any installment the date for payment of which has not arrived shall be collected at the same time as, and as part of, such installment. The part of the deficiency so prorated to any installment the date for payment of which has arrived shall be paid upon notice and demand from the Secretary. This subsection shall not apply if the deficiency is due to negligence, to intentional disregard of rules and regulations, or to fraud with intent to evade tax.

(e) Time for payment of interest

If the time for payment for any amount of tax has been extended under this section, interest payable under section 6601 on any unpaid portion of such amount shall be paid annually at the same time as, and as part of, each installment payment of the tax. Interest, on that part of a deficiency prorated under this section to any installment the date for payment of which has not arrived, for the period before the date fixed for the last installment preceding the assessment of the deficiency, shall be paid upon notice and demand from the Secretary.

(f) Tax attributable to recovery of foreign expropriation loss

For purposes of this section, the tax attributable to a recovery of a foreign expropriation loss is the sum of—

(1) the additional tax imposed by section 1351(d)(1) on such recovery, and

(2) the amount by which the tax imposed under subtitle A is increased by reason of the gain on such recovery which under section 1351(e) is considered as gain on the involuntary conversion of property.

(g) Failure to pay installment

If any installment under this section is not paid on or before the date fixed for its payment by this section (including any extension of time for the payment of such installment), the unpaid portion of the tax payable in installments shall be paid upon notice and demand from the Secretary.

(h) Cross-references

(1) Security. For authority of the Secretary to require security in the case of an extension under this section, see section 6165.

(2) Period of limitation.-For extension of the period of limitation in the case of an extension under this section, see section 6503(e).

(Added Pub. L. 89-384, § 1(d), Apr. 8, 1966, 80 Stat. 102, and amended Pub. L. 93-625, § 7(d)(2), (3), Jan. 3, 1975, 88 Stat. 2115; Pub. L. 94-455, title XIX, §§ 1902(b)(2)(B), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1806, 1834.)

AMENDMENTS

[blocks in formation]

1976-Subsecs. (a), (b), (d), (e), (g). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary".

Subsec. (h). Pub. L. 94-455, §§ 1902(b)(2)(B), 1906(b)(13)(A), substituted "section 6503(e)" for "section 6503(f)", and struck out "or his delegate" following "Secretary”.

1975-Subsec. (e). Pub. L. 93-625, § 7(d)(2), struck out provision that in applying section 6601(j) (relating to the application of the 4-percent interest rate in the case of recoveries of foreign expropriation losses to which this section applies) in the case of a deficiency, the entire amount which was prorated to installments under this section shall be treated as an amount of tax the payment of which was extended under this section.

Subsec. (h). Pub. L. 93-625, § 7(d)(3), struck out par. (1) providing a cross reference for payment of interest at 4 percent per annum for period of an extension under section 6601(j) of this title, and redesignated pars. (2) and (3) as (1) and (2), respectively.

EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (h)(2) by section 1902(b)(2)(B) of Pub. L. 94-455 applicable to estates of decedents dying after Oct. 4, 1976, see section 1902(c)(1) of Pub. L. 94-455, set out as a note under section 2011 of this title.

EFFECTIVE DATE OF 1975 Amendment Amendment by Pub. L. 93-625 effective July 1, 1975, and applicable to amounts outstanding on such date or arising thereafter, see section 7(e) of Pub. L. 93-625, set out as an Effective Date note under section 6621 of this title.

EFFECTIVE DATE

Section applicable with respect to amounts received after December 31, 1964, in respect of foreign expropriation losses (as defined in section 1351(b) of this title) sustained after December 31, 1958, see section 2 of Pub. L. 89-384, set out as a note under section 1351 of this title.

6207.

AMENDMENTS

1983-Pub. L. 97-424, title V, § 515(b)(3)(B), Jan. 6, 1983, 96 Stat. 2181, struck out reference to section 6424 in item 6206.

1970-Pub. L. 91-258, title II, § 207(d)(11), May 21, 1970, 84 Stat. 249, inserted reference to section 6427 in item 6206.

1965-Pub. L. 89-44, title II, § 202(c)(2)(B), June 21, 1965, 79 Stat. 139, substituted "6420, 6421, and 6424" for "6420 and 6421" in item 6206.

1956-Act Apr. 2, 1956, ch. 160, § 4(b)(2), 70 Stat. 91. inserted item "6206. Special rules applicable to excessive claims under section 6420", and renumbered former item "6206" as "6207".

Act June 29, 1956, ch. 62, title II, § 208(c)(3), substituted "sections 6420 and 6421" for "section 6420" in item "6206".

SUBCHAPTER REFERRED TO IN OTHER SECTIONS This subchapter is referred to in section 7851 of this title.

§ 6201. Assessment authority (a) Authority of Secretary

The Secretary is authorized and required to make the inquiries, determinations, and assessments of all taxes (including interest, additional amounts, additions to the tax, and assessable penalties) imposed by this title, or accruing under any former internal revenue law, which have not been duly paid by stamp at the time and in the manner provided by law. Such au

'Section numbers editorially supplied.

thority shall extend to and include the following:

(1) Taxes shown on return

The Secretary shall assess all taxes determined by the taxpayer or by the Secretary as to which returns or lists are made under this title.

