72-16-453. Closely held business defined -- qualification. (1) For the purposes of 72-16-323 and 72-16-452, the following definitions apply:
     (a) "Closely held business" means:
     (i) a trade or business carried on as a sole proprietorship;
     (ii) a partnership carrying on a trade or business if the partnership had 15 or fewer partners; or
     (iii) a corporation carrying on a trade or business if the corporation had 15 or fewer shareholders.
     (b) "Interest in a closely held business" means:
     (i) an interest as a sole proprietor in a trade or business carried on as a proprietorship;
     (ii) an interest as a partner in a partnership carrying on a trade or business if:
     (A) 20% or more of the total capital interest in the partnership would be taxable under Title 72, chapter 16, part 3, except for 72-16-323, as a transfer from the decedent; or
     (B) the partnership had 15 or fewer partners;
     (iii) stock in a corporation carrying on a trade or business if:
     (A) 20% or more in value of the voting stock of the corporation would be taxable under Title 72, chapter 16, part 3, except for 72-16-323, as a transfer from the decedent; or
     (B) the corporation had 15 or fewer shareholders.
     (2) Determination for qualification under subsection (1)(b) must be made as of the time immediately before the decedent's death.
     (3) Stock or a partnership interest held by a husband and wife as joint tenants or tenants in common is treated as owned by one shareholder or one partner, as the case may be.
     (4) Property owned directly or indirectly by or for a corporation, partnership, estate, or trust is considered as being owned proportionately by or for its shareholders, partners, or beneficiaries. For the purposes of this subsection, a person is a beneficiary of a trust only if the person has a present interest in the trust.
     (5) All stock and all partnership interests held by the decedent or by any member of the decedent's family within the meaning of section 267(c)(4) of the Internal Revenue Code is treated as being owned by the decedent.

     History: En. Sec. 15, Ch. 705, L. 1979; amd. Sec. 3, Ch. 288, L. 1997.