Proposed Regulations May Limit Valuation Discounts for Estate and Gift Transfers

  |   August 28, 2016

In our Summer 2015 Valuation & Forensics newsletter, we reported that “Valuation Discounts on Certain Transfers May Soon Be Limited,” and one year later, it appears this may finally come to pass. In early August 2016, the IRS proposed new regulations that are designed to limit valuation discounts in intra-family transfers of ownership interests in corporations, partnerships, limited liability companies and family limited partnerships. In advance of a public hearing on December 1, the proposed regulations are subject to a 90-day public comment period, with comments due November 2.

These very detailed proposed regulation modifications are still being studied. They include changes that could significantly limit valuation discounts, if restrictions on the sale of ownership interests could be removed by an heir (or recipient of a gift transfer) or the heir’s family. For further discussion of Valuation Discounts for Family-Owned Businesses and proposed changes to Internal Revenue Code Section 2704, click here to read a summary prepared by the Family Business Coalition.