(2) Unpaid taxes payable by stamp

(A) Omitted stamps

Whenever any article upon which a tax is required to be paid by means of a stamp is sold or removed for sale or use by the manufacturer thereof or whenever any transaction or act upon which a tax is required to be paid by means of a stamp occurs without the use of the proper stamp, it shall be the duty of the Secretary, upon such information as he can obtain, to estimate the amount of tax which has been omitted to be paid and to make assessment therefor upon the person or persons the Secretary determines to be liable for such tax.

(B) Check or money order not duly paid

In any case in which a check or money order received under authority of section 6311 as payment for stamps is not duly paid, the unpaid amount may be immediately assessed as if it were a tax imposed by this title, due at the time of such receipt, from the person who tendered such check or money order.

(3) Erroneous income tax prepayment credits

If on any return or claim for refund of income taxes under subtitle A there is an overstatement of the credit for income tax withheld at the source, or of the amount paid as estimated income tax, the amount so overstated which is allowed against the tax shown on the return or which is allowed as a credit or refund may be assessed by the Secretary in the same manner as in the case of a mathematical or clerical error appearing upon the return, except that the provisions of section 6213(b)(2) (relating to abatement of mathematical or clerical error assessments) shall not apply with regard to any assessment under this paragraph.

(4) Erroneous credit under section 39 or 43

If on any return or claim for refund of income taxes under subtitle A there is an overstatement of the credit allowable by section 39 (relating to certain uses of gasoline and special fuels) or section 43 (relating to earned income), the amount so overstated which is allowed against the tax shown on the return or which is allowed as a credit or refund may be assessed by the Secretary in the same manner as in the case of a mathematical or clerical error appearing upon the return, except that the provisions of section 6213(b)(2) (relating to abatement of mathematical or clerical error assessments) shall not apply with regard to any assessment under this paragraph.

(b) Amount not to be assessed (1) Estimated income tax

No unpaid amount of estimated tax under section 6153 or 6154 shall be assessed.

(2) Federal unemployment tax

No unpaid amount of Federal unemployment tax for any calendar quarter or other period of a calendar year, computed as provided in section 6157, shall be assessed.

(c) Compensation of child

Any income tax under chapter 1 assessed against a child, to the extent attributable to amounts includible in the gross income of the child, and not of the parent, solely by reason of section 73(a), shall, if not paid by the child, for all purposes be considered as having also been properly assessed against the parent.

(d) Deficiency proceedings

For special rules applicable to deficiencies of income. estate, gift, and certain excise taxes, see subchapter B.

(Aug. 16, 1954, ch. 736, 68A Stat. 767; June 21, 1965, Pub. L. 89-44, title VIII, § 809(d)(4)(A), 79 Stat. 168; Aug. 7, 1969, Pub. L. 91-53, § 2(b), 83 Stat. 92; Dec. 30, 1969, Pub. L. 91-172, title I, § 101(j)(38), 83 Stat. 530; May 21, 1970, Pub. L. 91-258, title II, § 207(d)(1), (2), 84 Stat. 248; Sept. 2, 1974, Pub. L. 93-406, title II, § 1016(a)(8), 88 Stat. 929; Mar. 29, 1975, Pub. L. 94-12, title II, § 204(b)(2), 89 Stat. 31; Oct. 4, 1976, Pub. L. 94-455, title XII, § 1206(c)(2), title XIII, § 1307(d)(2)(D), title XIX,

§ 1906(b)(13)(A), 90 Stat. 1704, 1727, 1834; Jan. 6, 1983, Pub. L. 97-424, title V, § 515(b)(6)(E), 96 Stat. 2182.)

1983-Subsec.

AMENDMENTS

(a)(4). Pub. L. 97-424, substituted "and special fuels" for ", special fuels, and lubricating oil" after "gasoline".

1976-Subsec. (a). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary".

Subsec. (a)(3), (4). Pub. L. 94-455, §§ 1206(c)(2), 1906(b)(13)(A), struck out "or his delegate" following "Secretary", substituted "mathematical or clerical error" for "mathematical error" following "the case of", and added ", except that the provisions of section 6213(b)(2) (relating to abatement of mathematical or clerical error assessments) shall not apply with regard to any assessment under this paragraph" following "upon the return".

Subsec. (d). Pub. L. 94-455, § 1307(d)(2)(D), substituted "and certain excise taxes" for "chapter 42, and chapter 43 taxes" following "estate, gift".

1975-Subsec. (a)(4). Pub. L. 94-12 inserted reference to section 43 in the par. heading and substituted "oil) or section 43 (relating to earned income)," for "oil)," in text.

1974-Subsec. (d). Pub. L. 93-406 inserted reference to chapter 43 taxes.

1970-Subsec. (a)(4). Pub. L. 91-258 included provision for overstatement of credit allowable by section 39 (relating to certain uses of special fuels) and substituted "under section 39" for "for use of gasoline" in par. (4) heading, respectively.

1969-Subsec. (b). Pub. L. 91-53 added subsec. (b) heading and par. (2), and redesignated former subsec. (b), including its heading, as par. (1).

Subsec. (d). Pub. L. 91-172 inserted reference to chapter 42 taxes.

1965-Subsec. (a)(4). Pub. L. 89-44 added par. (4).

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