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(b) ACCELERATION OF PAYMENT.

(1) WITHDRAWAL OF FUNDS FROM BUSINESS; DISPOSITION OF INTEREST.

(A) If—

(i) aggreagate withdrawals of money and other property from the trade or business, an interest in which qualifies under subsection (a), made with respect to such interest, equal or exceed 50 percent of the value of such trade or business, or

(ii) 50 percent or more in value of an interest in a closely held business which qualifies under subsection (a) is distributed,

sold, exchanged, or otherwise disposed of, then the extension of time for payment of tax provided in this section shall cease to apply, and any unpaid portion of the tax payable in installments shall be paid upon notice and demand from the Secretary or his delegate.

(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) subparagraph (A) (i) 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, and

(ii) subparagraph (A) (ii) 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. This subparagraph shall apply only if, on or before the date prescribed by subsection (e) for payment of the first installment which becomes due 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) (ii) 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 such subparagraph as an interest qualifying under subsection (a).

(D) Subparagraph (A) (ii) does not apply to a transfer of property of the decedent by the executor to a person entitled to receive such property under the decedent's will or under the applicable law of descent and distribution. (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 after its fourth taxable year, 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 deduction 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 Federal estate tax (including interest) paid by the executor during the taxable year (other than any

amount paid pursuant to this paragraph). (3) 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 or his delegate. (i) TRANSITIONAL RULES.(1) IN GENERAL.-If

(A) a deficiency in the tax imposed by section 2001 is assessed after the date of the enactment of this section, and

(B) the estate qualifies under paragraph (1) or (2) of 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 or his delegate for the payment of the deficiency, and shall be made in such manner as the Secretary or his delegate 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 (b)) be prorated to the installments which would have been due if an election had been timely made under this section 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.

(4) APPLICATION OF SUBSECTION (h) (2).-In the case of an election under this subsection, subsection (h) (2) shall not apply with respect to undistributed net income for any taxable year ending before January 1, 1960.

(j) REGULATIONS.—The Secretary or his delegate shall prescribe such regulations as may be necessary to the application of this section.

(k) Cross REFERENCES.(1) INTEREST.

For provisions requiring the payment of interest at the rate of 4 percent per annum for the period of an extension,

see section 6601 (b). (2) SECURITY.

For authority of the Secretary or his delegate to require security in the case of an extension under this section, see

section 6165. (3) PERIOD OF LIMITATION.

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

CHAPTER 63-ASSESSMENT

Subchapter A. In general.
Subchapter B. Deficiency procedures in the case of income, estate,

and gift taxes.

Subchapter A-In General

Sec. 6201. Assessment authority.
Sec. 6202. Establishment by regulations of mode or time of

assessment.
Sec, 6203. Method of assessment.
Sec. 6204. Supplemental assessments.
Sec. 6205. Special rules applicable to certain employment taxes.
Sec. 6206. Special rules applicable to excessive claims under sections

6420 and 6421.
Sec. 6207. Cross references.

SEC, 6201. ASSESSMENT AUTHORITY.

(a) AUTHORITY OF SECRETARY OR DELEGATE.-The Secretary or his delegate 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 authority shall extend to and include the following:

(1) TAXES SHOWN ON RETURN.—The Secretary or his delegate shall assess all taxes determined by the taxpayer or by the Secretary or his delegate 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

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 or his delegate, 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 or his delegate 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 or his delegate in the same manner as in the case of a mathematical error appearing upon the return.

(b) EstIMATED INCOME Tax.-No unpaid amount of estimated tax under section 6153 or 6154 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, and

gift taxes, see subchapter B. SEC. 6202. ESTABLISHMENT BY REGULATIONS OF MODE OR TIME

OF ASSESSMENT. If the mode or time for the assessment of any internal revenue tax (including interest, additional amounts, additions to the tax, and assessable penalties) is not otherwise provided for, the Secretary or his delegate may establish the same by regulations. SEC. 6203. METHOD OF ASSESSMENT.

The assessment shall be made by recording the liability of the taxpayer in the office of the Secretary or his delegate in accordance with rules or regulations prescribed by the Secretary or his delegate. Upon request of the taxpayer, the Secretary or his delegate shall furnish the taxpayer a copy of the record of the assessment. SEC. 6204. SUPPLEMENTAL ASSESSMENTS.

(a) GENERAL RULE.-The Secretary or his delegate may, at any time within the period prescribed for assessment, make a supplemental assessment whenever it is ascertained that any assessment is imperfect or incomplete in any material respect. (b) RESTRICTIONS ON ASSESSMENT.–

For restrictions on assessment of deficiencies in income, estate, and

gift taxes, see section 6213. SEC. 6205. SPECIAL RULES APPLICABLE TO CERTAIN EMPLOY.

MENT TAXES. (a) ADJUSTMENT OF Tax.

(1) GENERAL RULE.—If less than the correct amount of tax imposed by section 3101, 3111, 3201, 3221, or 3402 is paid with respect to any payment of wages or compensation, proper adjustments, with respect to both the tax and the amount to be deducted, shall be made, without interest, in such manner and at such times as the Secretary or his delegate may by regulations prescribe.

(2) UNITED STATES AS EMPLOYER. - For purposes of this subsection, in the case of remuneration received from the United States or a wholly-owned instrumentality thereof during any calendar year, each head of a Federal agency or instrumentality who makes à return pursuant to section 3122 and each agent, designated by the head of a Federal agency or instrumentality, who makes a return pursuant to such section shall be deemed a separate employer.

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