72-16-464. Acceleration of payment -- other grounds. (1) The extension of time for payment of tax provided in 72-16-452 shall cease to apply and any unpaid portion of the tax payable must be paid upon notice and demand of the department if any portion of an interest in a closely held business that qualifies under 72-16-452 is distributed, sold, exchanged, or otherwise disposed of or if money and other property attributable to such an interest is withdrawn from the trade or business and the aggregate of such distributions, sales, exchanges, or other dispositions and withdrawals equals or exceeds 50% of the value of such interest.
     (2) In the case of a distribution in redemption of stock to which section 303 of the Internal Revenue Code or so much of section 304 of the Internal Revenue Code as relates to section 303 applies:
     (a) subsection (1) of this section does not apply with respect to the stock redeemed and, for the purposes of subsection (1), the interest in the closely held business shall be considered to be such interest reduced by the value of the stock redeemed; and
     (b) subsection (1) of this section does not apply with respect to withdrawals of money and other property distributed and, for the purposes of subsection (1), the value of the trade or business shall be considered to be such value reduced by the amount of money and other property distributed.
     (3) Subsection (1) of this section does not apply to an exchange of stock pursuant to a plan of reorganization described in section 368(a)(1)(D), (a)(1)(E), or (a)(1)(F) of the Internal Revenue Code or to an exchange to which section 355 of the Internal Revenue Code or so much of section 356 of the Internal Revenue Code applies to section 355, but any stock received in such an exchange shall be treated for purposes of subsection (1) as an interest qualifying under 72-16-452.
     (4) Subsection (1) of this section does not apply to a transfer of property of the decedent to a person entitled by reason of the decedent's death to receive such property under the decedent's will, intestate succession, or a trust created by the decedent; nor does it apply to a series of subsequent transfers of the property by reason of death of the transferor, so long as each transfer is to a member of the family within the meaning of section 267(c)(4) of the Internal Revenue Code.

     History: En. Sec. 22, Ch. 705, L. 1979; amd. Sec. 15, Ch. 511, L. 1983.