In 1976, Congress enacted Section 6166 of the Internal Revenue Code so that, when a business owner died, his closely held business wouldn't have to be sold just to pay the federal estate taxes owed on his estate. Before this law, a taxable estate that held an interest in a closely held operating business but otherwise had little liquidity was forced to raise cash for estate taxes by borrowing from third parties or, when that wasn't possible, selling or liquidating the family business.
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