The IRS is expected to issue new regulations that will curtail the use of a valuation discount granted to closely held businesses for calculating estate tax. Estate planners have used family partnerships and LLC’s as receptacles for assets that have an easy to determine value and where not meant to be protected. In some cases, cash has been transferred to an entity and then discounted to a lower value using a mechanism intended to help lessen the estate tax burden for legitimate small business owners. These tax breaks have become a political hot button due to the large amounts of revenue being lost with President Obama stating a change could bring in $18 billion over 10 years. The new regulations are expected to be released in mid September.
See Pail Sullivan, Navigating Tougher I.R.S. Rules for Family Partnerships, New York Times, August 7, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
