Statutory Election Procedure Must Be Followed To Make Installment Payment Election.

I.R.C. Sec. 6166(d) specifies that the election is to be made on a timely-filed (including extensions) return in accordance with the regulations.  The regulations are detailed, and require that the appropriate box on Form 706 be checked and a notice of election be attached to the return.  The notice of election must also contain certain information.  In this case, however, the estate filed for an extension of time to file and included in that filing a letter that expressed the estate's intent to make an installment payment election and estimated that approximately $10,000,000 in tax would be paid in installments.  A subsequent request for an additional extension was made along with another letter containing some of the required information for an I.R.C. Sec. 6166 election.  IRS denied the second extension and informed the estate to file by the previously extended due date.  The estate ultimately filed its estate tax return late and attached a proper notice of election to pay the tax in installments.  IRS rejected the election for lack of timely filing, but estate claimed that it substantially complied.  The court determined that the estate's letters did not contain all of the information required by the regulations to make the election, particularly valuation information to allow IRS to determine if the percentage qualification tests had been satisfied.  Thus, the estate did not substantially comply with the regulations and the election was disallowed.  Estate of Woodbury v. Comr., T.C. Memo. 2014-66.