The Tax Court, however, agreed with the IRS that the QFOBI definition should be read as limited by the terms of the family ownership test.
Both their estate tax returns claimed deductions for QFOBIs, which the IRS disallowed in 2005.
A comparison of estates that claimed QFOBI to estates that did not claim the provision suggests that the two groups vary significantly in terms of liquidity.
Figure J shows the asset composition of estates by QFOBI status.
Compared to QFOBI estates, non-QFOBI estates held greater concentrations of other assets, such as liquid assets and personal residences.
Among QFOBI estates, 31.6 percent reported closely held business assets, while only 8.5 percent of non-QFOBI estates reported such assets.
The value of the QFOBI
passing to family members at an individual's death must be greater than 50 percent of the individual's estate.
Gifts of QFOBI
made to members of the decedent's family since 1977 are included in the computation at their original "date-of-gift values," provided those interests have continuously been held by family members since the original gift.
2033A qualified family-owned business interest (QFOBI) exclusion included in the IRS Restructuring and Reform Act of 1998 (IRSRRA '98) and the permanent extension of Sec.
Prior to the IRSRRA '98, the QFOBI exclusion decreased as the applicable exclusion amount increased; their combined benefit never exceeded $1.3 million.
2057(b)(2) that the deducted QFOBI pass to a qualified heir or a trust,(4) all of the beneficiaries of which are qualified heirs.
were eligible for a maximum estate tax deduction of as much as $675,000 in calendar-year 2000, on schedule T of Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return.