The IRS will implement new rules likely limiting techniques used by rich individuals to lower their estate and gift taxes. These new regulations apply to valuation discounts, which allow people with assets greater than the current $5.45 million exemption to lower the value of their assets subject to gift and estate taxes. Asset owners of this type typically put their assets into a holding company that is not traded, giving shares of the company to family or charity. Subsequently, the assets’ value drops due to dispersed control of the company. The proposed regulations will allow the IRS to ignore these discounts.
See Laura Saunders, The Controversial Way Wealthy Americans Are Lowering Their Estate Taxes, Wall Street Journal, August 19, 2016.
Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.
