Since all the tax changes in 1986, there has been only one way for people who own businesses to avoid federal estate taxes -- don't die.

While that strategy might work for Elvis and a few others, most people find it a bit hard to implement.

It wasn't always this way. In fact, before the Tax Reform Act of 1986 passed, it was possible to escape the tax collector almost unscathed by employing certain sophisticated planning techniques.

The classic method was the so-called estate freeze. A business owner would recapitalize, creating preferred stock, which he or she would keep, and common stock, which would be passed on to the heirs.

By investing the preferred with extensive rights, particularly the right to large dividends, the owner could make the common stock appear to have little value, at least on paper. Thus, when the common stock was given to the children, only modest gift tax liabilities were incurred.

In reality, however, the elder generation often did not collect the dividend or exercise other rights attached to the preferred stock. The cash stayed in the business, which grew and added value to the common stock, and, voila`, the real wealth had been transferred and most of the tax bite avoided.

Part of the 1986 law -- known as Section 2036(c) -- decreed that when the elder generation retained "an interest" in an enterprise, the whole enterprise could be pulled back into the taxable estate at death. That cured the abuses all right, but it also sucked in all sorts of ordinary deals in which there was no intent to dodge taxes.

Business groups, financial planners and others have been complaining mightily and at last have gotten congressional tax writers' attention. Last month, House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) introduced a bill that would repeal 2036(c) and replace it with an entirely different approach that focuses on proper valuation of the gift when the stock or other interest is given to the children.

Last week, Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) introduced a measure that would in general work the same way.

The two measures differ in detail -- "They are at least cousins, if not quite siblings," said one congressional staff member -- but their introduction by the leaders of the two tax-writing panels indicates that the heavy hand of Section 2036(c) will be lifted before too long.

Both bills would force owners to value as accurately as possible the stock that is given away. For example, dividends not paid would be counted as part of the stockholder's estate. Other rights on the preferred stock that wouldn't be exercised would be valued at zero, boosting the value of the common stock and forcing the payment of more gift taxes.

In both cases, most of the tax questions in such transfers would be dealt with upfront, rather than waiting until death. Under current law, estate planners and heirs cannot be certain what the tax liability will be until the estate is settled and the Internal Revenue Service is satisfied.

Some small business groups have some reservations about the measures but all are encouraged by their introduction.

D. J. Gribbin of the National Federation of Independent Business said Bentsen's plan, in particular, "looks very good. It's simple and short and I think effectively eliminates the abuses that existed under prior law without going completely overboard. ... It pretty accurately represents how things work in the real world, which is refreshing."

John Satagaj of the Small Business Legislative Council said his preliminary reaction was favorable, but he wanted more time to study it. "Until you go through the language on these things you never know," he said. "We don't want to miss something and later on find ourselves in the situation we are now in with the current law, saying, 'Oh gosh, I wish we'd taken more time' " to study the legislation.

John Galles, executive vice president of Small Business United, called the Bentsen bill "a big step in the right direction," but said he has some reservations about it. For example, he said, the measure does not spell out minimum acceptable dividend rates, so "a taxpayer is exposed to what IRS agents choose." Thus, it appears that even if the preferred stock was paying dividends, gift taxes could still be imposed if the IRS decided that the rate was too low.

What ultimately emerges is very much up in the air because of the uncertainties in the budget process. It is possible that a deal will be worked out that leaves the issue out altogether. Or it may be included at the last minute and one of the existing proposals will be yanked off the shelf.

For the moment, the best advice remains to stay alive and avoid the problem. But business owners take heart -- the day is coming when you won't have to live forever.